Operating a business provides people with opportunities to supply beneficial products to society, fulfill important services for customers, and obtain exceptional profits to achieve financial success. However, many small businesses in the US experience struggle to attempt to compete and maintain success in the contentious marketplace. Although many owners are tempted to sell their businesses or downsize the staff during difficult financial periods, many other options can effectively rejuvenate the business, improve profits and establish the company as a successful operation. By analyzing business records and evaluating trends of the past, owners can make effective strategic changes, improve product designs, adjust marketing techniques, and revive struggling businesses.
Selling a struggling business is a concept that many owners have contemplated and debated. An advantage of selling the business is that the owner can immediately receive money, avoid declaring bankruptcy like the one-time giant Blockbuster Video, and be relieved from the stressful and time-consuming project of reviving the company. Selling the business can also provide qualified people with an opportunity to successfully turn around the business. However, many disadvantages also accompany the decision to sell a struggling business. Because the company is failing to attain significant profits, the owner is often required to sell the struggling business for a very low minimum price that would not yield much money compared to the potentially immense profits that could be obtained by rejuvenating the company. Many owners are also reluctant to sell their struggling companies because doing so would cause the owners to lose the investment that they have exerted to build the company and the sale would require the owner to abandon a passion that has provided his career with a sense of importance for an extensive period. Additionally, many employees rely on their company owners to supply work and provide sufficient amounts of money required to support families. However, selling the company could devastate the owner’s loyal employees by making them vulnerable to possibly lose their jobs if the new owner decides to change the operations or structures of the company (Brindley, 2007). Thus, while owners might be tempted to sell their business during times of intense struggles, the owners can make a substantially higher amount of money by reviving the company than by panicking to sell the business at a very low price.
Many options are available that can help owners rejuvenate their struggling businesses. Before taking dramatic action, the owner should first analyze the business to determine which problematic factors have diminished the profit margins and impaired the progress of the company. You should conduct an extensive and comprehensive evaluation regarding the records of the company to establish the strategies that were effective during profitable periods, determine the moment in which the business began declining, and identify the problem that may have instigated the decline. For instance, the owner’s business might have been challenged by lost customers that were stolen by another competing company. In this case, the owner should attempt to decipher why the competitor was able to successfully entice and maintain the stolen customers. The problem causing the decline might also include the market changing and the business failing to adjust to the changes. For market changes, the owner should speculate what specific changes occurred in the market place, the reasons for those changes, and the most effective method of adjusting the business to accommodate those changes. Furthermore, the company might be declining because of an economic recession in which the customers of the company are experiencing severe financial struggles that prevent them from possessing extra spending money (Henricks, n.d.). Thus, the first step owners should fulfill when rejuvenating their company is to determine the problem that impaired the business so the company can then make adjustments to alleviate the problem.
Making adjustments to marketing strategies is a common tactic that many owners utilize to revive their struggling businesses. Marketing is an essential function that can generate significant financial success, for advertisements provide the owner with opportunities to inform potential customers regarding the products or services offered by the company, attract potential customers by emphasizing the importance of those services, and establish credibility by boasting about the exceptional knowledge and skills of the company. However, many businesses struggle when the marketing strategies fail to adequately promote the business or entice customers to purchase the products or services. As a result, owners can strengthen the company by developing and implementing new marketing strategies that can more effectively attract the attention of the public, enhance the reputation of the business, and promote the services of the company. Owners can make several adjustments to the marketing strategies of their businesses. The owners can change the particular qualities of the company that advertisements highlight and brag about, increase the volume of advertisements being distributed to the public, or modify the types of media platforms being used to deliver the advertisements. For instance, the innovative technological advancement of the Internet over the past decade has required many businesses to shift their marketing focus away from print media advertisements and to instead concentrate on Internet advertisements. Additionally, the company can generate a new marketing campaign that features appealing advertisements and that is directed towards a different set of target customers than in the past (Henricks, n.d.). A disadvantage of developing new marketing strategies is that the process requires an abundance of time, effort and money. However, the money and energy invested in a new marketing campaign can reward the business with an expanded customer base and with soaring profits. Therefore, a common method of turning around a business is to establish new marketing strategies that can accommodate cultural changes, promote the important qualities of the company, and entice more customers to support the business.
Owners can also help solve complex problems that are challenging the business by communicating with existing customers. Many advantages accompany the process of customer communication, for doing so can provide you with an opportunity to solidify their support by assuring them that you value the customers, are passionate about the business and are interested in constantly improving the standards of the company. However, the most important benefit of customer communication is that owners can acquire valuable feedback regarding what business strategies are effective and which strategies are failing (Klein, 2009). In turn, customer feedback can permit the owner to repeat and strengthen strategies that are getting favorable responses from customers while eliminated or adjusting strategies that are consistently criticized by customers.
Narrowing the focus of the ideal customer base can also help owners revive a struggling company. Targeting every possible customer group might provide a minimal amount of customers from each group. In contrast, narrowing the focus to instead target one specific customer base can enable the company to dominate a niche group, accumulate substantial profits, and generate a loyal and reliable customer base that can perpetuate support for the company deep into the future (Top 5 Strategies, 2012). The strategy of narrowing the focus to attract one niche group can be risky, for exclusively relying on only one customer base inevitably entails that the business will not receive any profits if the targeted group does not consistently support the company. However, there is also a high reward associated with the tactic of narrowing the customer focus, for dominating one niche group can provide the company with many dependable customers and solidify the profitable success of the company.
Other situations are more conducive to expanding the focus of the company. Expanding the focus involves diversifying the types of customers that the company attracts and thereby increasing the number of people that utilize the products or services of the business. Owners should implement strategies to expand the focus of the targeted customer base when the company previously relied on one particular niche group that recently began shrinking in size, experiencing financial struggles or changing product preferences (Rinaldi, 2009). Thus, expanding the focus of the company to make the products appealing to a larger and more diverse range of customers can increase the size of the company’s customer base and maximize the sales achieved by the business.
One of the most effective methods of expanding the focus of the business is for the owner to invest in research, development and design programs. Conducting thorough research can enable the company to change the design of the existing products to make the business more innovative and appealing to potential customers. Investing in research can also facilitate the creation of new products that can fill a vacancy in the market, increase the number of products sold by the business, and conveniently accommodate the needs of many different types of customers (Hofmann, 2012). A disadvantage of utilizing research and development is that the owner is typically required to invest a significant amount of money into the projects and might need to receive or increase a loan to execute the new product lines. However, this investment can be a very successful strategy, for providing more innovative and diverse products that can generate numerous new customers, allow the company to ascertain a bigger share of the market, and reward the company with perpetual growth and consistent long-term profits.
Owners can also workout debts as a method of reviving a struggling business. Excessive debt accumulation can dramatically hamper the owner, impair the financial progress of the company, and prevent the owner from being able to invest in new business plans. As a result, working out the debts with creditors can be very advantageous to the efforts of reviving a business. Debt workouts can provide the company with more financial stability, protect the owners from filing for bankruptcy, and enable owners to invest in the new strategies of the company. To work out a debt, owners usually must present the future business plan of the company to the creditors, negotiate with the creditors to modify the structure of the debt arrangement, and establish new payment requirements that are most conducive for the success of the owners and creditors (Todrin, 2012). A disadvantage of debt workouts is that the process can be very difficult and the business might assume a chaotic atmosphere during the debt workout negotiation process. However, the advantage is that debt workouts can preserve the business, provide owners with more financial comfort, and remove the detrimental problems of the old business system to facilitate the beginning of the new and more prosperous system.
Minimizing expenses can also help elevate struggling companies into the realm of financial success. The profit margins of businesses are often diminished and curtailed by several small expenses that develop and accumulate to impair the growth of the business. Minimizing expenses can enable owners to eliminate unnecessary or redundant expenses, increase the profit margin of the company, and stimulate steady financial growth. For instance, owners can eliminate unnecessary company expenses by avoiding the excessive use of paper, searching for low percentage credit interests, and by avoiding bank fees. Leasing equipment can also save the company money and increase profit margins. Whereas owning equipment can require constant and expensive purchases for maintenance or upgrade services, leasing the equipment costs less money and enables the leasing company to provide equipment upgrades, repairs, and maintenance services for free. Additionally, owners can also minimize the company expenses by combining utility services to get discounts from suppliers and to reduce the total cost of bills (Marcus, n.d.). Thus, eliminating small and unnecessary purchases and minimizing company expenses can help the business achieve a higher profit margin, maintain the stability of the company, and enable owners to invest more money into the development of new strategies.
To save a severely struggling business, owners can also opt to file for Chapter 11 bankruptcy. While owners generally prefer not to harm the reputation of their business by filing for bankruptcy, there are many benefits associated with the process. Filing for bankruptcy can extend the time available for owners to revive the company, as the process suspends and delays creditor payment requirements and allows owners to accept or reject new contracts. However, filing for bankruptcy can also cost vast amounts of money in expensive attorney fees, a judge might eventually order to liquidate the company, and a judge can exert powerful authority regarding the future business endeavors of the company (Betts, n.d.). Thus, bankruptcy can provide owners with more time to develop solutions and implement new strategies to rejuvenate the business, but owners might also experience difficulty recovering from the expensive and vulnerable process of bankruptcy.
Although owners of struggling businesses might be tempted to perform massive layoffs and downsize the company, most experts agree that performing massive layoffs and terminating a large portion of the employees does not effectively rescue businesses and inevitably facilitates a multitude of larger problems. Owners are often tempted to downsize the company because the process seems like an easy solution that can bear immediate results. For instance, eliminating a significant portion of the staff quickly reduces the number of employees on the payroll and allows the owners to ascertain a larger portion of the profits (Mathews, 2002). As a result, many companies resort to the tactic of downsizing and massive employee layoffs when the business is struggling and the owners see negative disparities in their profit and loss statements. However, many dramatic problems can arise from the decision to downsize the business.
A significant problem of downsizing is that it costs an abundance of money for owners to execute the employee layoffs. To fire each employee requires excessive amounts of time, for the owner and managers must all spend time determining who to terminate, filling out the necessary paperwork, and sitting down with each employee to explain the situation. Thus, the lengthy and arduous effort required to downsize a company inevitably causes the company to spend and lose money during the termination process. After the termination of the employees, many owners are then required to pay for severance packages, continued benefit packages, accrued vacation expenses, and outplacement service fees. The terminated employees might also collect unemployment insurance checks, which can cause the overall tax rate of the business to gradually increase over the succeeding years to compensate for the unemployment checks (Mathews, 2002). Thus, the extensive amount of time and money required to execute the terminations typically results in immediate losses and reduced profits for the business.
Massive downsizing layoffs also tend to diminish the efficiency and productivity of the entire business. Because most employees fulfill important functions and essential positions, the absence of the employees and the vacancies of the positions significantly impair the rate of productivity for the company. Many research studies indicate that the loss of productivity from the vacancies causes the companies to lose approximately 50 percent of the employee compensation for each employee that was terminated and for each position that has not yet been replaced (Mathews, 2002). Thus, the loss of productivity caused by the layoffs and the vacant positions generally diminishes the financial progress of the company.
Because downsizing also causes companies to suffer from the loss of the knowledge and skills that the former employees contributed to the professional endeavors of the company, many reports indicate that few businesses benefit from layoffs and most companies that downsize must refill the staff to its previous levels within less than two years. However, the staffing process costs the owners and the company even more time and money to fund and operate the recruiting, screening and interview processes. After new employees are hired, the company then must exert even more time, energy and resources to fulfill the training process. For instance, the owners must train the new employees, provide supervisors to assist and guide new staffers through the training process, and fulfill several company obligations while new employees are getting prepared. Therefore, the eventual need to hire and train new employees causes a dramatic loss of productivity, costs an abundance of time and money, and significantly reduces the profit margins of the company.
Downsizing also diminishes the morale of the remaining employees that are not terminated during the layoff process. The fact that the owner downsized the company significantly disheartens and deflates the staff, for the remaining employees typically perceive that the business is desperately struggling, lose confidence in the company and lose confidence in the security of their jobs. In turn, the layoff strategy can cause the staff to become resentful of the owners and can decrease their loyalty to the company. Many research studies demonstrate a correlation between employee morale and productivity (Mathews, 2002). Thus, conducting massive downsizing layoffs impairs the morale of the staff, reduces the productivity of the remaining employees, and decreases the total profits that are acquired by the company.
Performing a massive layoff and terminating several employees to downsize the company can also diminish the reputation and customer base of the business. Because throughout American history many middle-class workforces have suffered from abusive treatment by wealthy corporation owners, the majority middle-class portion of the American society generally disapproves of downsizing and perceives the tactic as a method for owners to increase wealth at the expense of the livelihood of the workers. As a result, conducting massive layoffs can risk the company becoming stigmatized and condemned as a business that is indifferent and detrimental to the working class, which can impair the reputation of the company, generate anger from middle-class America, and discourage potential or existing customers from utilizing the services of the business (Mathews, 2002). Thus, the stigma associated with downsizing can significantly reduce company profits by making working-class customers reluctant to support the business and more prone to instead support other competing businesses that have not terminated an abundance of workers to accrue more money for the owners.
Although owning a business that is struggling and that you are passionate about can be a very difficult and frustrating experience, there are many methods of rejuvenating a business without needing to sell or downsize the company. In the modern contentious marketplace, almost all successful businesses only thrive because the owners first helped the companies overcome several very difficult periods of intense struggle. Owners can overcome tough obstacles and rejuvenate a struggling business by analyzing the problems, adjusting the marketing strategies, appealing to different types of customers, designing new products, and minimizing overall company expenses. Whereas selling a business yields minimal amounts of immediate money, fulfilling all of the necessary adjustments required to revive the company can enable the owner to build a successful business, acquire a prestigious reputation in the financial market, and allow the company to benefit from exceptional long-term profits.
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