By Rose Hill
Every business will go through a period of financial difficulty at some stage. The difference, however, is whether the business owner is able to combat the issues during that time.
While some may be averse to buying a business that isn’t doing well financially, it could prove to be a sound investment if you know what to do to turn around its fortunes. Here are a few tips on how to breathe life back into a floundering business:
Make sure you’re objective about the reason for failure
When initially taking on a declining business, current managers and employees will all have their own beliefs as to the reason the business isn’t doing well financially. Don’t ignore these, but remember to be objective and analyze the facts in order to draw your own conclusions.
Be truthful with current employees – and protect your assets in the process
You may not want to appear to be negative about the situation that the company is in, however you do need to be truthful to your employees. You don’t want them to jump ship amidst whispers of a floundering business; they need to be able to trust you. The only way that they can do that is if you are truthful about the current situation and the plans to reinvigorate the business.
The business’ negative financial situation won’t push employees to abandon the business – but escalating gossip may damage morale. Remember that the most important asset of a company is, more often than not, its people. These people will help you in understanding the day-to-day of running the business, as well as its past. If you plan to move forward with the business, you need to keep the employees on side.
Of course, you don’t need to tell them every worst-case scenario – just outline the process of reassessment and re-evaluation of the business and realistic estimates of where it currently is, and where it could be in the future.
Make sure everyone’s on board
There will always be those who are resistant to change – which means that it is imperative that you do as much as you can to share your vision for the future of the company.
Once your new long and short term strategies are considered after having analysed the issues that are and/or could affect the business, present the plans to employees and then act upon them. Make sure that everyone who is a part of the company understands the goal for the future of the company and is fully on board.
New procedures should be documented so that employees will be able to reference something if they slip back into the old ways of the company.
Finally, make sure that you act quickly when you take on a business in need of financial help. Be decisive and don’t be hesitant in drawing up the new strategy for the business and showing it to employees.
Theo Paphitis, a British entrepreneur best known for taking on failing businesses and turning around their fortunes, told The Guardian newspaper that there are often multiple reasons as to why a small business is doing badly.
‘They haven’t done the research, they don’t know where to go for the right funding … it’s rarely one thing,’ he said.
If you analyze what the issues are, both subjectively and objectively, and implement a structured plan that employees are on board with and act with haste, there’s no reason why you can’t turn around the fortunes of an ailing business.
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Rose Hill is an online journalist for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Rose writes for all titles in the Dynamis stable including PropertySales.com and FranchiseSales.com.