Business environment continues to increasingly grow tougher as the day passes with increasing number of business going burst every day. This rather ugly trend would not give way anytime soon. But there are tips on how to revive a dying business.
How to revive a dying business using the five pillars of economic recovery model is based on what I have observed that has worked in my business turnaround consulting engagements that I have been part of in the last 15 years of helping small businesses survive rough business terrains.
Five (5) pillars of economic recovery model
The idea of the five (5) pillars of economic recovery model is quite simple in theory yet difficult to implement in practice. I have helped many struggling businesses navigate this path in the past so relax and read with full attention as I explain the five pillars of economic recovery in simple plain language.
- Rethink your business models: entrepreneurs or business owners in a rush to launch their business tend to ignore some basic ground work that needs to be done before launching a business. One of such areas where massive errors are made is in the area of building a working business model. There are basic ingredients that a business model must have, if yours lacks any of such ingredients then you must rethink your business model or face the risk of going bankrupt as a business. I will briefly comment on building a viable strategy here but I highly recommend you spend 2-3 minutes on this article on strategy formulation for better business models. For a business model to hold its ground, it must profitable fulfil societal pressing needs.
- Have another look at your customer or clientele’s database: a common meeting ground for all struggling businesses is that over 50% of their customers are not financially healthy. You must urgently look at the financial health of your customers as a business that is struggling as the kind of customers that you have in your customer database to some extent dictates the kind of offerings and pricing that you are privileged to. A very simple way to glimpse into the financial health of your customers without violating and privacy law is to perform some form of working capital analysis using publicly available financial information. You simply cannot milk your existing customer base nor get quality referrals from them if they are financially sick.
- Understand the direction of your cashflow and financial risks: cash flow is everything as far as the financial health of a business is concerned. A negative cash flow will always take your business two steps back ward for every attempted forward step. There are ways to improve cashflows of a struggling business. I encourage you to read the hyperlinked article if you haven’t done so already.
- Shake up your business operations – including your supply chain: lousy operations is a bane or clog in the wheel of organizations. Are there still bottlenecks in your operations? This aspect of shaking up your processes is one area that businesses do struggle with and the reason for the struggle is that they think they can do it all by themselves. Process improvement is a full fledging field, so get the service of a process improvement professional in this regard. Improving your supply chain management for example can increase customer satisfaction by over 30%.
- Revisit your credit control management architecture (policy and implementations): a lot of potentials for growth and profitability are sacrificed on the altar of inadequate credit control management. Monies that would be put into productive use elsewhere are tied up in the hands of customers for too long. Some of these account receivables end up becoming bad and eventually written off. It is part of the role of the CFO to come up with a suitable credit control policy and template to help the organization.
The above discussed five pillars of economic recovery model have been used by many businesses who had serious challenge in the past. There is no harm in trying out the tips list in this article on how to revive a dying business using the five pillars of economic recovery model.