Business captains across the world are operating in lean economic times characterized by ever shrinking consumer markets, high rates of inflation and reduced productivity, thanks to the dwindling global economic fortunes. As a result, majority entrepreneurs are mulling over the idea of downsizing of operational units and eventual close down of their businesses.
What most entrepreneurs fail to remember though is that, downsizing or closing down a new or existing business has a more severe impact on individuals and institutions that rely on the business unit than the actual business owner.
As much as business may be operating in tough economic times, it is wise to listen to a renowned marketing guru Zig Ziglar and his famous quote on turning setbacks into a success story. He points out that, “The most successful people are the ones who learn from their mistakes and turn their failures into opportunities.”
The world of free enterprise has a positive impact to the society and to our local Kenyan economy as well. It is, therefore, unwise to let go of a business enterprise just because of intermittent economic aftershocks that can be surmounted with a clear plan and strategy.
Established business owners recognize the fact that entrepreneurship is a vital cog in the wheel of economic development and is actually not meant for the faint-hearted. When faced by a business crisis, as Leonard Saffir says, be quick with the facts and slow with the blame. If your business is struggling, you need to do something to turn it around instead of folding your arms and whining. Before closing down your business, try out these turnaround strategies that could help you salvage your failing business.
- Trim the Fat
The first thing you ought to do is to have a screenshot of your business income and expenditure in form of a spreadsheet. The aim of this exercise is to cut out the flack and do away with whatever expenses on things your business does not urgently need.
Fore example, Catherine who runs a leading travel advisory agency in town realized that she was spending Kshs500,000 annually in magazine subscriptions for her 30 support staff. When sales began going south due to travel advisory policies by foreign governments, Catherine reduced that to Ksh25000, freeing up Ksh,475,000 annually for more productive activities in the company.
Another bright move you could exploit is closing down unprofitable business units/ branches in order to preserve your bottom line. Barclays the other day decided to sell off its 33.7 per cent stake in their South African unit raising a total of Ksh299.8 billion that will definitely be channeled to more profit making ventures. The bank decided to stick to it’s core USA and Britain market.
Another example is that of the ailing national carrier Kenya Airways. As per their 2016 report, Kenya Airways made hard choices of subleasing three Boeing 777’s and two Boeing 787’s and selling two Boeing 777’s bringing their fleet costs down by Ksh14 billion to Ksh15.5 billion, significantly reducing their loss making levels. Tough choices indeed but quite necessary for business survival.
- Have the right business model
Most entrepreneurs fail not because they have entered the wrong market but because they have the wrong business model. Management operatives at the giant e-commerce platform Amazon realized that consumers were seeking low prices, convenience and faster delivery of products and services and quickly structured their business model around that reality. Had they not realized that fact fast and early enough, they would not be enjoying the current status they are in in the world of e-commerce and delivery business.
Delivery and price are just as important as the quality of the products and services your are offering in the market. Customers are fluid and are not bound to one organization thanks to the many vendors selling just the same products/services in the market. Faced by low visitor turnouts in low seasons, the Tourism Ministry in Kenya is now toying around with the idea of reducing visa and park entry fees during the low tourist season of April and June. The move will definitely cushion the the industry against low sales during lean times when the industry registers low visitor numbers.
Right pricing and the ever fluid consumer needs can only be accurately captured by a prior market research in the industry you are operating in. Such a blueprint is vital and will arm you with prior knowledge of your customer buying patterns, what products/services they need most, how they want to be served, and how much they are willing to pay in exchange for your products/services.
The market research document will set your business up for success in the industry. In case you did not do a research during the business set up stage, do not worry yourself much. The research could still be conducted on a daily basis as you run your business entity. Constant restructuring of your business model is key. Though it takes lots time, it will help you keep up with the ever changing consumer needs and wants.
- Differentiate yourself in an overly saturated market
As the ability of consumers to choose from a wide array of product and service providers continues to increase, every thoughtful entrepreneur must be intentional in standing out in the market as well as creating and delivering value to her consumers. This is if your are serious with your business and don’t intend to see it close down.
A number of scheming entrepreneurs actually believe that a crowded marketplace is a critical indicator of high demand. They do not hesitate to put their heads into the crowded market and the trick they mostly use is differentiation and exemplary customer service.
A couple of years ago, Purity set out to launch a high end spa meant to cater for middle class women in Nairobi. Armed with her cheque book and property agent, she set out to locate a premise with a high number of high end spas in the vicinity. After weeks of careful searching, she found one in the one of the leafy suburbs of Nairobi town and aid for it immediately.
After contracting her interior designer, neighbours started whispering doubts about Purity’s move of jumping into an overly saturated high end spa market. She blocked her ears and went on to put final touches on her dream spa.
The inaugural day came and Purity opened her doors to clients and went ahead to offer a 50 per cent slash on prices of services offered by other high end spas in the neighborhood. She made an effort to collect names and contact details of all clients who set foot in her dream spa on that material day. Confident in her highly trained team, Purity was assured of repeat business at normal rates the next time the same clients stepped into her business doors.
Word actually spread around the vicinity and Purity was blessed with a double increase in clientele the following weekend. As we speak, her dream spa is among the leading high end spas in the leafy suburb.Whether your business has a distinct philosophy or a unique approach, or transforms some aspect of the traditional offers of your competitors into something bigger, better or more useful, you can easily excel in an overly crowded market through differentiation. Am sure most of you shy away from crowded markets in fear of competition and business failure but you now know what to do if faced by such an opportunity.
These strategies and more should help you gain confidence and turn around your struggling business. Remember, most of the worlds successful business owners started and closed numerous business ventures before making it big in the corporate world.
So, who are you to chicken out of small economic tremors? Experiences of failure ought to strengthen you and offer you a map of what has and hasn’t worked before and not an excuse to close down your brilliant business entity. Come up with your own business turnaround campaign today and stop living in fear of the unknown. Businesses are built to last and not to fail.
First published here