Running your own business always comes with challenges and when times get tough it can be hard to know what to do or where to turn.
The impact of the pandemic is still being felt by businesses and, with an ongoing cost-of-living crisis and recession looming, it’s understandable that struggling businesses are considering throwing in the towel.
So, what can you do if your company isn’t performing?
In this article, we share advice from experts in the UKBF community on how you can fight back.
In this forum, Richard explains to a struggling business owner that “circumstances outside of your control changed the world around how the business operates, and you have been wise and successful enough to recognise this. This is absolutely not a failure.”
The elephant in the room here is the pandemic and the resulting recession. It’s safe to say that most businesses were not prepared for the UK’s economy to shut down and trading to be reduced to a bare minimum.
As for recession, inflation and cost of living, there’s no denying that smaller companies are hardest hit by these pressures. This is understandably a popular topic among our members, in forums such as this one where members discuss how everyone is coping with the drop in consumer spending.
If you want more advice on surviving an economic downturn, check out this article. We’ve also shared advice on how small businesses can cope with inflation, talking to your staff about pay cuts or reductions in hours and cutting your costs.
In fact, it can be the most business-savvy choice. As Mark T Jones put it in this thread: “One key (often lacking) business skill is knowing when to get out.”
Other members agreed, including Paulears who advised: “There’s a big difference between being a failure and something not working. Failure is doing things which are too risky, not responding, taking ridiculous chances and being irresponsible. [If] you're closing a business because it takes too much time, and doesn't make enough to make it viable, that's common sense.”
Whilst it may be inconceivable to imagine “giving up” on a business you’ve put so much time and energy into, try not to think of it like that. Instead, view it as a chance to regroup and seek new opportunities.
Lots of UKBF members suggest that, from their experience, business owners may feel reinvigorated to try again with something new after taking some time out.
Whatever happens, the main things to remember are to take responsibility, learn from your experience and use this to drive what you do next.
It can be easy to panic and react, rather than making a considered plan of action. In this thread, UKBF members discussed their past unsuccessful businesses, including Kerwin who explained that when trying to start a business in 2020, he was “very impulsive and didn’t sit down to think about things, [so] wasted time constantly switching between tasks”.
Mark T Jones also shared his experience, explaining that one of his biggest learning curves came during the mid-90s recession. He claims that a “big no-no is to fail to learn from your mistakes or not to take responsibility”. In another thread, he also advises fellow business owners to “avoid panic measures such as… discounting” and focus on making your business more resilient.
There are a number of steps you can take to regroup when your business is under pressure:
UKBF members have been discussing the fact that things haven’t yet returned to “normal” in 2022 in this forum. Whilst some feel the future is uncertain, Paul Norman is of the opinion that “opportunities will still be there [...] but they will be different. This is a great example of how to flip what could be seen as a negative situation and look at it more positively.
Another great example of this positive mindset is seen from SillyBill in this thread. He says: “The ‘beat your competition’ [mindset] is key too - they're in the same boat and [it’s] important you remind yourself of this.”
Instead of looking at your company in isolation and thinking you’re the only one, look at the bigger picture. Reflect on how the issues affecting your business also impact others. Not only will you feel less isolated but it might give you ideas of things you can do differently.
For more tips on resilience and recovery from business burn out, why not read our guide on how to recover from stress and bounce back?
Ultimately, they are what will determine whether or not your business survives, so meeting their needs and keeping them happy is your top priority – establishing trust with your customers is crucial.
When times get tough, it’s easy to look inwards and just think about how it’s affecting you and your business. But consider how changing conditions impact your customers too. Remember that whatever your industry and whatever you’re selling, all businesses are looking to provide solutions to their customers. So consider what new problems they’re being faced with, and what part can you play in solving these.
Customer retention is essential to a successful business, but don’t just assume that what your customers wanted or needed when you first launched your business is the same now. You need to analyse your target market, how that might be changing and understand what motivates them to spend money with you or your competitors: adaptation is one of the key tools to business success, which we’ll come onto next.
It might seem that in order to keep your customers, you need to keep prices low. This can be a dangerous trap when things go awry and you’re worried about staying in business, but your business won’t survive if you aren’t making sufficient profit margins – don’t be a busy fool.
Putting prices up doesn’t have to mean losing customers. Be very clear on the value you provide. Explain price increases clearly.
This may also mean ditching non-performing revenue streams entirely. Take the time to understand what parts of the business are contributing to the bottom line and be brutally honest about those that aren’t.
“[This can] mean ditching the customers who are worthless to you, be that because they take too much of your time or simply aren't paying enough,” added Japancool. “That's something that many service businesses fail to do.”
Businesses who fail to adapt to changing conditions and instead do what they’ve always done will find themselves struggling at one point or another. This can manifest itself in lots of different ways, but one area discussed by our members includes a breakdown in director or stakeholder relationships.
In this thread, UKBF members address a question from fives4fun about wanting to breakaway from their business partner in order to make the company more successful and profitable. This is a great example of how to recognise when an element of your business isn’t working, and having the courage to take decisive action, despite it being uncomfortable. There’s lots of information on how to do this in the thread itself, from member and resident business guru, The Resolver.
First things first: if you’re in a sticky situation, prioritise profit over revenue. Don’t fool yourself into thinking that the books are balanced by looking at your turnover without considering your outgoings. It’ll only come back to bite you in the long run so don’t try to pretend things are better than there really are.
Prioritise what you pay. It might be that you simply can’t afford to cover everything, but don’t stick your head in the sand. Be proactive, speak to suppliers, employees and any financial professionals that might be involved to let them know you’re struggling.
Manage your cash flow efficiently. Make sure you have a financial forecast and use this to project how much you’ll have in the bank. This is usually a good first indicator as to when things aren’t going well, and could help you nip issues in the bud before they get out of hand (here’s a handy guide to managing cash flow in difficult times).
When times are tough, you may move to a weekly or even daily cashflow forecasting, which allows you to react quickly. As mentioned previously, scenario planning can help you understand your options. This involves updating your forecast based on potential options such as making cuts, so you can better understand the impacts.
Lastly, make sure you’re organised when it comes to financial admin. Send out invoices on time and push for timely payments. Pay your bills on time whenever you can so things don’t build up, and follow-up with customers who don’t do so to make sure they don’t fall behind on payments.
At this point, an administrator (a licensed insolvency practitioner) is appointed. UKBF member and licensed insolvency practitioner Lisa Thomas recommends business owners who believe their company is insolvent, or looks as if it may become insolvent in the future, seek advice as soon as possible.
"Seeking advice too late may limit the amount of options your business has. You may also find you have committed misconduct under the Insolvency Act 1986, which could come back to bite you if a future insolvency procedure is entered into."
The government described administration as a "breathing space" that frees a company from creditor enforcement actions: the goal is to look at ways to rescue the company as a going concern where possible.
Companies in administration can continue to trade, but control passes from the directors to the appointed administrator.
Whatever you’re going through, the chances are someone else has experienced something similar and might be able to help or point you in the right direction.
Mentors, advisors or members of the small business community will share valuable advice, offer constructive feedback and help connect you to the right people, so don’t suffer in silence. Remember to look after your own wellbeing too by managing stress so you can stay resilient - here are five easy ways to make improvements.
A final thought from the UKBF community member Fagin2021 on not failing: “If you worked hard and gave it your best shot, but were overcome by circumstances beyond your control, that isn’t a failure. Who knows, after a decent interval to regroup, you might feel the urge to start another business.”
The impact of the pandemic is still being felt by businesses and, with an ongoing cost-of-living crisis and recession looming, it’s understandable that struggling businesses are considering throwing in the towel.
So, what can you do if your company isn’t performing?
In this article, we share advice from experts in the UKBF community on how you can fight back.
Reacting to the impacts of the pandemic and recession
Let’s start with a note from UKBF founder, Richard Osbourne, AKA Ozzy. He advises business owners not to use the word “failure”, because it creates unnecessary negative emotion.In this forum, Richard explains to a struggling business owner that “circumstances outside of your control changed the world around how the business operates, and you have been wise and successful enough to recognise this. This is absolutely not a failure.”
The elephant in the room here is the pandemic and the resulting recession. It’s safe to say that most businesses were not prepared for the UK’s economy to shut down and trading to be reduced to a bare minimum.
As for recession, inflation and cost of living, there’s no denying that smaller companies are hardest hit by these pressures. This is understandably a popular topic among our members, in forums such as this one where members discuss how everyone is coping with the drop in consumer spending.
If you want more advice on surviving an economic downturn, check out this article. We’ve also shared advice on how small businesses can cope with inflation, talking to your staff about pay cuts or reductions in hours and cutting your costs.
What happens when you’ve done everything you can?
Let’s get this one out of the way. Sometimes, the best thing you can do for a business is to recognise that you’ve done all you can, and not expend any unnecessary time, energy or money on, to put it bluntly, flogging a dead horse.In fact, it can be the most business-savvy choice. As Mark T Jones put it in this thread: “One key (often lacking) business skill is knowing when to get out.”
Other members agreed, including Paulears who advised: “There’s a big difference between being a failure and something not working. Failure is doing things which are too risky, not responding, taking ridiculous chances and being irresponsible. [If] you're closing a business because it takes too much time, and doesn't make enough to make it viable, that's common sense.”
Whilst it may be inconceivable to imagine “giving up” on a business you’ve put so much time and energy into, try not to think of it like that. Instead, view it as a chance to regroup and seek new opportunities.
Lots of UKBF members suggest that, from their experience, business owners may feel reinvigorated to try again with something new after taking some time out.
Whatever happens, the main things to remember are to take responsibility, learn from your experience and use this to drive what you do next.
Five ways to fight back and save your business
If you’re not ready to give up the fight and want to take action to improve performance, you’ve already got the right attitude. But what steps can you take to try and get things back on track?1. Step back, analyse and regroup
The first step to saving any business is to take a step back, regroup and conduct a thorough analysis of what is or isn’t working. Reflecting on your business in this way is helpful in identifying problem areas and addressing the root cause rather than trying to treat the symptoms. This allows you to prioritise, resolve and prevent, rather than firefight.It can be easy to panic and react, rather than making a considered plan of action. In this thread, UKBF members discussed their past unsuccessful businesses, including Kerwin who explained that when trying to start a business in 2020, he was “very impulsive and didn’t sit down to think about things, [so] wasted time constantly switching between tasks”.
Mark T Jones also shared his experience, explaining that one of his biggest learning curves came during the mid-90s recession. He claims that a “big no-no is to fail to learn from your mistakes or not to take responsibility”. In another thread, he also advises fellow business owners to “avoid panic measures such as… discounting” and focus on making your business more resilient.
There are a number of steps you can take to regroup when your business is under pressure:
- Look at your strengths, weaknesses, opportunities and threats (otherwise known as a SWOT analysis) and prioritise what you can do now (here’s a free SWOT template you can use).
- Make sure you're on top of your cashflow forecast and can test different scenarios, such as cost cutting or investing in sales and marketing.
- Take time off. It can seem impossible to get a few days away from work when you’re firefighting, but it will leave you feeling revitalised and help avoid burnout.
- Talk to other business owners about what you’re struggling with. It’s great to get feedback, share your problem and realise you’re not the only one.
- Figure out what you can stop doing to free up time. Try writing the tasks you do on Post-it Notes, group them and then think about what types of activity you can stop doing or delegate.
2. Change your mindset
We’ve talked about how mindset can impact company performance and how determination, perseverance and positivity go a long way to helping you survive the tough times. So, how can you maintain this outlook, especially when things seem hopeless?UKBF members have been discussing the fact that things haven’t yet returned to “normal” in 2022 in this forum. Whilst some feel the future is uncertain, Paul Norman is of the opinion that “opportunities will still be there [...] but they will be different. This is a great example of how to flip what could be seen as a negative situation and look at it more positively.
Another great example of this positive mindset is seen from SillyBill in this thread. He says: “The ‘beat your competition’ [mindset] is key too - they're in the same boat and [it’s] important you remind yourself of this.”
Instead of looking at your company in isolation and thinking you’re the only one, look at the bigger picture. Reflect on how the issues affecting your business also impact others. Not only will you feel less isolated but it might give you ideas of things you can do differently.
For more tips on resilience and recovery from business burn out, why not read our guide on how to recover from stress and bounce back?
3. Put your customers first
This might seem obvious, but when times get tough you need to focus on what’s most important: your customers.Ultimately, they are what will determine whether or not your business survives, so meeting their needs and keeping them happy is your top priority – establishing trust with your customers is crucial.
When times get tough, it’s easy to look inwards and just think about how it’s affecting you and your business. But consider how changing conditions impact your customers too. Remember that whatever your industry and whatever you’re selling, all businesses are looking to provide solutions to their customers. So consider what new problems they’re being faced with, and what part can you play in solving these.
Customer retention is essential to a successful business, but don’t just assume that what your customers wanted or needed when you first launched your business is the same now. You need to analyse your target market, how that might be changing and understand what motivates them to spend money with you or your competitors: adaptation is one of the key tools to business success, which we’ll come onto next.
What to do about price changes
It might seem that in order to keep your customers, you need to keep prices low. If your company isn’t performing, you’ll need to make a profit to stay viable, but putting prices up doesn’t have to mean losing customers.It might seem that in order to keep your customers, you need to keep prices low. This can be a dangerous trap when things go awry and you’re worried about staying in business, but your business won’t survive if you aren’t making sufficient profit margins – don’t be a busy fool.
Putting prices up doesn’t have to mean losing customers. Be very clear on the value you provide. Explain price increases clearly.
This may also mean ditching non-performing revenue streams entirely. Take the time to understand what parts of the business are contributing to the bottom line and be brutally honest about those that aren’t.
“[This can] mean ditching the customers who are worthless to you, be that because they take too much of your time or simply aren't paying enough,” added Japancool. “That's something that many service businesses fail to do.”
4. Adapt and react
Survival is all about adaptation and running your own company is no different. There will always be moments of difficulty or even “failure”, but how you react and adapt to these will be the key to whether you survive and ultimately thrive.Businesses who fail to adapt to changing conditions and instead do what they’ve always done will find themselves struggling at one point or another. This can manifest itself in lots of different ways, but one area discussed by our members includes a breakdown in director or stakeholder relationships.
In this thread, UKBF members address a question from fives4fun about wanting to breakaway from their business partner in order to make the company more successful and profitable. This is a great example of how to recognise when an element of your business isn’t working, and having the courage to take decisive action, despite it being uncomfortable. There’s lots of information on how to do this in the thread itself, from member and resident business guru, The Resolver.
5. Manage your finances
Another tip which perhaps seems obvious, but can be neglected when times get tough. There are a number of key focus areas to make sure you stay on top of your finances and keep your company profitable, even when demand is low and costs are high.First things first: if you’re in a sticky situation, prioritise profit over revenue. Don’t fool yourself into thinking that the books are balanced by looking at your turnover without considering your outgoings. It’ll only come back to bite you in the long run so don’t try to pretend things are better than there really are.
Improving cashflow when you're under pressure
Cut unnecessary costs. Again this might seem obvious and although it won’t save your business on its own, it can buy you some time. Think about what is absolutely necessary in order to keep your company running and cut back on your outgoings.Prioritise what you pay. It might be that you simply can’t afford to cover everything, but don’t stick your head in the sand. Be proactive, speak to suppliers, employees and any financial professionals that might be involved to let them know you’re struggling.
Manage your cash flow efficiently. Make sure you have a financial forecast and use this to project how much you’ll have in the bank. This is usually a good first indicator as to when things aren’t going well, and could help you nip issues in the bud before they get out of hand (here’s a handy guide to managing cash flow in difficult times).
When times are tough, you may move to a weekly or even daily cashflow forecasting, which allows you to react quickly. As mentioned previously, scenario planning can help you understand your options. This involves updating your forecast based on potential options such as making cuts, so you can better understand the impacts.
Lastly, make sure you’re organised when it comes to financial admin. Send out invoices on time and push for timely payments. Pay your bills on time whenever you can so things don’t build up, and follow-up with customers who don’t do so to make sure they don’t fall behind on payments.
When do you need to call in the administrators?
When a business isn't able to pay the money it owes it can be put into administration. This is done by an order of the court (normally because a company's creditors have pursued debts they are owed), a qualifying floating charge holder, which relates to company property, or by the directors.At this point, an administrator (a licensed insolvency practitioner) is appointed. UKBF member and licensed insolvency practitioner Lisa Thomas recommends business owners who believe their company is insolvent, or looks as if it may become insolvent in the future, seek advice as soon as possible.
"Seeking advice too late may limit the amount of options your business has. You may also find you have committed misconduct under the Insolvency Act 1986, which could come back to bite you if a future insolvency procedure is entered into."
The government described administration as a "breathing space" that frees a company from creditor enforcement actions: the goal is to look at ways to rescue the company as a going concern where possible.
Companies in administration can continue to trade, but control passes from the directors to the appointed administrator.
Pre-pack administrations
Pre-pack administrations involve selling insolvent businesses back to the existing directors. The sale is negotiated prior to the company entering administration and happens shortly after it. This is sometimes called “phoenixing”.You’re not the only one that’s struggling
When you think your business is struggling, the main thing to remember is that you’re not alone. You can always consult a mentor or advisor, and make use of all the experience and advice available from the UKBF community.Whatever you’re going through, the chances are someone else has experienced something similar and might be able to help or point you in the right direction.
Mentors, advisors or members of the small business community will share valuable advice, offer constructive feedback and help connect you to the right people, so don’t suffer in silence. Remember to look after your own wellbeing too by managing stress so you can stay resilient - here are five easy ways to make improvements.
A final thought from the UKBF community member Fagin2021 on not failing: “If you worked hard and gave it your best shot, but were overcome by circumstances beyond your control, that isn’t a failure. Who knows, after a decent interval to regroup, you might feel the urge to start another business.”
Useful resources to read next
Looking to take action to improve your situation? Here are some UKBF guides that can help. If you want to ask a specific question about your business, please don't hesitate to post in the forum.- How small businesses can cope with inflation
- How to talk to staff about pay cuts or reductions in hours
- Nine business cost of living tips and hacks
- Five easy ways small and micro-business owners can support their wellbeing
- Overcoming business burnout after a tough year
- Under pressure: 10 tips to improve your supplier price negotiations
- Six ways to manage cash flow during difficult times
