What to do if you think your business is failing

[ChrisGoodfellow]

We've just published a guide to help members who are worried about their businesses or are thinking of throwing in the towel. As you know, we regularly get posts from people that are struggling and I thought it would be helpful to summarise the advice.

I've included advice from @Mark T Jones, @The Resolver, @Ozzy et al.

What to do if you think your business is failing

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...

www.ukbusinessforums.co.uk

It's a really important subject and I want this to act as a piece of cornerstone content that we can keep updated: what would you add? Do you have any other feedback?

 

[japancool]

I think the article has too much fluff in it. It needs to be shorter and more on point - people who read it are looking for practical advice and probably don't want to read through all the gubbins to get to the "here's what you can do" part.

You mention raising prices but don't mention cutting non-performing revenue streams - which 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. That's something that many service businesses fail to do.

 

[fisicx]

Too many links to forum threads. Doesn’t need any of them. You could add a references section at the end (like Wikipedia).

What it isn’t is a piece of cornerstone content.

 

[ChrisGoodfellow]

You mention raising prices but don't mention cutting non-performing revenue streams - which 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. That's something that many service businesses fail to do.

Good point, thanks! I've extended that section and quoted you in the copy. Hope that's okay.

As for the "fluff" at the beginning, as you so kindly put it ?, I think the mindset stuff's important and it's only a short scroll to "Five ways to fight back and save your business" for people that are scanning it.

Anchor tags/ a table of contents would be a nice addition.

 

[ChrisGoodfellow]

Too many links to forum threads. Doesn’t need any of them. You could add a references section at the end (like Wikipedia).

What it isn’t is a piece of cornerstone content.

Links to forum threads provide useful context and help keep people on the site. Links in the body of an article are a lot easier to use that a references section, so I'm going to leave them in. That said, I've added a useful resources section at the bottom, which should help signpost people.

I think this has the potential to become a piece of cornerstone content as it's a really important topic for new community members site. We'll see how it performs in terms of dwell time etc. and decide what role it should take from there.

 

[fisicx]

I agree that they give context but there are far too many of them. They reduce readability. The other issue is there is very ‘how’. You say I should regroup but don’t give a list of ways to do this other than SWOT - which itself isn’t an easy thing to do without training.

 

[Gyumri]

The opposite cornerstone could be what not to do if you think your business is failing. That may be equally valuable.

 

[ChrisGoodfellow]

The opposite cornerstone could be what not to do if you think your business is failing. That may be equally valuable.

Nice! I like your thinking.

 

[ChrisGoodfellow]

You say I should regroup but don’t give a list of ways to do this other than SWOT - which itself isn’t an easy thing to do without training.

Good idea. I've added a series of bullet points.

 

[japancool]

Oh yes - a "where to get help" section would be useful.

 

[fisicx]

Good idea. I've added a series of bullet points.

Looks good. Now need the same for the other 4 sections.

Do you really need to link to all the member pages? It doesn't really add to the flow. For example how does this help the reader: https://www.ukbusinessforums.co.uk/members/dafcjim.139850/? Might be better to add have a list of contributors at the bottom.

Might also be worth checking the forums you link to. For example you say to visit a thread for info about phoenixing but most of the thread is nothing of the sort. What you really need is an expert guide to phoenixing.

 

[Lisa Thomas]

I've only skimmed it but did not see any reference to seeking advice form a licensed insolvency practitioner?

 

[ChrisGoodfellow]

I've only skimmed it but did not see any reference to seeking advice form a licensed insolvency practitioner?

Good point, thanks. I can add a section on when administration or insolvency might be necessary. Is it possible you could write me a quick quote about when and why you should seed advice form a licensed insolvency practitioner? I can link to your profile/ website

 

[Lisa Thomas]

Hi Chris

Sure:

"If you believe your company is insolvent, or looks as if it may become insolvent in the future, you should take steps to seek advice form a licensed Insolvency Practitioner 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."

If you're happy with the above, please fee free to link it to my profile.

Thank you

 

[LMN118]

Positive mindset doesn't help, it is fluff, it doesn't change the reality. Perseverance and resilience are like having a shield in front of you being shot blast by problems. Fine in the short term but overtime they wear thin and fail.

I am a sole trader, my sales have been steadily dropping since March, it doesn't look like there will be any improvements since the products I sell are the first to go in times of hardship.

I took out Sunak's now ironically named "Bounce Back" loan which is now slowly throttling me.

I have prioritised, I have down sized, I've cut business and personal expenditure, I've had clearance sales to cut dead stock away, I've cancelled b2b orders and am swallowing thousands in restocking fees at a time when I can't afford them.

In just over two years I've gone from being debt free, cash rich, planning expansion and allocating the resources for that, in a happy relationship and looking forward to the future...

To checking my balance everyday to micromanage income. Looking around my home thinking about what I can sell. Looking back on the wreckage of a relationship wrecked by COVID. Wondering what will break first my business or my mental health. Yesterday I had an odd thought, I haven't touched another human being in close to two years.

Thinking of fluffy bunny's while singing "Don't worry, be happy" isn't going to change anything. It is patronising and insulting to those of us under immense pressure and looking at the very real chance of being destitute soon.

Yes my competitors are also feeling the strain, but they are bigger, get better deals on stock, consumables and shipping prices. They have more customers and can deal with the strain easier.

I can't walk away anymore due to the debts created.

I appreciate the sentiment but if you are going to offer advice try for something practical and not positive mindset or "it's not a failure".

 

[MBE2017]

Positive mindset doesn't help, it is fluff, it doesn't change the reality.
I appreciate the sentiment but if you are going to offer advice try for something practical and not positive mindset or "it's not a failure".

Over a fifty year career in sales, I have seen the difference in performance thousands of times, where the majority of guys say it’s seemingly impossible to a new guy, fresh attitude, not being told its impossible going out and selling way above target.

I know it’s not what you want to hear, but I disagree on your assertion the mindset plays no part. I’m sorry to hear of your problems and wish you well.

 

[Lisa Thomas]

Hi Chris

Sure:

"If you believe your company is insolvent, or looks as if it may become insolvent in the future, you should take steps to seek advice form a licensed Insolvency Practitioner 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."

If you're happy with the above, please fee free to link it to my profile.

Thank you

* from!

 

[LMN118]

Thank you for your reply and best wishes, however, I'm not sure if your example applies. Currently customers are not spending money, it is not a difference of sales tactics or mindset as customers are not buying period. Especially in younger demographics who are being squeezed the hardest.

With online sales it is all about directing customers to your shop or products and pricing. A positive mindset is irrelevant when it comes to sales. Having a positive mindset will not increase impressions, click through rate or conversions. Our impressions, i.e. where we are on the search results are still quite high considering the size of the business so there is little value trying to improve them.

I do have some options, debt consolidation for example, but other than customers having more money in their pocket there is little else I can do. At least business wise, the only other option is cutting back and getting a job doing something else but I've been "out of work" for 15 years now so it is unlikely I'll find anything but menial labour which won't pay the bills.

 

[fisicx]

I know it’s not what you want to hear, but I disagree on your assertion the mindset plays no part. I’m sorry to hear of your problems and wish you well.

not sure that's what he meant. Of course mindest plays a part but even with the most positive mindset there are some businesses that just can't be saved. This is where the article from @ChrisGoodfellow fails. It suggests that all you need to do is a bit of adjustment and everything will be OK. Which we all know just isn't true. 20% will fail in the first year and only 30% get to 10 years.

Sometimes the best advice for a failing business is to let it fail and start something new.

 

[japancool]

Positive mindset doesn't help, it is fluff, it doesn't change the reality. Perseverance and resilience are like having a shield in front of you being shot blast by problems. Fine in the short term but overtime they wear thin and fail.

I am a sole trader, my sales have been steadily dropping since March, it doesn't look like there will be any improvements since the products I sell are the first to go in times of hardship.

I took out Sunak's now ironically named "Bounce Back" loan which is now slowly throttling me.

I have prioritised, I have down sized, I've cut business and personal expenditure, I've had clearance sales to cut dead stock away, I've cancelled b2b orders and am swallowing thousands in restocking fees at a time when I can't afford them.

In just over two years I've gone from being debt free, cash rich, planning expansion and allocating the resources for that, in a happy relationship and looking forward to the future...

To checking my balance everyday to micromanage income. Looking around my home thinking about what I can sell. Looking back on the wreckage of a relationship wrecked by COVID. Wondering what will break first my business or my mental health. Yesterday I had an odd thought, I haven't touched another human being in close to two years.

Thinking of fluffy bunny's while singing "Don't worry, be happy" isn't going to change anything. It is patronising and insulting to those of us under immense pressure and looking at the very real chance of being destitute soon.

Yes my competitors are also feeling the strain, but they are bigger, get better deals on stock, consumables and shipping prices. They have more customers and can deal with the strain easier.

I can't walk away anymore due to the debts created.

I appreciate the sentiment but if you are going to offer advice try for something practical and not positive mindset or "it's not a failure".

This.

The whole "positive mindset" thing reeks of American self-help books. If you just change the way you think about things, everything will be ok.

People who are in the position of a business failing are under IMMENSE pressure. You can't pay bills, your staff may not be getting paid, you can't keep your family fed and warm, you could lose the roof over your head.

If I were reading this kind of article, I'd want practical advice. How do I turn my sales around? How do I get more income into the company? Where can I cut costs? What options do I have for negotiating with my creditors? Who can help me do that? The article answers none of those questions.

And if all else fails, what can I do?

If you're a business owner who's built something up over many years, it can be emotionally impossible to let it go, and it's easy to dig a deeper and deeper hole for yourself. Thinking things will get better if I have a "postive mindset" can lead you further down that rabbit hole.

BTW, I found the whole "why do businesses fail" bit incredibly patronising.

 

[Ozzy]

I've been away for a bit exhibiting, so only just getting to catch up on threads I may have missed.

It's interesting that so many have taken this article as expecting it to be the be all and end all of advice on one page, and not as a reference piece out to the threads where the advice is actually given.

Positive mindset doesn't help, it is fluff, it doesn't change the reality. Perseverance and resilience are like having a shield in front of you being shot blast by problems. Fine in the short term but overtime they wear thin and fail.

The whole "positive mindset" thing reeks of American self-help books. If you just change the way you think about things, everything will be ok.

I've just read the article and looked at the threads the article links to about mindset, and I definitely think you guys may have misread the article or not referenced the source material it linked to.

I didn't see any fluffy bunnies, but what I did see is reference to treating the collapse of a business as a learning experience to improve from. If your business is collapsing then it's collapsing, it happens, from my own experience I've been through it. The mindset comes into it as about how you approach that collapse, and when you read the referenced content where the forum members have spoken about this it talks about having the mindset to not treat it as "failure" but take time out, see what could be changed and learned from, and go again.

It suggests that all you need to do is a bit of adjustment and everything will be OK. Which we all know just isn't true. 20% will fail in the first year and only 30% get to 10 years.

Sometimes the best advice for a failing business is to let it fail and start something new.

That's not what I came away with when I read the various threads and advice, I definitely came away with you could try a few bits but if your business is going to the wall then make sure you get out when you should. Don't flog a dead horse was what I took from it.

If I were reading this kind of article, I'd want practical advice. How do I turn my sales around? How do I get more income into the company? Where can I cut costs? What options do I have for negotiating with my creditors? Who can help me do that? The article answers none of those questions.

There is definitely quite a bit of advice like that across all the threads this article brought together, including some of your own advice.

 

[The Byre]

Thinking of fluffy bunny's while singing "Don't worry, be happy" isn't going to change anything.

True - but it did make me laugh!

We have had no meaningful turnover in our UK business for two years. Almost nothing - and in my industry (film) the lockdown here and elsewhere we all suffered the same fate.

But the funny thing is that we nearly all survived because the business is used to disasters. Usually, that was always a single project that might go bust or maybe more than one - and this time it happened right across the board. But each company and each person was ready for lean times. It is an industry where revenues are extremely lumpy - large sums one year and nothing for a couple of years after that.

And that got me thinking - if the film industry can go "Yer, whatever!" after a total year of no income and carry on as normal, what is the difference?

The answer is structure. Most companies are not structured to take a hit like that. They rely on steady revenue streams - and those days seem to be over. And all that means having more than one revenue stream and in very different types of markets.

That can be as simple as a crew member who has a wife who is a doctor, to a successful actor with a string of buy-2-lets. It also means sensitivity analysis - the old "What if?" game. What if there is a recession? What if the building burns down? What if our two key suppliers fail? What if Whoopee Cushions are made illegal?

It also means having to cut down radically on fixed costs.

 

[japancool]

I didn't see any fluffy bunnies, but what I did see is reference to treating the collapse of a business as a learning experience to improve from. If your business is collapsing then it's collapsing, it happens, from my own experience I've been through it. The mindset comes into it as about how you approach that collapse, and when you read the referenced content where the forum members have spoken about this it talks about having the mindset to not treat it as "failure" but take time out, see what could be changed and learned from, and go again.

I understand that, but think of it in the context of someone reading that article.

You'll have a lot of inexperienced business owners on here, who will be searching for articles about what to do when your business fails. You and I, and many people on the forum, know that you learn from your mistakes and you take these experiences into your next venture.

But when you're sitting there staring ruin in the face, not knowing where to turn, telling someone to take it as a learning experience can seem blasé. That's something to reflect on in the aftermath, after you've dealt with creditors and staff and so on, not at the point where you're probably reading the article.

 

[ChrisGoodfellow]

Thanks for the feedback everyone. It's been great to be able to build on what we have based on your advice. As @Ozzy points out, it's important to note the context: we're not going to be able to answer everything, but we do want to produce something that's really robust.

To follow-up on a few more specific points.

I've removed the why do businesses fail section.

I've added a section on calling in the administrators. Can you sense check it for me @Lisa Thomas ?

Positive mindset doesn't help, it is fluff, it doesn't change the reality. Perseverance and resilience are like having a shield in front of you being shot blast by problems. Fine in the short term but overtime they wear thin and fail.

I'm sorry to hear what you've been through. Hopefully, some of the members can weigh in with advice that's specific to your situation.

As @MBE2017 points out mindset is important in certain situations. I know from my own experience that changing the way I dealt with the highs and lows of running a business made a big difference. But it's not for every one or every situation.

not sure that's what he meant. Of course mindest plays a part but even with the most positive mindset there are some businesses that just can't be saved. This is where the article from @ChrisGoodfellow fails.

I really don't understand this comment. There's a whole section on What happens when you've done everything you can? that digs into when it makes sense to throw in the towel and includes advice and context. We're not going to write an entire article that says why you should give up!

If I were reading this kind of article, I'd want practical advice. How do I turn my sales around? How do I get more income into the company? Where can I cut costs? What options do I have for negotiating with my creditors? Who can help me do that? The article answers none of those questions.

There's lots of advice in there and links to useful resources that can help. This is about providing context and sign posting.

 

[ChrisGoodfellow]

Opps. Just clicked save on the new version and got a CMS error. The changes described above will be made shortly!

 

[Ozzy]

But when you're sitting there staring ruin in the face, not knowing where to turn, telling someone to take it as a learning experience can seem blasé.

When you look through the threads on here and the threads the article linked to, do you see many cold hard truths being given as answers to questions?

When someone is staring ruin in the face as much of the content there says, try a few things but if you have already or they don't work then get out. It may be hard to do but do it, minimise your losses as best you can, and learn from it.

 

[fisicx]

@ChrisGoodfellow - I didn’t see that. Probably because the article wandered all over the place and lacked the checklist people needing help are looking for. As I said before many of the links were of little value and detracted from the readability. There was way too much prose and not enough solid advice.

Just read the article again and now see the paragraph about giving up the business. Like many people I skim read, I scanned the article looking for the headings to see if they added value.

One of my jobs is writing technical manuals. A how to guide usually has a defined structure with contents list and key points highlighted. The article here should be a solid cornerstone for businesses with clear guidance. It waffles too much.

 

[japancool]

When someone is staring ruin in the face as much of the content there says, try a few things but if you have already or they don't work then get out. It may be hard to do but do it, minimise your losses as best you can, and learn from it.

I think you're missing my point. Signposting is great, but, as I'm sure you're aware, all the different opinions and advice that are posted in threads can be confusing. I think you need to distill it, make it clear to someone who probably isn't thinking straight - I know I certainly wasn't, when I was in that position.

Just my 2p.

 

[ChrisGoodfellow]

I didn’t see that. Probably because the article wandered all over the place and lacked the checklist people needing help are looking for. As I said before many of the links were of little value and detracted from the readability. There was way too much prose and not enough solid advice.

@fisicx I do struggle with this. That section is literally the second heading and it's clear as day. If you're going to engage in a discussion about an article, particularly if you're going to be negative, please take the time to read it first.

 

[Lisa Thomas]

Thanks for the feedback everyone. It's been great to be able to build on what we have based on your advice. As @Ozzy points out, it's important to note the context: we're not going to be able to answer everything, but we do want to produce something that's really robust.

To follow-up on a few more specific points.

I've removed the why do businesses fail section.

I've added a section on calling in the administrators. Can you sense check it for me @Lisa Thomas ?



I'm sorry to hear what you've been through. Hopefully, some of the members can weigh in with advice that's specific to your situation.

As @MBE2017 points out mindset is important in certain situations. I know from my own experience that changing the way I dealt with the highs and lows of running a business made a big difference. But it's not for every one or every situation.



I really don't understand this comment. There's a whole section on What happens when you've done everything you can? that digs into when it makes sense to throw in the towel and includes advice and context. We're not going to write an entire article that says why you should give up!



There's lots of advice in there and links to useful resources that can help. This is about providing context and sign posting.

I can't see that section has been added?

Also I'm not sure whether you should use the heading 'calling in the Administrators' unless you are also going to discuss liquidators?

 

[fisicx]

@fisicx I do struggle with this. That section is literally the second heading and it's clear as day. If you're going to engage in a discussion about an article, particularly if you're going to be negative, please take the time to read it first.

I did read it but it it then suggested there was no need to accept failure. That may not be what you meant but that’s how I read it.

I’ve read the whole thing about three times fully since the initial overview and each time it feels more waffly. I can understand why some point need explanation but there doesn’t seem to be a clear plan of action.

How do you know if it’s time to give up and if there is a chance of survival? If I’m stressed out over my financial security I want to see a proven checklist of things to do.

Maybe you need to give some examples of businesses that got themselves back on track after applying a mindset change or the other suggestions you make.

Apologies if I came across so negative but an article like this is really important and will be the sort of thing many will be looking for in the next year or two. As @japancool suggested, the key points from the forum discussions need to be extracted and then ordered. And then backed up with referrals and links to further details. If a mindset change is key then point to further advice on how to do this. Not a forum thread but advice from someone who has done just this and seen the changes to their business.

 

[Mark T Jones]

The main takeaway from the comments on this tread is that people will read things differently.

Personally I think the article is a decent overview - and potentially a prelude to a series of more specific articles.

The mindset thing is incredibly relevant. This was abundantly clear from my clients - mostly in hospitality - during lockdown. From those who laid down and died at the first hurdle, through those who tried various innovative ways to keep their heads above water to those who actually turned it to their advantage. Nothing to do with fluffy bunnies, everything to do with clarity & focus.

 

[fisicx]

Personally I think the article is a decent overview - and potentially a prelude to a series of more specific articles.

That’s the point I was trying to make. Move the detail into further articles. Keep the top level article simple and easy to read. Don’t refer to threads as most of them are divisive or go rapidly off topic. A set of properly curated articles and case studies would be a fantastic resource.

 

[ChrisGoodfellow]

The main takeaway from the comments on this tread is that people will read things differently.

Personally I think the article is a decent overview - and potentially a prelude to a series of more specific articles.

Thanks, it's appreciated!

 

[fisicx]

Thinking more on this over dinner and the question to be asked is: who is the article written for?

• Is it someone like me who is interested in your thoughts?
• is it a someone whose business isn't failing but it looking to do some future proofing?
• Is it a someone whose business that is struggling and need some ideas as to what to do
• Or is it a business that is on the brink of collapse and doesn't know what to do.

The way you write the article will be different for each. You can't write it for all potential readers.

 

[The Byre]

When someone is facing business failure, they are either despondent or as busy as a one-legged man in a butt-kicking contest. Either way, they do not want to wade through long copy, esp. if it is of the "There are many kinds of butterflies!" variety.

Yes, when selling certain types of goods/services, long copy sells - no doubt about it. But it has to be information rich. So I get what @fisicx is saying here. Every sentence should contain information that is of help to the reader.

For example - the first four sentences are redundant and repeat what is already in the title. @fisicx's idea of a short bullet-pointed article that points to other more fulsome articles that have been written by experts in that specific field.

So as stated by @Mark T Jones, it is a good overview but if I was still editing copy written by journalists, I would precis the whole thing right down and point folks at quality articles written by experts in that field.

 

[Talay]

True - but it did make me laugh!

We have had no meaningful turnover in our UK business for two years. Almost nothing - and in my industry (film) the lockdown here and elsewhere we all suffered the same fate.

But the funny thing is that we nearly all survived because the business is used to disasters. Usually, that was always a single project that might go bust or maybe more than one - and this time it happened right across the board. But each company and each person was ready for lean times. It is an industry where revenues are extremely lumpy - large sums one year and nothing for a couple of years after that.

And that got me thinking - if the film industry can go "Yer, whatever!" after a total year of no income and carry on as normal, what is the difference?

The answer is structure. Most companies are not structured to take a hit like that. They rely on steady revenue streams - and those days seem to be over. And all that means having more than one revenue stream and in very different types of markets.

That can be as simple as a crew member who has a wife who is a doctor, to a successful actor with a string of buy-2-lets. It also means sensitivity analysis - the old "What if?" game. What if there is a recession? What if the building burns down? What if our two key suppliers fail? What if Whoopee Cushions are made illegal?

It also means having to cut down radically on fixed costs.

I think there is a huge necessity for businesses (in reality the business owners) to perhaps limit growth through reinvestment and diversify into income producing assets and to do so far earlier in their business lives than they might otherwise do. I have mostly given up acquisitive expansion and am using income and until recently fixed rate (sub 2.5%) debt to facilitate this.

My industry cannot live with zero income but I do take your point about reducing fixed costs as much as possible and we are sweating our real estate more than ever before and will push even harder as we reduce the number of buildings we operate from.

We are investing in additional income streams away from our main business but leveraging the same assets.

I even have an idea to operate 16-24 hours a day and share facilities with someone as we couldn't do that solely on our own as we'd have to grow 100%+ but that idea is likely dead in the water before it starts though it makes huge common sense to go from 1 shift of roughly 8-4 to 2 shifts of 6-2 and 2-10.

 

[BusinessHelp]

Times are hard for many businesses at the moment. I love the point you made about it not being about failure. Sometimes even a viable business can struggle due to external pressures like we're facing right now.

Sometimes it's easier to close the doors and call it a day. Alternatively, you can restructure your business and walk away from the debts.

We can give you expert business advice and have over 60 years of experience in restructuring and closing businesses. We'll help you to find the best solution for you and your business.

www.businesshelpline.uk

 

[japancool]

I've noticed that most of the people who post on UKBF about this are at the stage where they decided that they need to close their business and walk away. So really, it's a question of "What to do when my business has failed", and most of the advice on UKBF tends to be geared towards that.

It would be good to see a series of articles about how to turn failing businesses around.

 

[Paul Kelly ICHYB]

Mindset can affect people, but it needs to be balanced. Being a realist is the most important thing.

A sign of a goof business person is knowing when to give up, rather than pouring money into failure.

Currently customers are not spending money,

They are, but not the ones you are marketing to!

Westfield was packed yesterday. Restaurants are still busy. May be different in your area, but not everywhere.