4 Steps to Take if Your Small Business Is Struggling

Struggle is the price of success.

For most entrepreneurs, opening a business represents the fulfillment of a dream. Unfortunately, owning a business is a challenging endeavor and businesses do fail. If you're concerned about the trajectory of your business, it's not too late to turn things around. Here, we'll cover four common sense ways to get back on track.

Identifying the root issue(s)

Pinpointing when things began to go wrong is a great first step. Once you know where the root of the problem lies you have a clear target on which to focus. It's possible that there is not a single cause, but a number of them. That's okay.

This list highlights the most common reasons companies get into trouble. As you read through the list, make a note of any that might apply to your business.

• Insufficient cash flow is the leading cause of business failure. Simply put, this is when owners do not bring enough cash into their business account to cover ongoing expenses. The problem could be due to starting out with too little money, or could be due to overspending.
• The lack of a strong business plan is a huge problem for most struggling businesses. It's possible that you put a plan together and at the time, it seemed sufficient. Since then, experience has taught you that there was more you should have planned for.
• Poor pricing might be an issue. As you've undoubtedly learned by now, underpricing your goods and services leads to operating on a shoestring budget. Overpricing leads to losing customers to other, less expensive, businesses.
• Being overly optimistic can be a problem. It's natural to go into a new venture with our heads in the clouds, but if you overestimated how many customers you would serve the first year, how much money would pour into your business checking account, or how much it would cost to keep the business up and running, being overly optimistic may be at the root of the problem.
• An estimated 70% of businesses fail because entrepreneurs don't accept their weaknesses for what they are and rarely attempt to pivot.

If any of these issues feel uncomfortably close to home, that's a good thing. That means your problem can be addressed. Here's how to do that.

Turn things around

Your business did not get into trouble overnight, and it will take some time to get it back on track. Still, every step you take at this point may become a blessing in disguise. The lessons that stick with us in life are those learned when times were tough. This is your chance to reshape your company, to strengthen its foundation.

Based on the most common causes of business failures, let's look at actionable steps you can take today.

1. Manage insufficient cash flow

Until you can bring more money into your business through sales, your best move is to cut expenses in every possible way. That may mean getting by with less inventory for a while. If you currently have an employee, it may also mean letting them go until business picks back up. There are also practical steps you can take, like moving your business into your home (if it's not already based there). Cost cutting is never fun, but right now, it's an essential part of turning the tide on cash flow.

While you're looking for ways to save money, seek new sources of income. For example:

• If you're selling a product, offer it internationally.
• Develop partnerships with other businesses to promote each other's goods and services.
• If you have office space, sublet a portion of it.
• Stay active on social media and continue to get the word out about your business.
• Offer something "different" to bring new customers through the doors. For example, if you sell sporting goods, offer a free batting clinic.

2. Revisit your business plan

If you didn't create a business plan before opening your business, now is the time to do it. If you had a plan in place, now is the time to revisit it. Here are the five questions your plan should answer:

1. What am I selling? This is where you outline how you intend to make money.
2. Is there a market for what I'm selling? If you've opened a cafe in an area of two surrounded by other dining establishments, you have to determine whether there's enough business to go around.
3. How's my location? If you're running an online business, you don't have to worry about this one. Otherwise, it's time to ask yourself if you set up shop in the right area. Are you selling a service or product that locals can afford? One good way to check out area demographics for free is by visiting the U.S. Census Bureau's free demographic tool. Just type in a ZIP code, and you'll have access to average education, employment rate, income, ethnicity, and more.
4. Can my business be competitive? Even if you've done it before, check out the competition. Find businesses -- both brick and mortar and online -- selling the same products or services you sell. Find out if your prices are competitive, and if not, determine whether you can afford to change your prices.
5. Do I have a marketing strategy? Are you doing everything you can to advertise your enterprise?

3. Double-check pricing

We just mentioned the importance of remaining competitive. If your prices are higher than the competition, you have to know that you're likely to lose business to them. On the other hand, if you're underpricing your goods and services, it helps explain your cash flow issue.

4. Solicit opinions

Be prepared to work on your weaknesses. For example, if you've lost a customer, reach out and ask them what you might have done differently. It may feel awkward, but it's better to know what needs to change. Be open to feedback and use that feedback to tweak the way you're doing business.

Do not buy into the notion that trouble means the end of your business. Rather, know that it's an opportunity to rebuild and grow.