In business, it’s important to understand the difference between bad luck and bad judgement. Misfortune will often masquerade as a mistake, and has caused many talented people to walk away from their business ventures prematurely. I’m painfully aware of this reality.
One of my earliest memories as a child is of the bailiffs walking in and taking every last stick of furniture we had. I remember feeling such a powerful sense of injustice, despite not understanding what was happening at the time.
My father, who remains my biggest inspiration, had originally grown a very large central heating company, employing some 300 people at its peak. Unfortunately, things took a turn for the worse – which is when the bailiffs came knocking.
As the years went by, I often wondered if I could have helped him save the business, had I only been a bit older, wiser, and able to spot the warning signs. But my father was a savvy businessman; surely he’d have seen the storm clouds brewing?
I later found out that he’d actually been screwed over by a business partner. A betrayal of trust like that always comes as a massive shock, no matter how well you think you are prepared.
Despite the setbacks, despite the bad luck, my father was able to get into another business and provide a good living for us all. He’d lost everything, rebuilt from scratch, and still managed to provide for his family. His mantra was always, “One door closes and another one opens”. A born optimist, if ever there was one, he taught me the importance of values such as determination, ambition, and honesty.
Getting a startup past the first year is commonly regarded as the biggest challenge to any entrepreneur. Sometimes hitting a bump in the road is just that and the best approach is to weather the storm, keep calm and carry on. But how do you know if your business still has a future and how do you turn around the fortunes of your struggling enterprise? Here are some of my top tips:
How can you tell if your business still has a future?
If you are doubtful about the prospects of your own business, find out what your rivals are doing. Are they struggling too? What are they doing differently? You also need to regularly check the state of the investment climate, to see if the moneymen still have an appetite for your industry. If things are quiet then maybe it’s time to consider your options.
Gathering this intelligence can help you assess the overall health of the market you operate in, it may just be a case of making a few tweaks to your business to get yourself back on track. If your business can offer solutions for your customers which your competition cannot, it will put you head and shoulders above anyone else in your market.
How do you know if a business is salvageable or if it’s time to walk away?
The best business leaders all share a common trait, which both helps and hinders: blunt-faced stubbornness. It’s that single-minded outlook that prevents many entrepreneurs from walking away when the going gets tough.
However, no matter how obstinate you might be, I think it’s crucial to surround yourself with a circle of people that you trust, who can help inform your decisions. A bunch of “yes men” are no good to anybody – you need honest, brutal feedback to help you keep your business going in the right direction.
Before walking away altogether, you should consider what aspects of your business are still salvageable, as a company pivot might be better than pulling the plug altogether. The corporate world is full of companies that managed to reverse their fortunes by changing their product or purpose when they sensed their original path had run its course.
What are the warning signs that there’s no way back?
Your rivals might be dropping like flies, but is that down to your own success or is the market imploding? Your own staff will often provide you with the earliest warning signs.
If you’re not in a financial position to provide pay rises or improve their working conditions, you’ll notice your staff retention levels begin to drop. If you end up having to introduce redundancies, pay cuts and longer hours, your staff will sense a sinking ship.
Human resource is your biggest business asset – neglect it at your peril. An unhappy workforce will have a negative effect on your company’s prospects – and the feeling of impending doom is contagious. Losing your staff creates the most slippery of slopes, and one that’s practically impossible to recover from.
Finally, try to be prepared: have contingency plans, and make sure that when you are budgeting your first year, pre-empt some worst-case scenarios. Fundamentally, what will set a successful business apart from one that fails is not just the ability to spot the pitfalls, but also the courage to leap over them, march on, and make your own luck.
Hilary Devey CBE is founder, CEO and chairman of The Pall-EX Group, and small business champion for the Britain Stronger in Europe campaign. She was a keynote speaker at this year’s Business Show in London
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