There are no shortage of reasons why businesses fail: maybe they can’t scale, can’t achieve profitability, or can’t weather industry disruption at the hands of more nimble competitors. Entrepreneurs often find themselves in a do-or-die position that, unfortunately, calls for drastic turnaround measures or at least a significant pivot.
In these situations, the silver lining is that you’re not starting from scratch, and that’s a good thing. Chances are, you already have an established infrastructure, as well as first-hand knowledge of the market, some customers and cash flow. These are assets that can be repositioned and repurposed for the next step in your company’s journey.
Failure isn’t the kiss-of-death; it’s a lesson. Some might even say it’s a rite of passage.
The most successful entrepreneurs don’t burn time on could-haves and should-haves. Instead, they spin their failures into more profitable and meaningful directions by honing in on how they can best leverage their business’s existing resources.
In fact, as long as you stay forward-focused, failure can become your roadmap to success.
Explore Assets and Liabilities
The explanation for why your business is failing should become your foundation to assess its strengths and weaknesses in a new light. As you scan through your business for opportunities, gather as much data as possible. Speak to customers, industry experts and partners. Perform a competitive analysis and try to apply any lessons you can learn from competitors as well as successful companies in different industries. Speak with employees at all levels of your organization to solicit feedback on what’s working and what’s not so that these insights can be applied to your strategic plan.
Devise a Turnaround Strategy
Come up with a strategy that allows you to attack your biggest challenges first, enabling you to ultimately reposition your company and find its most appropriate target audience. Dell had one of the best turnaround strategies in recent years: In 2006, the company suffered losses when it announced cost-cutting by selling its products directly, but in 2007 they withdrew the direct selling strategy and instead began selling via retail outlets to become the second largest computer retailer.
Embrace the ideas that support your overall strategy, and ensure that you receive feedback and support from employees, investors and customers so that the change is warranted, understood and championed by all.
Regardless of the nature of your business, innovation is essential to distinguish you from competitors and position your company for the future. Any successful turnaround or pivot must involve adapting to fit the emerging needs of customers and evolving industry trends. Innovation allows you to get ahead of marketplace changes, ensuring your relevancy and long-term viability. Netflix was able to do this by using automation throughout their streaming services to match consumer preferences while also staying at the forefront of original film and TV programming.
Innovation extends beyond product and service creation, as well. It can and should take place at every level and within every department of your organization. Challenge your employees to look for ways to do their jobs better with existing resources and stay open to suggestions that help you operate more efficiently. Be sure to also apply an innovative mindset to your business model, examining it critically to ensure that it’s as lucrative as possible.
A great strategy won’t do any good without the right team in place to execute it. Let go of resources that aren’t supportive of your plan and hire ones that can help you get where you need to go. Likewise, be sure to work hard to retain the top-notch talent, especially those employees that helped you originally shape the vision for the company. They’re at the company’s core, and if you can demonstrate that they’ve bought into your turnaround plan, that will add to your credibility and convince others to trust the new direction, as well. Recruitment expert Jeff Hyman stresses the importance of hiring people who share the company’s DNA, the employees who share values and a connection to your company’s goals. Doing that will help you maintain a functional culture that breeds cooperation and high performance when you need it most.
Track and Communicate Achievements
Change is scary, and a company in turnaround mode risks losing valuable resources if its leaders aren’t transparent. Regular communication builds confidence among employees that the company is built-to-last and their jobs are secure. Buffer, for instance, offers a public spreadsheet that reveals the salaries of its employees throughout the organization and the formula it uses to come up with employee salaries. Even the CEO reveals how much he makes.
That level of transparency isn’t right for every company, but the principle holds true across the board -- you not only need to generate enthusiasm for the turnaround plan itself, you need to regularly communicate the steps and achievements that are taking the company where it needs to go.
Every company has its fair share of setbacks and what differentiates the winners from the losers isn’t where and why they went wrong, but how they managed to successfully change course. Turnarounds and pivots are hard work, but with the right mindset, strategy and team in place to carry out the work, they are possible for any business.