When your business is struggling, you need to stop doing what you’ve been doing that is not effective and start doing other things that you think might be. Everything feels hard, and you need to fix that.
Every business hits hard times. Maybe you have a cash crunch because you invested in growth but revenue hasn’t grown yet as a result. Maybe you lost a key client and that may necessitate layoffs. Or maybe you stepped on the gas too early on growth but you have a leaky bucket of a product.
The scenario isn’t important. What’s important is that your business is struggling, and you as the entrepreneur are responsible to fix it otherwise you might lose your business.
This may feel like the worst time to do it, but it is at this very point that you need to step back and figure out what is going wrong so that you can course correct.
This is what I do.
Look At Your Financials
First things first, you must know exactly where your business stands financially. You need to know:
- how much cash you have on hand,
- how much cash you are bringing in monthly, and
- how much cash you are spending every month.
In short, you need to know when your business is going to be out of money.
If you don’t have your financials in order, you can’t make the right decisions. In business, eventually everything ties back to the bottom line. If you aren’t tying things back to the bottom line, you’re building a hobby or a tool not a business.
Now you know the truth of the situation. It probably hurts. It’s probably scary.
You need to look hard at what you are spending on and figure out how to stay in business by first cutting non-mission-critical expenses. Sometimes this will be staff, which is terrible because that’s a person whose life will be affected. But this is business, and if you don’t do it your business will die and that’s not good for a lot of people.
Image via Buffer
Audit Your Efforts
Next, you need to audit everything you are doing. This includes business operation tasks, marketing, product development, sales, management, customer support, and whatever else.
Here’s an example (these are mine):
When I started working with my coach Andy, before we even had our first meeting he had me track my time in 30 minute increments for a full week. From that, we were able to see exactly what I was spending my time on by category.
We did this to help identify what I am really good at and should keep doing (and thus hire others to do other things), but if your business is struggling/failing then you need to do it to understand where your efforts are going that are not generating the needed revenue.
Watch Dan Martell’s video to learn more:
Tie Efforts To Analytics
Some non-revenue-generating tasks have to be done in order for a business to grow — you have to keep your books in order, you have to invest in retrospectives when something goes wrong, you have to send invoices (which, while not directly billable, is actually the highest direct revenue-generating task you can do, though the attribution is messy ;-)).
Other tasks you can directly tie to revenue. For example, paid acquisition marketing spend. You can look directly at what you spend monthly on AdWords, for example, and then tie that to your Google Analytics (you have that set up to track revenue, right? If not, check out Annie’s site) to see what your spend is getting you.
Other tasks are harder. For example, if you are investing hard into content marketing and expecting that to drive growth for you long term then you need to have a look at the traffic these efforts are driving for you (whether organic, social, or referral) and how/if that traffic then turns into revenue eventually. You’ll also need to know how much time is being spent on each piece/activity and map that effort to return on that investment. This also much be done over time as the ROI compounds exponentially, unlike PPC/other ads which are very transactional.
Point is, take the tasks you are doing and figure out which ones are high value and you should keep doing, which are low value and you should hire someone else to do, and which ones are not generating revenue (and are not business critical) that no one should be doing.
Now you have a list of tasks you’ve been doing that:
- You should keep doing
- You should stop doing completely
- You should hire someone else (who is cheaper than you) to do
You need to eliminate all of the tasks in #2. Stop doing them.
I do recommend keeping this list somewhere to check yourself against from time to time, but at the end of the day if a task is actually in #1 or #3 but has been lumped into #2 you’ll realize it and reintegrate it properly.
The goal of this step is to free up your time from non-valuable tasks so that you can find and have time for tasks that are going to move your business.
You’re going to cut out tasks that don’t matter and take up your time. You’re going to cut expenses.
First you have to get back to being able to pay your bills, or stop burning more cash than you’re making so that you’ll continue to be able to pay your bills, and then you can figure out how to make that revenue graph go up (while still not overly increasing your spend).
Hypothesize and Test New Strategies
Now comes the fun part for anyone who enjoys marketing and product strategy. You get to outline the new things you want to try (or always had in the back of your mind or on your Trello board but never seemed to get to) and then get down to trying them.
This is a huge topic for another post to do it justice most likely, and every business is different and thus what you need to change is different.
Maybe you’re invested in content marketing, but need to shift from 3x a week 500-word blog posts to twice a month epic 15,000 word guides.
Maybe you’re an ecommerce business and you need to move spend from AdWords to Facebook and bring in a retargeting strategy. (ps Credo can help you here).
What I do know is that you need to bring in people smarter than yourself to help you with this. Whether you hire a coach or simply find mentors that you’ve been connected with tangentially for years who can point you in better directions or help you generate ideas, you need to start being wise not smart and keep asking others for help when you need it.
Did this resonate with you? I’d love to hear your thoughts in the comments.