Running a business in Australia is more difficult than ever—in 2023, ABC revealed that business failure rates have reached a 15-year high (15% of Australian businesses failed in 12 months). Many SMEs now struggle to succeed in fiercely competitive modern markets. When at risk of failure and in need of insolvency assistance or other support, how can you save your business?
At Corporate Lifeline, we’re ideally positioned with our industry experience to assist you. Since 2020 we’ve helped hundreds of businesses overcome their struggles and you can join them on the road to recovery. Read our guide to address your problems fast or call us for quick support.
Reasons Why Businesses Are Failing
The right combination of strategies can reverse your financial distress, but the first step is to get to the root cause of the problem. Common causes of business failure include:
- Not understanding your market
- Poor financial management
- Lack of market need
- Not having a clear strategy
- Not hiring the right talent
- Not anticipating market changes
- Falling behind competitors
- World events (such as a recession)
When facing the stark reality of potential business failure, instead of panicking it is best to remain calm and address your situation. With these following steps, you may be able to get your company back on track.
1.
How to Save Your Business: Seek Expert Advice
How to save your business from failing can begin here. Company directors such as yourself can speak to bankruptcy and insolvency experts. Expert advisory assistance can cover topics such as:
- Funding solutions
- Performance improvements
- Forensic accounting assessments
- Voluntary administration
- Safe Harbour
The above are strategies you may consider suitable to avoid business failure. For example, voluntary administration involves striking an agreement with your creditors and appointing an independent administrator. This individual evaluates your circumstances and finds a solution. This can be a way to get goals back on track.
Alternatively, safe harbour provisions may protect directors from personal liability with company debts. This process is designed to give you breathing space while you address internal problems.
2.
Evaluate Business Management
Being honest about your management skills is crucial when considering how to save a struggling business. Overcome any fears and begin by examining your documents. This includes:
- Financial records
- Inventory
- Business plan
- Business performance
- Written processes
- KPIs
- Sales targets
- Quarterly income
A business performance review can address the above. This can help you to identify problem areas, such as insufficient funding or excessive debt. You may also find management issues such as incorrect processes and goals. Weeding out problem areas can create a clear roadmap towards a healthier internal business structure.
3.
Cut Costs Where Possible
Business restructuring is one way to assist this process. It follows an evaluation period where you consider what has gone wrong with your business plan. Your goals and objectives may be lacking or you may need to adapt to new market trends. During this time, you’ll discover ways to save money. That can include automating processes with modern technology such as customer service chatbots.
It’s essential to stay in touch with creditors during any business restructures. Don’t make the common mistake of trying to resolve matters before contacting them. Instead, be upfront with your creditors and update them regularly about the situation.
4.
Secure a Business Loan
Many modern businesses require a loan from time to time to bolster financial security, cover debts, or make investments. You can apply for secured or unsecured loans that offer favourable interest rates and sums of money to cover your cash shortfalls.
However, consider reaching out for expert advisory feedback before committing to a loan, as you will need to pay it back (with interest) and you must be able to afford repayments. Otherwise, your situation may become worse.
To shore up your finances you may even wish to:
- Borrow from family members or close friends
- Withdraw from savings or investments
- Sell valuable assets (such as a vehicle)
- Consolidate your debts
5.
Make Marketing Investments
Once you have a plan to get your business back on track, addressing modern marketing tactics can help redress the balance of success. Even on a small budget, you can create content to draw in relevant customers. All at a cost-effective rate.
To kickstart a new lease of life, you can try common tactics such as social media campaigns or local advertising (newspapers, billboards, signs). Don’t underestimate the power of this advertising as it can be very powerful. You could combine your marketing with effective sales tactics such as discounts or loyalty points to bring in new customers.
How to Save a Struggling Small Business
Small business collapse is one of the most common in the modern corporate world. Smaller companies have to compete in a fiercely competitive environment.
Yet the good news is even a small business in trouble can address financial distress and fight to return to normal trading. Follow these steps:
- Perform a SWOT analysis: Why is your business struggling? This analysis helps you identify strategic strengths, weaknesses, opportunities, and threats (SWOT). It’s a simple, cheap, and effective way to discover where you’ve gone wrong.
- Understand your target market: Performing new market research can help you understand how to make a stronger sales pitch. You can then realign your business strategies with a more effective approach.
- Reduce costs: Consider how to reduce your budget, which may mean downsizing from your current office or even going fully remote. To assist with your finances, you also wish to apply for a loan.
- Remove expensive and repetitive tasks: Implement new money-saving technology to automate tasks, such as HR technology or AI tools like chatbots. These can help take the pressure off your schedule while also helping match customer demand.
During these processes, small business owners have difficult decisions to make. There’s no denying that. Ultimately, your best course of action is to challenge your struggles head-on.
This can begin with effective small business restructuring. The sooner you seek expert advice, evaluate, and act, the better chance you have of saving your company.
Prevent Business Failure With Corporate Lifeline
Remember, you’re not alone in your struggles. Thousands of companies like yours face financial distress annually and we’re ideally positioned to help you out of your struggles. We are one of Australia’s leading advisory firms, offering specialist advice on restructuring, turnaround, and insolvency. We will help you find a solution.
Expert help is only ever a phone call away. With a judgment-free assessment and a sympathetic ear available to guide you out of your struggles, call Corporate Lifeline for a free consultation. We’re here to help.
How Many Businesses Fail?
Statistics show that 60% of Australian businesses will fail within their first three years. 20% will also fail within their first year. While alarming, this data highlights the extreme importance of entering an industry with a clear plan.
Additionally, if you have hit troubles, the best course of action is to act as quickly as possible. Address the matter, such as by reaching out for third-party assistance, to get your business back on track.
Why Do Businesses Fail?
Common reasons for this include poor financial management and inadequate planning. Other issues include:
- Insufficient leadership.
- Inadequate market research.
- Losing ground to competitors.
- Failure to meet customer expectations.
However, bad luck is also another major component often overlooked. Sometimes economic timing can go against businesses, such as with the COVID-19 pandemic in 2020 or a recession.
Setting yourself up to succeed is the ideal way to begin trading, but it is a difficult undertaking. It requires meticulous planning ahead of starting a business, as well as finding a unique gap in the market or product/service to stand out from competitors.
How Do You Run a Successful Business?
To promote the best chance of long-term success you should aim to:
- Create a strong business plan
- Hire talented employees
- Adapt quickly to an ever-changing market
- Maintain exceptional organisation
- Use effective marketing strategies
- Go above and beyond customer expectations
- Understand key competitors
- Track business performance
While staying sharp and analysing data is essential for business stability, there’s never a guarantee that your best efforts will lead to success. What’s crucial to remember is to address problem areas as soon as possible.
