Your mindset is a fundamental part of overcoming business failure. Winston Churchill stressed this vital factor, saying, “To improve is to change; to be perfect is to change often.” One of the keys to dealing with failure in business is to learn from your mistakes and keep a healthy perspective by distinguishing ‘who you are’ from ‘what you do’.
For business owners looking to rebound after a failed business, learning how to increase cash flow is vital. For example, if you’re working in a reduced capacity, you can still get new customers, offset your expenses, and free up cash for your business by joining the Bartercard community.
Below, we explore seven steps you can take to deal with failure in business and ready yourself for any storms that may damage your enterprise. Read on to learn how to deal with failure in a healthy, meaningful, and productive way!
Seven Steps to Overcome Business Failure
1. Accept Failure & Don’t Stay in Emotional Limbo
Accept the failure and see it for what it is; something to learn from. Failure is a part of life. You’ll never get over your failure if you don’t view it as a path to success. Accepting it will help you move forward toward future business success.
2. Reflect and Learn to Separate Failure from Personal Identity
When your business fails, it’s easy to blame that 100% on yourself and end up conflating your business role with personal self-worth. However, personalising a business failure will make the situation a lot harder to handle. By taking your role less personally, you can make more objective decisions while maintaining a healthy sense of self.
How can you detach your personal identity from your work? Start by objectively asking yourself, ‘why did this fail?’ Create a list of the things that went wrong and take time to reflect on how you would do things differently next time. Chart a path toward success. For example, in future business endeavours, you should ensure frequent SWOT analyses of your business system are conducted. A SWOT (strength, weaknesses, opportunities, and threats) analysis examines the external and internal areas of your business to identify areas that need improvement. This can help you prepare and boost your organisation’s resilience.
3. Keep Customers at the Heart of Your Business
Customer loyalty is what makes or breaks a business. While gaining new clients is important, retaining them is even more vital. 80% of business revenue comes from 20% of your customers and according to recent studies, a mere 5% increase in customer retention can increase profitability by 75%.
For future business success, your strategies, marketing campaign planning, product development, and more, must prioritise customers. Ways to ensure your clients are front and centre of what you do include encouraging customer feedback and absorbing it (both the good and the ugly). Sharing customer case studies, reviews, and the like will also make them feel important and valued. This will encourage loyalty and increase retention in the long haul, especially during challenging times.
4. Manage Your Cash Flow
Maintaining consistent cash flow is vital to avoid your business drying up and crumbling. Money needs to consistently be coming in to pay for expenses. Prepare by forecasting your cash flow to see what expenses are coming in and going out. While this is only a prediction, this information can still give valuable insights to help you make informed business decisions around sales and expenditures (including cash transactions). Cash flow efficiency also affects invoice payments deposit payments, paying for bills, and customer follow-ups for late payments.
5. Create an Action Plan with SMART Goals
For future business success, write down your SMART goals, e.g., your goals should be:
- Specific: State exactly what you want to accomplish (within your control)
- Measurable: Break your goals into measurable steps
- Achievable: Set realistic goals that give you the time and resources you need
- Relevant: ensure your goals align with your business values
- Timely: Set deadlines and stick to them
To get your SMART goals rolling, think about what steps you need to take now, how long each step will take, and who can help you achieve this.
6. Gain Guidance from an Experienced Mentor
A mentor or business advisor has a treasure trove of information and guidance to help you through your business difficulties and help your business grow. Entrepreneurs can greatly benefit from the support, reassurance, and guidance of their mentors, who have likely been in similar situations during their time. They can share advice, give constructive feedback, and connect you with the right people.
7. Improve Your Business Liquidity
Business liquidity refers to a company’s ability to pay its bills when due without needing to sell assets, compromise operations, or incur additional costs. A business’ liquidity is generally a measure of how efficiently a business can settle its current liabilities (bill payments, short-term loans, taxes, accounts payable, etc.) with its current/short term assets (cash/cash equivalents, accounts receivable, marketable securities, inventory).
As a business owner, you can reduce the liquidity risk (the likelihood that the company can’t cover its short-term liabilities) by calculating and managing business liquidity.
Set Your Business Up for Success with Bartercard
For many entrepreneurs, an initial failure is just the first step of a long journey, one that can lead to a much higher success rate in the future. To begin down the road to recovery, you will need to recover financially to preserve your career momentum.
Pressing the reset button means changing things and starting over (as per Winston Churchill) and is a crucial step to overcoming a business failure; it allows you to make a fresh start.
Joining Bartercard is a way for businesses to gain an extra income stream to ensure resilience. Join the Bartercard community today to boost your income and create a better cash flow for your business.