Clarify the Problem
Before you can identify a solution, it’s important first to clarify the problem. Why is your business struggling in the first place? If you don’t have clarity on the specific challenge you’re facing, you won’t know what steps to take to save your business. Take some time to think about how you got to where you currently are.
What happened that you didn’t anticipate?
What things went wrong?
Some common problems businesses face are:
1. Market changes. Economic factors, new technology, emerging competition, and many other things can cause the market to change. Survival requires the ability to adapt to changes as they happen.
2. Failure to understand the target customer or market. If people aren’t interested in your product or service, there’s a good chance you don’t understand your customers or market. Dig deep to understand what people truly want and what motivates them to buy.
3. Poor pricing strategy. If your prices don’t match the customer demand, you won’t sell much. It’s crucial to understand what customers are willing to pay, as well as where your product sits in relation to your competitors.
4. Insufficient funds. Not having enough money on hand will quickly tank your business. You must pay close attention to cash flow, financing, sales, and more.
5. Too much growth. Growth is a good thing, except when there’s too much of it. If your business grows too fast, you might not be able to keep up with demand.
Identifying fundamental problems within your business can be a painful exercise. No one likes to be reminded of ways they’ve failed. But if you want your business to thrive during challenging times, you must be able to put your finger on the primary problems.
If you’re feeling sick and go to the doctor, what’s the first thing they try to do? Determine what is causing the illness. Only then can the doctor prescribe the proper treatment. If the doctor has you start taking random medications hoping that one will work, you won’t get any better.
The same principle is true in business. You must identify the cause of the problems before you can determine the proper solution. The sooner you identify the issues, the better.
As Jim Collins wrote in Too Mighty To Fall:
I’ve come to see an institutional decline like a staged disease: harder to detect but easier to cure in the early stages, easier to detect but harder to heal in the later stages. An institution can look strong on the outside but already be sick on the inside…