According to an Industry Canada study, the main reason small businesses fail is inexperienced management. About half of all businesses fail within their first five years. Fortunately, many of these failures are preventable. Here are some things that Calgary small business owners can do to turn a business around and save it from closure.

Finding the Problem

Find out why your business is failing. A good Calgary accounting firm (like Padgett Business Solutions, of course) can provide an impartial perspective for small business owners who could be too close to the situation to understand what went wrong. They can also save you time so that you can focus on helping your customers.

 

Make sure that your pricing is competitive with similar businesses in your industry. If sales have declined, look for ways to increase them again, like updating products, advertising, or discounting some items. To make your Calgary business the most successful, market the most profitable products and not necessarily the most expensive or the best-selling.

 Conduct a survey or ask for testimonials from customers to find out if products or customer service needs improvement. Small businesses fail because they try to expand into too many different areas too quickly. When in doubt, go back to the business’s original mission and values.

Budgeting

Calgary business owners should be able to pay for employee salaries and operating costs like rent and power with income from their businesses. They also need some profit to pay for personal expenses. People without enough money to pay for expenses may be able to get a loan. However, this is a just temporary solution. It could leave an owner in debt if the business is not successful.

To reduce operating expenses, make a monthly budget and stick to it. Again, a good Calgary accounting company can help. They can help you with costing so you can:

  • Reduce the amount of inventory ordered at one time to reduce the cost of holding that inventory.
  • Renegotiate costs or contracts with vendors. Many may be willing to give discounts to loyal customers.
  • Even small cutbacks like buying cheaper pens for the office can make a difference.

Layoffs

Sometimes small cuts are not enough and layoffs are needed. However, getting rid of too many people will destroy morale and force the remaining staff to take on more tasks than they can reasonably handle.  Top Calgary accountants will be able to give you more information about how many cuts are needed.

Maybe you can look at a shorter work week or fewer hours to retain as many people as possible. That way, the company can save money on severance pay and avoid having to recruit less experienced people when it’s doing well again. Cutting back on staff could also hurt future business opportunities. Prospective customers could lose confidence in a company if they hear about major staff cuts. Make sure to set up clear, nondiscriminatory criteria for choosing who to let go and whose hours to cut.

Expanding to New Markets

Use your website to reach customers all over the world instead of in just in the Calgary area. This is much less expensive than opening a new location. Increase revenue by always looking for new ways to sell more products and reach more customers. For example, a restaurant could easily start catering weddings and other events. Use your Calgary accountant to check and see if expanding to a new market would be profitable.

It’s never easy to watch a business falter. Losing just one or two major clients could cause a company to struggle. To manage a company on the brink of failure, people need strong management skills and creative thinking, as well as perseverance and a little luck. A good leader can keep workers’ confidence even if layoffs are necessary. Someone who turns a flagging business around and helps it grow will get noticed in the business world.