Many things can change the market your business operates in, from new competitors and innovations to a general slowdown in the economy. If your business is in trouble, you could benefit from fresh information on your market, customers and potential customers. You might discover your sector has changed and that your lack of response has contributed to your problems.
There are a number of places where you can get information, some of which are free, including:
- government reports and statistics
- local Trade Associations
- Chambers of Commerce
- local authorities
- commercial publishers of market reports
You could also do your own research, which will allow you to target the issues and markets you are most interested in. For more information, see market research and market reports.
Once you have some information about the way the market is moving, you can see whether your business could be made more competitive. If demand for your product or service is shrinking, you could consider diversifying into other areas where you have existing skills and technical expertise.
Customers and competition
An alternative strategy could be to exploit a currently underserved niche. Do your customers have any needs you could potentially fulfil? Is there anything you do particularly well that you could focus on?
Your customers are an extremely useful commodity. Take advantage of your existing relationships to see what they think of your business. You should also try to identify your most valuable customers and do more trade with them. Use the Pareto principle (often known as the 80/20 rule) - it suggests that around 80 per cent of your profit is gained from 20 per cent of your customers.
Changing your pricing strategy is another option. Raising prices will help your profit margin but total sales may fall, so re-emphasising the benefits of your product or service can offset the impact of a rise.
Cutting prices may seem counterintuitive but could encourage new sales. Be careful, however, not to let quality or service slip at the same time - see price your product or service.
One reason for your business having financial difficulty could be the entrant of new competitors into your market, or existing competitors expanding or doing something different. Find out as much as you can about what your competitors are doing and plan a response. Do not imitate them - they have already staked out that area of the marketplace - but select ideas that would work for your business and innovate.
For more information, see understand your competitors.