How to Get UN-Stuck

By Doug Zeisel and Gary McDaniel, TCV Growth Partners-

Starting and running a business is exciting and fun, until it isn’t. All too often businesses get into a rut that they can’t seem to escape.  The first step to getting back on the path to growth is recognizing why the business got stuck in the first place.  Here are some of the signs of business decline:

• Loss of customers

• Increasing customer complaints

• Rising operating costs

• Growing debt and cash flow difficulties

• Reduced employee productivity

• Loss of market share

Any of the above may result in falling sales and decreasing profits. Not fun! If your business is experiencing stagnation or decline, then a close look at the various factors that cause this must be examined.

Management & Leadership

As Gary McDaniel says in his article – Management Teams Matter, management issues can often lead to decline. These can include:

• Ineffective leadership and decision-making

• Lack of clear goals and business strategies

• Poor communication between managers and employees

• Failure to identify and solve problems early

• Low employee morale and motivation leading to high staff turnover

• Lack of training and essential skills

• Poor workplace culture and internal conflicts

The problem is that no one wants to admit that they are part of the problem; it takes outside objective assessment to recognize these problems and help leadership to internalize them. TCV can help!

Financial Leadership

Without proper financial leadership, companies may not recognize money problems until they are in crisis. Good financial leadership will help the founder/CEO overcome these issues before they become irreversible.  Poor cash flow management leads to vendors not being paid, contracts being lost, and supply interruptions.  Other problems include excessive debt, high interest payments, overspending, insufficient capital to support business operations, and declining profit margins.

Budgeting, forecasting, financial reporting, and cash flow analysis are not things that companies do because they have to.  They are essential to success.  Management needs to understand and pay attention to their financials so that they can react proactively to changes in the company’s financial position before it is too late. TCV’s Financial Leadership Partners become the CEO’s “wingman” giving them the insights needed to avoid getting stuck.

Increased Competition

Competition can be fierce in many markets and it is not easy to keep ahead of the pack. This is especially true for companies that have grown so large that operations have become costly to maintain.  Smaller, lean and mean competitors with lower overhead offering the same products at lower prices emerge. It is critical to regularly assess the competitive landscape to understand the challenges facing your company and react to meet those challenges. 

Specifically, it is important to differentiate your business from your competitors. 

Customers buy from a business because they see value in the product or service. Customer satisfaction needs to be monitored on a regular basis to ensure that a business is maintaining the perceived value provided. 

Poor Marketing Strategies

Poor marketing strategy usually results from a misunderstanding of a company’s value proposition which in turn results in poor positioning against the competition.  Poor positioning is a death knell and wastes time and money.  Ineffective advertising and promotion, continual searching for the correct target audience, weak brand awareness, and incorrect digital marketing programs are all problematic.  It’s all about marketing basics – define the target market, create a viable value proposition, and position your company for success!  TCV’s marketing experts can help companies assess their marketing fundamentals to ensure a strong marketing strategy.

Poor Customer Service

Customer service is all about delivering on the promise made in the marketing campaign and by the sales team.  Do you have any unresolved customer complaints?  Are there long waiting times or delayed deliveries?  Is your company receiving negative reviews that can damage the company's reputation?  Are there charge backs or contract payments not received?   

Any of these problems can result from dated operations – systems that worked until sales doubled and bottlenecks developed in the chain of operations.  Other possible issues include poor leadership and communication as well as an undefined corporate mission.  All employees must be pulling on the oars in the same direction.

Failure to Innovate

Doing the same things over and over again and expecting a different outcome is a road to doom.  In today’s rapidly changing business environment either innovate or fall behind.  Companies should continuously be updating technology or equipment to operate more efficiently, developing new products and services to meet ever-changing market challenges, and using technology to keep track of industry trends.  Innovation and adaptation are essential for business growth and survival. 

External Factors

Companies, of course, do not operate in a vacuum.  We live in a dynamic world.  Company leadership needs to be aware of their environment and to respond to changes in that environment accordingly.

• Changes in government policies and regulations

• Political instability

• Natural disasters and supply chain disruptions

• Technological changes that affect the industry

• Inflation and rising operating costs, including transportation and labor

• Interest rates

• Tariffs

• Economic recessions

  
  

External challenges can often be the most difficult to manage because they are beyond our control.  The senior management team must stay aware of these changes and move to manage accordingly.  Cutting costs, improving operating efficiency, and raising prices are just a few of the options available to cope with such challenges.

Final Thoughts

Business decline is often caused by a combination of poor management, financial difficulties, increased competition, changing customer needs, and external economic pressures.

Identifying these causes early can help a business take corrective action, improve performance, and avoid failure.  The problem for many companies is that senior leadership is often not able to objectively assess the situation and may not have the expertise to recognize specific problems.  That’s why TCV Growth Partners exists – our team of experts, who have successfully run companies, can objectively assess all business functions and work with management to craft a recovery plan.  Contact doug@tcv-growth.partners for a free consultation.