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Turning a declining business around involves making hard calls.

Businesses go into decline for a large number of reasons, often all happening at once. Usually, a business goes into decline due to factors that are outside of your control.

If you are in a position where your business is going downhill, you need to take an objective look at all aspects of your business to decide if it can be saved, if it is worth saving, and what you need to do next.

Sometimes there is nothing you can do that will repair this situation. In those cases you are best to look at selling your business, or closing down gracefully. The objective then is to close down as painlessly as you can.

Either way, you need to do a thorough assessment of your business to understand what your best options are and, sometimes, to convince others that there is something to save.

It is important to know that there is no cavalry. Nobody is going to arrive with government funding to fix the problems you have so you need to bite the bullet and do what needs to be done.

Make sure you are well informed about what your actual situation is and make decisions quickly. Delays tend to just make things worse.

While you are going through this process, look after yourself. Running a declining business is extremely tough so make sure you are getting help if you need it and are taking the time for some self care.

External factors that can cause your business to decline may include:

  • Declining sales
  • Increased prices of your inputs
  • Increasing wage costs
  • High legislative costs
  • New competition

Internal factors can include:

  • Wasteful systems
  • Low productivity
  • Ineffective staff
  • High level of debt servicing
  • Providing unprofitable goods or services
  • Providing substandard goods or services
  • Badly thought-out pricing and costing
  • Sub-par marketing
  • Bad customer service
  • Lack of understanding of your actual cash position

If you are experiencing any of these factors, bring in outside expertise. Have a talk with your business representative at the bank, talk with your accountant, bring in a business coach. It is worth the cost if it helps you to work out what you need to address to get your business back on track.

Unless you are able to work out where your business stands it will be increasingly difficult to find a solution. Make sure you have a really solid grasp on all of your incomings and outgoings on a regular basis (at least monthly) and use that to put together a realistic cashflow forecast. Your accountant can help you with that. It pays to listen to what they say, even if you don’t like what they are saying. A good cashflow forecast will help you understand the impact of saving money, raising prices or increasing activity.

You should have a good knowledge of:

• Your sales levels
• Margins
• Your assets and liabilities
• Your profit and loss
• Any forward work you have
• Staff liabilities
• Your personal assets and wealth


There are a number of tactics to try and reverse a decline in business, but all of them have one thing in common – you need to know your numbers. Sometimes the solutions can be counterintuitive. To make sure you are having the greatest impact we recommend bringing in an expert to help you identify solutions you should take and to work out what the optimum level of change is.

Some potential solutions are:

  • Raise your prices
  • Renegotiate prices with your suppliers, or possibly find new suppliers
  • Reduce your range of goods and services to the most profitable ones
  • Improve your marketing to bring in new customers
  • Invest in improved systems and processes to minimise unproductive work time
  • Let staff go – See Redundancy
  • Find ways to manage your waste stream better
  • Bring in savings or investment to get your business through a temporary lull
  • Sell your assets (and potentially lease what you need)
  • Talk with your landlord
  • Adjust your products or services and aim at a different target market
  • Carefully monitoring your cost of inputs so that you can raise your prices immediately if your costs rise.

Sometimes putting a solution in place costs money. This is where hard decisions need to be made. If you are able to source the money you need, will it actually fix the problem or will it just put you in further debt? No matter what solution you put in place, you need to be able to see that doing so will give you a clear path to profitability.

If none of the above solutions look likely to work, you may need to consider closing or selling your business, pausing your business or finding another income stream to survive (such as a part-time job).


How to close your business

If you do not have the money month-to-month to pay your bills then you are putting yourself in a very precarious position. Businesses are built on relationships and if you cannot pay your staff or suppliers you may lose the ability to operate. You could also be held personally liable if you are found to be trading while insolvent, with very serious penalties.

Some methods to retain cash are:

  • Selling assets (hiring assets may be an option)
  • Refinancing
  • Downsizing
  • Deferring purchases
  • Reducing stock
  • Reducing drawings
  • An overdraft (if used wisely)
  • Chasing your debtors and being willing to take action if needed
  • Reducing the lag between providing a service and getting payment
    • Deposits for service
    • Immediate payments
    • No more ’20th of the month’
  • Talking to IRD about deferring tax payments


Repaying Debts: What are Your Options?

If your business is declining it is very unlikely that anyone will be willing to lend you money or invest in your business unless you are able to show a very clear path to profitability. During a disaster situation the government will sometimes provide some emergency grants to businesses but there is no government funding to help with a lagging economy or businesses that are not performing as you want them to.

That said, there are methods to raise money but you need to be very sure that you are not just delaying the inevitable.

A list of methods to raise money is listed on our Funding and Investment page



Funding and Investment Sources

It can be very easy to forget your own wellbeing when you are trying to rescue a declining business. It is so very important that you take the time to look after yourself. You will not thank yourself if you push yourself to a breakdown.


Other ENC Business Resources

Starting a Business

A repository of guides, templates and information on how to start a business successfully.


How to get customers to know you exist and once they do, how to get them to spend with you.

Systems and Processes

Tools, resources and links that will help the back office part of your business hum.

Funding and Investment

Whether for startup, growth or reinvention, there are a large number of options for raising money.

Your Finances

Cashflow is the lifeblood of every business. Tools and strategies to help you manage your day to day finances.


Useful data sources for businesses in North Canterbury around population, industry and trends.

Growing Your Business

Learn how to successfully grow your business locally or through exporting.


It might take some up-front investment, but reducing your impact on the world is likely to save you money in the longer term as well as make your brand more attractive.

Farm Diversification

Assistance, studies, resources and potential paths to market for those looking to grow crops.

Social Enterprise

Starting a social enterprise is a noble goal. But what exactly is a social enterprise and how do you go about setting one up?

Exiting Your Business

Whether selling or walking away, there are a number of things you can do to maximise profit or minimise loss.

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