How to Turn around a Business

A small business lost many clients in 2008 after the market crashed because the crash affected the firm's clients. This is beginning of the inspiring story of how a coaching firm makes a comeback in Rallying the Team for a Recovery.

For eight years, the firm saw growth every year and lost revenue totaling more than $600,000 for the first time in 2008. The money losses didn't stop there. The company had $100,000 less cash than originally believed when it found bookkeeping errors.

To stop the bleeding, owner Suzanne Bates cut salaries by 10 to 15 percent. She also snipped the marketing budget and dropped perks like free coffee. Bates stopped lease payments by negotiating with the property own who agreed that she'd pay the owed amounts later plus interest. These changes are enough to bring down the happiest employee. Bates avoided this by empowering employees to come up with solutions and to identify what did and didn't work.

The company used social media by setting up a Twitter account and creating a Facebook page revolving around sharing their knowledge. In looking for solutions, employees discovered several needs and filled them. The result: the company surpassed the $1.8 million in revenues it earned prior to the market crash in 2008. As of the story's publication, the firm expected to earn $3 million this year.

A business seeing revenues drop needs to make extreme changes to turn things around or else go out of business. Not all is dire. After all, look at how Bates' company found a way to grow the business again.

The follow lists actions to take to rescue a business:

• Include employees in finding solutions.
• Cut salaries - temporarily.
• Cut expenses.
• Look in your own business for potential cash flow.
• Explore other products and services to offer.
• Negotiate leases and contracts.
• Partner with another business.
• Outsourcing processes that aren't core to your business.

Bates' situation shows you can overcome shrinking revenues and do it without laying off employees. They see a cut in pay as a better alternative than no pay. When you do some of these things, you'll find more cash and maybe a whole new type of client. Empower employees -- that's most critical to make this work.

FYI: You can visit Enterpreneur.com for more inspiring comeback stories like this one as it's part of a new series called Small-Business Comebacks.

What other actions can businesses take to recover?