Whether it’s cash flow issues, supply chain snags or market downturns, every small business owner experiences challenges from time to time — it’s an unavoidable part of being an entrepreneur. What matters most is how you respond. Being adaptable can help you learn from these hurdles and bounce back stronger than before. In that spirit, here are six tips for recovering from small business setbacks.
Evaluate where you are now
Begin by taking stock of what your business is experiencing right now. In other words, what is the setback and how is it affecting your business? For example, you might be struggling to:
- Generate enough cash to cover regular business expenses or surprise bills
- Keep up with regulatory requirements
- Recruit and retain quality employees
- Source inventory for your business
- Develop an effective marketing plan
- Build a loyal customer base
You’ll want to get as detailed as possible. The clearer you are about your current situation, the better able you’ll be to move forward.
Identify what caused the setback
You can’t move forward if you don’t know what caused the setback to begin with. The sooner you can get to the root of the problem — and understand what happened — the better. That includes getting granular and asking yourself the following questions:
- What events led up to the setback? Was it one main event, or multiple factors that created a “perfect storm” of sorts?
- Were these events foreseeable and part of your business operations plan? Or did they take you by surprise?
- Were other businesses affected?
The idea is to get crystal clear on what happened. It may be as simple as an unexpected tax bill that threw off your cash flow — or something more complex, like fundamentally misunderstanding your ideal customer’s needs. Whatever your setback, understanding what happened is essential to building your recovery plan.
Put out the biggest fires first
Some setbacks are larger than others. For instance, if you own a restaurant and fail to renew your food license, that could bring your entire business to a grinding halt. Assess the situation and pinpoint your top priorities.
For example, if you’re experiencing a sourcing issue and cannot fulfill customer orders, you’ll want to notify them immediately and let them know their options. They might be okay with a longer delivery time — or request a refund, which you’ll need to carry out as soon as possible. The goal is to begin addressing the setback while preventing long-term damage. You’ll still need to create a comprehensive recovery plan, but you’ll also want to deal with emergencies in the moment.
Develop a recovery plan
Once you’ve addressed any immediate concerns, it’s time to take the long view and come up with a detailed recovery plan. This will be shaped by the specific details that caused the setback, along with whatever effects you’re feeling in your business. Your aim is to put safeguards in place to get back to where you were before the setback — and prevent it from happening again.
This will be case-specific, but here are some core questions to get you started:
- What guardrails can you put in place to prevent this type of setback from occurring again? If you’re experiencing a cash shortage, for example, your recovery plan might involve building up a business emergency fund.
- Do you need to update your internal operations? For example, if your setback was an employee who behaved unprofessionally and made others feel uncomfortable, you might introduce periodic workplace harassment training.
- Would it be wise to expand your team? That might involve hiring an accountant, marketing coordinator or other professional to manage specific parts of your business.
- Is it time to modify your business plan? The answer might be yes if economic conditions or industry changes could impact your business again in the future.
Remember that setbacks are part of the journey
Whether you’re in startup mode or running an established small business, it’s wise to expect the unexpected — and remember that setbacks come with the territory when you’re an entrepreneur. While disruptive, they can also present a unique learning opportunity that ultimately makes you a better business owner. A business setback could:
- Reshape your business vision
- Lead to new offerings or services
- Open up your customer base
- Inspire you to create new protocols that strengthen your business
- Keep you on your toes and adaptable
- Make you a more resilient entrepreneur
Go easy on yourself and your team
As a small business owner, some things — like market downturns or unforeseen costs — are out of your control. But you can, however, control how you respond to setbacks. The best path forward is to take a strategic approach that makes room for learning and accountability.
Beating yourself up or being too harsh with your team will likely work against you, especially if you need to work together to fix whatever problem you’re facing. Try to direct that energy into positive action while you recover. The most important question to ask is what you can take away from the experience.