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As a founder businessman, it is difficult to always be “in love” with “your children”. You didn’t create anything from anything, you nurtured it on the way, and you made a really good thing. Unless the point is “your baby” grows, your profit comes with a growing competitiveness, and the roller coaster begins to pace in the wrong direction, which is not the same as before, the revenue decreases.
Want to “live” and hope for things to get better in the future. Depending on the main cause of the fall, like a temporary decline in the economy, it began to recover very well. But, there are also times when the main reason cannot be determined, or even worse, “Snowball” will continue in the wrong direction.
In these scenario, you need to know when the cost of your business is zero before you have to pull “Rapkord” to save whatever price you have left. This post will help you identify how you and your shareholders get a “soft landing” when things start to south.
Joe’s bike on a case -stad.
Meet the bikes, who sellers an e -commerce seller of electronic bikes (“ABEX”). He was one of the first transferring online marketing, launching his website in 2018, and was facing Alka growth in the first several years, which increased his income from 0 to 0 to 20 mm by 2022. But shortly after this point, he was watching a lot of competition online with other Abac sellers, and his Google advertising was getting worse.
Their profits, which reached 2 mm in 2022, fell to 1 mm in 2023 with increasing costs of advertising to eliminate extra rivals in 2023.
But then who saw that in 2024, something was really strange. It saw the cost per total after doubled in Google, which means that the cost of acquiring its users is about to double. And it began to cut off the number of its clicks by Google in half, the main reason is that Chat GPT (removing traffic from Google) due to the invention of artificial intelligence engines and re -designing their pages to Google itself to find out the results of the search results in search of their AI results.
Being double the cost of cost meant that its profits were slowly going to $ 0 at its current income level, and that its traffic would be half the possibility of revenue that would be most likely to be cut from half 20 mm to 10 mm than next year, which was suggested in the future. His financial statements were not yet visible in 2023, but he knew that the storm was coming to an estimated 2024.
If the study of this matter seems familiar, it is needed, as most of the product categories have been spending some forms of the aforementioned e -commerce companies during the past two years during their developmental posts. Now, what do we do about it?
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What are the options?
Option 1: Get out of the storm. What couldn’t do and just “hope” to struggle to improve its advertising. But unless there is new marketing channels (such as, distribution of eBits by retailers such as Dick Sporting Equipment), its advertising matrix can never be improved if it is focused only on search advertisement. You should never make business decisions with the word “hope”, so this path doesn’t mean.
Option 2: Recruitment of its business. It may be fine that its revenue will fall from 20 mm to 10mm, as long as he can think of how to reduce his costs so that the expected loss can become a small profit to afford his lifestyle. But we are talking about a lot of deductions (about 70 70 %) here to target our goal. And it doesn’t look like a reasonable path ahead.
Option 3. Sell business: Why you can still do. Yes, which could have been sold at 10 mm (at the time a profit of 5x mm 2mm) a year ago. But at this point it is water under the bridge, and it should not be chased. He can still be MM 5MM (5x sales in his 1 mm profit of 5X which is reported in the first year).
If the next year it will be $ 0 to 5 mm, if the profit leads to really big losses. Suppose the buyer who can move forward fast to find and get them shut down, this is the best way forward. But as long as he takes more time to reach the finish line, the difficulties of reducing this route will work, as the financial reports of the coming months begin to decrease. Which should move here at a slight speed.
Who will do?
If a single owner, the path that should be followed is a personal decision based on his personal goals. But if the shareholders are the shares, they should protect their interests, and in this case, selling it before it is too late, at least will come out to their investors at a reasonable price, which will make them a good return on their investment.
He should “win”, which will be appreciated by his investors and will be willing to back his next project again. Because if those who do not sell, and let’s reduce revenue and profit, which results in a terrible trend line, they will never be able to sell, and its investors will lose all their money, and even more importantly, they are confident.
How to make leading indicators for your business
Who was fortunate to have settled itself a matrix to predict the future health of his business. Most traders live in present and only detect their success and make decisions based on historical results. You need to know where you can guess where your business is going, to learn the bad news that is coming to your way, before it is in fact a collision with your business, so you have time to respond prematurely and take necessary steps.
In the case, his leading indicators were clicks and costs per click from his Google campaign, which he could track in “real time”. The moment he saw people moving in the wrong direction, he knew that it was time to take action. Remember, your business buyer is studying historical finances, which still looks good for this business. Only those who knew the future storm that was coming in his way. You need to know which well -known indicators will be the one that will protect your business from a sharp storm, over time you will still travel for shelter.
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Ideas to close
So, a couple of closing ideas here. First, stop pursuing historical peak prices that can never be recovered. A bird in the hand is much more valuable than two waiting in the bush, especially if you think the business is going down.
And secondly, make sure you have important indicators that you will be able to pull your “Rapkord” quickly over time to get a “soft landing”. Otherwise, prepare for the crash and burning, completely clean your equity value and credibility with investors in this process.
As a founder businessman, it is difficult to always be “in love” with “your children”. You didn’t create anything from anything, you nurtured it on the way, and you made a really good thing. Unless the point is “your baby” grows, your profit comes with a growing competitiveness, and the roller coaster begins to pace in the wrong direction, which is not the same as before, the revenue decreases.
Want to “live” and hope for things to get better in the future. Depending on the main cause of the fall, like a temporary decline in the economy, it began to recover very well. But, there are also times when the main reason cannot be determined, or even worse, “Snowball” will continue in the wrong direction.
In these scenario, you need to know when the cost of your business is zero before you have to pull “Rapkord” to save whatever price you have left. This post will help you identify how you and your shareholders get a “soft landing” when things start to south.
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