Every business faces ups and downs. While the Chamber of Commerce reports that 18% of small businesses don’t make it past their first year, having a struggling business doesn’t mean you’ve failed—it means it’s time to adapt.
Instead of dwelling on challenges or forcing optimism, let’s reframe your business struggles as opportunities for growth. This guide will help you identify common causes of businesses struggles and give you practical steps to get back on track.
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Common reasons small businesses struggle
Understanding why businesses face challenges helps you tackle problems head-on. Here are the key factors to watch for:
Cash flow issues
If you’re spending late nights worrying over profit and loss statements, you’re not alone. When your bank account is running low, work with your accountant to find new revenue sources or cut costs strategically.
Market fit challenges
Sometimes enthusiasm for an idea leads to rushing past proper research. If you’re not seeing the demand you expected, you might need to reassess your market fit. But don’t worry—with thorough research and creative thinking, you can pivot your offerings, find new audiences, or adjust your positioning.
Competition pressure
The ecommerce world is crowded, and similar products often sell for a whole lot less. But don’t rush to cut prices—focus on what makes your business unique and strengthen those advantages.
Business model issues
Even great ideas need solid business models. If you’re constantly struggling to stay afloat, you might need to look at structural changes rather than quick fixes.
How to spot business challenges early
If you’re reading this, you’ve probably already noticed some warning signs. Beyond financial indicators, keep an eye out for these red flags::
Customer feedback
While negative reviews can be tough to read, they offer valuable insights into what’s pushing customers away. Plus, how you respond matters—Podium found that 56% of consumers change their opinion of a business based on review responses.
Team morale
Your staff can spot problems early. If you notice disengagement or high turnover, ask for their input through conversation or anonymous surveys. This shows you value their perspective while gathering crucial insights.
Conversion rates
The average global ecommerce conversion rate from November 2023 to October 2024 was 3.37%, according to Dynamic Yield. Check your Shopify behavior reports to see how your store compares. Low conversion rates often signal that something’s stopping interested shoppers from completing their purchase.
14 steps to turn your struggling business around
1. Shift your mindset
Success isn’t about working harder—it’s about working smarter. Research shows that your intentions and values drive your actions. By developing a growth mindset—believing that your abilities can be improved through hard work—you’ll see challenges as opportunities to learn and improve.
Here’s how to build a growth mindset:
- Learn from your setbacks: Every business faces failures. Each one teaches you what to do differently next time.
- Stay adaptable: Plans rarely work out perfectly. Being flexible helps you handle unexpected challenges.
- Take care of yourself: When business is tough, it’s tempting to work non-stop. But burning out won’t help you or your business succeed.
2. Create clear goals
Now that your mindset is in a good place, it’s time to turn your business around. Setting goals helps guide your focus and maintain momentum when things feel uncertain.
Research shows that goal-setting boosts motivation, self-esteem, and confidence. It also correlates strongly with success.
Start small. Instead of setting massive goals that might disappoint you, break big goals into sets of smaller, more frequent goals, and celebrate completing them. For example, if your big goal is getting 200 email subscribers, your mini-goals might be:
- Sign up for email marketing software
- Create a sign-up landing page
- Design your first email campaign
- Promote your list across your website and social media
3. Learn why customers are leaving
While customers often shop around, consistent negative feedback needs attention. Find out why customers leave, such as:
- Poor customer service experiences
- Products not meeting expectations
- Unclear value proposition
- Overly aggressive sales tactics
Set up a feedback system with your existing customers. Tools like UserLoop or Fuzzy Surveys help you collect insights and understand what customers really want. Use this data to improve your products and marketing strategies to boost both sales and loyalty.
4. Understand your target audience
Your target audience is the group your marketing speaks to. Knowing exactly who you’re aiming to reach helps you find new customers more easily and bring qualified buyers to your store.
Take cosmetics brand SUGAR, which spent three years defining its target audience. “While we were running our ecommerce business between 2012 and 2015, we realized that there were a lot of millennial women who couldn’t find that perfect nude lipstick or a perfect red lipstick,” founder Vineeta Singh says in a Shopify Masters podcast episode. “There were a lot of colors that were perfect for, say, Caucasian skin, but wouldn’t work on the deeper Indian skin tones.”
The brand identified its core buyers:
- Indian women aged 20–27
- Living in metropolitan areas
- Heavy digital content consumers
- Inspired by global trends
- Looking for trends adapted for Indian preferences
This insight led SUGAR to create its first hit product: liquid lipsticks. The long-lasting formula was perfect for India’s humid climate and their target audience’s needs.
SUGAR has since grown from one ecommerce store to over 10,000 retail touchpoints and raised more than $21 million in Series C funding.
5. Perform a SWOT analysis
As a struggling small business owner, take a step back and look at your business from a broader perspective with a SWOT analysis (strengths, weaknesses, opportunities, and threats).
A SWOT analysis helps you examine your business from different angles and understand your future potential. It’s often part of a strong business plan.
Focus on two main areas:
- Strengths and weaknesses: Internal factors you can control, like reputation, partnerships, intellectual property, and staff.
- Opportunities and threats: External factors outside your control, such as competitors, economy, market conditions, industry trends, and supplier relationships.
Use this analysis to identify problems, plan improvements, and make decisions that strengthen your business.
6. Review your finances
Even successful businesses face financial challenges. From cash flow problems to inaccurate reports and high debt—many of these issues are preventable or fixable.
If money is tight, examine your expenses and cash flow carefully. Consider tracking finances weekly instead of monthly to spot issues early and keep your company profitable.
Watch for common financial challenges:
- Cash flow problems
- Missing or unclear budgets
- Unexpected expenses
- High debt levels
- Tax compliance issues
- Mixed personal and business finances
- Incomplete financial reporting
7. Consider funding options
Limited working capital affects businesses of all sizes, but it’s especially tough for smaller companies. While having cash for daily operations is essential, you also need capital to hire staff, maintain inventory, run marketing campaigns, and develop new products.
Create an operations budget, then research financing options before you need them.
Shopify Capital offers quick access to business funding. There’s no lengthy application or credit check, and you can get funded within days. Repayment adjusts with your sales volume.
Use funding to:
- Hire new team members
- Work with expert consultants
- Prepare for seasonal sales
- Buy inventory at volume discounts
- Source new materials
- Launch marketing campaigns
8. Consider pivoting your business
While changing direction might seem daunting, especially if you recently started your business, a pivot can strengthen your long-term success.
You might switch business models from direct-to-consumer to selling wholesale, or make simpler changes like updating your business name—try Shopify’sbusiness name generator for fresh ideas that connect with your audience.
Remember to update your business license and registration documents when making changes to avoid complications later.
9. Build your marketing strategy
With your foundations set—understanding your audience, securing funding, and planning for growth—it’s time to spread the word. Attract and keep the right customers through targeted marketing strategies.
Create awareness on a budget using social platforms:
“Focus on solving one to two simple but common and important problems in each video,” advises Henry Chen, a serial entrepreneur and business coach. “People are more likely to do business with you after they see the social proof and free value that you’ve provided. Being that it’s evergreen, your videos will work for you for months and even years to come.”
10. Use AI to save time
If you’re stretched thin, AI tools can help you work smarter. They save time and money while improving customer service.
Shopify Magic offers AI tools for building your store, marketing, customer support, and business management. For example, Shopify Sidekick acts as your personal business assistant—it understands Shopify, your business, and entrepreneurship, helping you automate routine tasks.
11. Improve your online store
Your Shopify Benchmarks reports compare your store’s performance with similar businesses. If you’re consistently in the bottom 25th percentile, it’s time to upgrade your online store.
Try these tips for selling online:
- Optimize for mobile: With 60% of global ecommerce sales happening on mobile, make sure your mobile experience works well.
- High bounce rates often signal
- . Reduce third-party apps, optimize images,
- , and use system fonts where possible to keep things speedy.
- Boost your SEO: Low traffic often means poor SEO. Start with clear site structure and natural keyword use, then consider adding a blog or building backlinks.
12. Streamline your operations
Inefficient processes waste time and resources. Today’s tools can help you simplify and automate your business.
For example, Shopify Marketplace Connect lets you update your product catalog once and syncs it across marketplaces like Amazon or Walmart. This reduces repetitive work and keeps your products consistent everywhere.
13. Get expert help
This might be tough advice to take, but it’s crucial. Running a business isn’t an innate skill—you can’t know everything about marketing, finances, and management. Getting expert help shows wisdom, not weakness.
Business consultants specialize in helping struggling businesses diagnose problems and implement solutions. Choose carefully: look for expertise in your industry, interview several candidates, check references, and compare proposals to find the best fit.
Need help but watching costs? Consider working with a business mentor. SCORE, a nonprofit partnering with the Small Business Administration (SBA), connects owners with experienced mentors who volunteer their time.
14. Take action now
When your business struggles, be proactive. Don’t wait for problems to worsen before acting. Take steps to both prevent further issues and fix existing problems.
Successfully turning around a struggling business is incredibly rewarding. Every entrepreneur faces challenges—a temporary setback is just one of many.
Remember: Even if this business doesn’t succeed despite your efforts, the experience is valuable. Many successful entrepreneurs faced setbacks before finding their winning venture. You only need to succeed once.
Learning from setbacks
Recognizing your business is struggling is an important first step. While you may face tough decisions to keep your business going, remember that overcoming challenges is part of the entrepreneurial journey.
Whether you need to find new customers or secure funding, taking time to reset and rebuild is a normal part of growing a successful business.
*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six month periods. The actual duration may be less than 18 months based on sales.
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Struggling Business FAQ
What type of business fails most often?
According to the US Bureau of Labor Statistics (March 2023), transportation and warehousing businesses had the highest one-year failure rate at 24.8%. Retail trade showed more resilience, with only 12.9% failing in their first year.
Is it normal for a business to struggle?
Yes. The US Bureau of Labor Statistics data shows that 23.2% of businesses close within their first year, 48% within five years, and 65.3% within 10 years. These numbers show that running a business is challenging, and facing struggles is a normal part of the journey.
What’s the first step if your business is failing?
Start by evaluating your business performance to identify areas for improvement. Then research ways to increase revenue or reduce costs to get back on track.
What should you do when your business runs out of money?
If your business runs low on cash:
- Identify the root cause of the shortage
- Look for ways to increase revenue or reduce expenses
- Consult a financial professional
- Explore funding options to maintain operations
