Only two things will save your struggling business: an honest assessment of the numbers and an innovative new direction. If signs point to a downturn, don’t ignore them. Now is the time to learn what you need to know and pivot your company in the right direction.
Understand your numbers and test your business model
Most entrepreneurs say they’re growing. They see a company that has doubled or even tripled its business during the last year, but they failed to look at its profitability. It’s easy to open a new location or launch a new product without thoroughly examining the capital requirement.
The only way to get a pulse on your business is an honest look at your numbers. To turn things around, get all the information your accountant or finance team can give you, including credit card transactions, lines of credit, bank accounts, income statements, cash flow statements, risk exposures, and liabilities.
Once you’ve obtained the nitty-gritty financial information you need, it’s time to test your business model by making a simple cash flow projection. Answer these three questions:
· What are my Income and expenses?
· What are my working capital requirements?
· What does my cash flow look like?
By boiling the numbers down, you can see your company’s exposure, or risk, as well as its liabilities, or debts. Every entrepreneur should have an ongoing understanding of their business at this fundamental level.
Failing to break down your business model is the root of many bankruptcies. Rough patches will challenge every entrepreneur, and you need a deep understanding of your financials to weather those patches when they come.
Take theme parks, for example. This is one industry that has struggled during the pandemic. It is worth noting that most of the country’s 5,500+ theme parks, amusement parks, water parks, and family entertainment centers (FECs) are local operations nowhere near the scale of Disney, Universal Studios, or Busch Gardens.
According to the National Amusement Park Heritage Association (NAPHA), hundreds of defunct FECs lie scattered across the continental US. While giants of the amusement industry like Disney and Universal possessed the resources to withstand economic downturns, most smaller parks were susceptible to the risk of bankruptcy and permanent closure.
In June of 2020, during the height of the COVID-19 pandemic, Tim Murphy helped save one group of FECs and waterparks from the brink of collapse. Murphy, who serves as CEO of APX Operating Company (dba Boomers Parks), helped save Boomers from bankruptcy by enabling the private equity firm, Cerberus Financial Group, to acquire APX’s assets from APEX Parks Group. These assets primarily consist of six FECs and two water parks: Big Kahuna’s Water & Adventure Parks located in Florida and New JerseySpeedZone in Los Angeles, and five Boomers’ Parks - one in Florida and four in California.
Unlike so many entrepreneurs, Murphy did not leap into the business sphere before understanding how to read the numbers. He came to the FEC industry equipped with deep financial and FEC expertise, including years of advising as a turnaround specialist and working with or for 150+ brands with more than 10,000 locations after securing an undergraduate degree in accounting from the University of Central Florida and an MBA in finance from Orlando College.
Murphy dug into the financials and got the parks through the pandemic. Despite having to furlough the majority of his employees in 2020 due to the pandemic, by the end of 2021 he had taken the parks in a new direction, and now in 2022 is ready to rebuild and grow the brands.
Make a plan and pivot
When your numbers enable you to understand how you came to be struggling, it’s time to make the financial plan that turns your company around. Instead of taking a leap forward or cautious baby steps, the best maneuver is often a pivot. When you pivot, you leave one foot firmly planted on the ground while swinging the other in another direction. In terms of your company, look for something that is working. Then look for a new path to take that to a higher success. If you pivot in the right direction, the strategy that is currently working can prove even more effective.
There are different ways you can pivot. Maybe you take a successful product and market it to a new group of customers. Maybe you have established a loyal customer base but discovered they have a problem that could be solved through a new product. Maybe you hone in on the most successful feature from your product to create a simplified business. Your pivot should allow you to maximize what is working with an innovative strategy to make it work even better. Finding just the right pivot prevents you from making a hasty leap or plodding timidly in the same direction.
Thinking back to our previous example, Murphy says that his team’s vision and direction for Boomers Parks helped them think bigger, plan long-term, and become stronger. He told LA Weekly last June that he and his team “...took the time to change our direction and turnaround Boomers Parks to make them more profitable.” And as Murphy stresses, “You cannot do the same old thing and expect a different result as that unfortunately is the definition of insanity. You must try new approaches and pivot to succeed.”
Murphy based his pivot on the projected growth of the FEC industry. Despite the pandemic’s impact in 2020, the industry is forecasted to grow by nearly 11% between 2021 and 2026. That growth is due to technological advancements in sectors like augmented and virtual reality (AR/VR).
As CEO of Boomers Parks, Murphy plans to acquire and rebrand another 25-30 locations over the next few years as well as license new products that Boomers is creating and eventually franchise their systems. His vision for growth is rooted in food and beverage upgrades, clean and friendly guest experiences, and a focus on integrating augmented reality technologies.
“We’re going to recondition and turn [Boomers] into what we do best,” Murphy told Influencive, “and I think that’s where the value can be created.”
If your business has hit a rough patch, try doing the same as Murphy. First, take an honest dive into your numbers. Then use that information to discover what is working and pivot in a new direction.
