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Business Turnaround Strategies: Using Digital Payments to Sustainably Recover

September 13, 2023
Rachel Ludwig

We’ve all heard the startling statistics that half of small businesses fail in the first year. While that data is exaggerated, the Bureau of Labor Statistics (BLS) has found that only 25% of new businesses make it to 15 years or more.

Although there’s always a chance of failure in business, there’s also an opportunity to turn poor performance around and succeed. 

If your business is facing a period of decline, there are steps and strategies you can take to get back on track. We call this concept a “business turnaround.” 

This post explains what a business turnaround is, how to conduct one, and the importance digital payments play in your overall turnaround management strategy.  


What is a business turnaround?


A business turnaround occurs when a company recovers from a period of poor financial performance. Turnarounds typically follow a plan or strategy that’s strategically put in place to save the business.

Most businesses require different turnaround strategies depending on the reason(s) their business is underperforming. Some examples of turnaround strategies include launching new products/services, restructuring debt, cutting costs, or reorganizing staff.

Note: Because of their rapidly growing relevance and immediate impact on overall business performance, adding digital payments is a widely beneficial strategy to turn your business around. We’ll discuss this topic further in later sections. 


Steps to conduct a business turnaround


A successful turnaround strategy requires careful planning to guide your business toward success. 

Here are some beginning steps you can follow to create an effective turnaround strategy: 


1. Determine your problem(s)

What’s the reason your business is failing? While the most common problem is lower revenue, there are a number of driving factors for a business to make less money.

Some reasons a business is failing include:

  • • Bloated spending 
  • • Poor resource allocation
  • • Employees/culture
  • • Inefficient workflows
  • • Outdated/missing technological support

As you come to understand what’s going wrong, you can factor the solutions into your business plan and begin recovering from the downturn.


2. Establish a culture of change

In order to revamp your business, your entire company needs to be on the same page. By first admitting what’s going wrong and vocalizing that change starts now, you’ll set the right precedent for your turnaround plan to succeed.

Everyone from interns to your management team to executives should be able to clearly define both their own goals and action items as well as the broader company’s turnaround plan. 


3. Create your plan


This is probably the most important step in the turnaround process. Once your problem(s) are identified, create a clear plan to attack and resolve the issue.

This plan often requires input across all departments and should be properly documented and shared to the entire organization. Goals and milestones need to be lofty, yet achievable and be able to extend to every stakeholder’s day-to-day work. 


4. Reach stability


Your turnaround strategy should initially focus on halting extreme revenue losses/debts and reaching a point of stability. Aggressive budgeting is key at this stage as you must be ruthless with your profit margins and losses.

Then, from a stable point in the business, you’re able to make more rational decisions without the added stress of a spiraling decline.  

Consider restructuring your debt obligations, selling off assets to boost liquidity, or reducing your staff/cutting unnecessary costs to stabilize your balance sheet. 


5. Increase sales


From a point of stability, you can identify and execute a strategy to increase your sales and improve your bottom line. There are 4 ways to increase revenue:

  • • Increase # of customers
  • • Increase average transaction size
  • • Increase the frequency of transactions per customer
  • • Raising prices

Keep reading: We’ll talk about how digital payments influence revenue in the next section! 


6. Stay consistent


Tony Gaskins said, “If you can’t be consistent, you can’t be anything.” That’s especially true during a business turnaround.

Don’t be deterred by slow progress or internal pushback. The more closely you stick to a well-designed plan, the better your chances of turning things around.


How digital payments enhance business turnaround


A digital payment is the instant transfer of currency from a customer to a business. A common method of digital payment is called ACH (automated clearing house), which involves sending funds directly from a customer bank to a business bank.

Digital payments are revolutionizing the mainstream financial landscape. Their impact on revenue, efficiency, and customer experience makes onboarding this seamless payment method an easy and effective way to turn your business around.  

Four ways digital payments help with business turnaround are:


Increase revenue


Digital payment providers like Aeropay drive dramatic improvement in retail revenue. This is because customers who use ACH payments:

  • • Spend 25% more per order
  • • Complete online orders 30% more often
  • • Return to shop online 37% more often


For businesses seeking a low-cost revenue boost, the solution is as simple as onboarding and utilizing ACH payments. Companies like Uber have already started adding one-click digital payments as a means to fuel revenue and enhance the checkout experience. 


Enhance cash flow


Digital ACH payments involve electronic fund transfers that are settled faster than many traditional payment methods. This results in quicker access to funds for your business and improves your cash flow.


Reduce costs and increase efficiency


Research from IHL Group shows handling cash can cost retailers between 4.7 and 15.3 percent of a transaction. Replacing cash with digital payments is an easy way to save anywhere from $5 to $15 per $100 sale.

Integrating digital payments with your POS system is another time and cost saver as it reduces manual data entry and streamlines the payment process.

Plus, digital payments simplify the checkout process across order types, so you can streamline your online, delivery, and in-store payments at the same time. 


Improve customer experience and loyalty


Convenience is often an overlooked addition of value in any retail setting. But 87% of millennials say convenience is important when shopping.

According to a survey conducted in 2021, **89% of Gen Z consumers** consider convenience to be a critical factor when shopping. This generation, born between the mid-1990s and mid-2000s, places a high value on seamless and hassle-free shopping experiences, making convenience a key driver of customer loyalty. 

Just like millennials, Gen Z is also highly inclined towards digital payments due to their speed and ease of use, which aligns with their preference for convenient shopping experiences.

Digital payments are the most convenient way for customers to pay. They can be done in seconds and the transfer of funds is instant. This holds weight for shoppers who will be delighted to pay digitally.

In the same way digital payments improve customer experience, they increase retention. That’s because you’re able to avoid negative payment experiences, like when a customer:

  • • Forgets their wallet (digital payments allow shoppers to pay with their phone)
  • • Doesn’t want to pay a card-related fee (providers like Aeropay don’t charge customer-facing fees)
  • • Runs into any sort of friction related to traditional payment methods (cash and cards are clunky payment processes)


Takeaways for business owners

  • • If your business is failing, take steps to begin a turnaround immediately
  • • Create an actionable turnaround strategy 
  • • Ensure everyone in your organization is working together to turn your business around
  • • Adding digital payments has a direct impact on revenue, efficiency, and customer experience – which can help turn your business around


Add Aeropay digital payments to your turnaround strategy 

As you look for effective ways to improve your business, keep in mind that retailers using Aeropay digital payments experience:

  • • 25% higher customer spend 
  • • 30% increase in completed online orders
  • • 37% increase in online customers returning

The simplicity, security, and efficiency of Aeropay removes the need for cash or cards at your business – so you can focus on your business. 
Schedule a 15 minute demo to see our full payments solution and put bank-to-bank transfers to work for your business.

Author

Rachel Ludwig

Marketing & PR Lead
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