Wilko went into administration in August 2023. There were a number of factors that contributed to the company’s financial difficulties, including:
- The COVID-19 pandemic led to a decline in footfall and sales.
- Rising costs, such as rent and energy bills.
- Competition from online retailers and discount stores.
- Failure to invest in technology and marketing.
- Management problems, such as a revolving door of CEOs.
What did Wilko do?
In the months leading up to administration, Wilko had taken a number of steps to try to improve its financial situation including:
- Cutting costs, such as jobs and store closures.
- Borrowing money from lenders.
- Seeking a buyer for the business.
However, these measures were not enough to prevent the company from going into administration.
Lessons to Learn from Wilko
There are a number of things that small businesses can learn from Wilko’s collapse. These include:
- Be prepared for unexpected challenges. The COVID-19 pandemic was a major challenge for Wilko, but it is important for all businesses to be prepared for unexpected events that can impact their bottom line. This could include anything from a natural disaster to a change in government regulations. There are several ways small businesses can stay prepared which include:
- Building Financial Resilience: This could mean establishing an emergency fund, diversifying your revenue streams or ensuring you have adequate insurance coverage.
- Developing a Contingency Plan: This involves undertaking a risk assessment to identify potential threats and based on said threats developing a business continuity plan.
- Strengthening Your Digital Presence: Having an online storefront can help you to serve customers during lockdowns or to reach a broader audience who don’t like shopping in stores.
- Scenario Planning: Undertaking scenario planning can help you foresee and prepare for a range of potential difficulties. Make action plans for various circumstances that can be used as needed.
- Stay up-to-date on technology. Wilko did not invest heavily in technology in recent years, which put it at a disadvantage compared to its rivals. Small businesses need to make sure they are using the latest technology to improve their efficiency and reach their customers.
- Invest in marketing. Wilko also did not invest heavily in marketing in recent years. This meant that the company was not able to reach its target audience effectively. Small businesses need to make sure they are investing in marketing to reach their current customers or target audience, build brand awareness and drive sales in today’s competitive marketplace.
- Have a strong management team. Wilko had a revolving door of CEOs in recent years, which made it difficult to implement long-term strategies. Small businesses need to have a strong management team in place that can make decisions and execute them.
- Be flexible and adaptable. The retail landscape is constantly changing, so small businesses need to be flexible and adaptable. This means being willing to change their business model or products and services if necessary.
By following these tips, small businesses can help to avoid the same fate as Wilko.
Here are some additional tips for small businesses:
- Build a strong customer base. This means providing excellent customer service and offering products and services that your customers want and need.
- Create a unique selling proposition. What makes your business different from the competition? What can you offer that no one else can?
- Be price competitive. You don’t have to be the cheapest, but you do need to be competitive.
- Promote your business. Let people know about your business through advertising, social media, and other channels.
- Manage your finances carefully. This means tracking your income and expenses and making sure you are not spending more than you are making.
- Don’t be afraid to ask for help. There are many resources available to small businesses, such as government grants and loans, business advice, and mentoring programs. If you are unsure – get in touch with the Precision MC team!