Dealing With A Non-Performing Product

It is not a good idea to keep a non-performing product or service. Even if you invested a lot of time and resources into its development, if the product or service is not contributing to your bottom line, it might be time to cut it loose. If your product is pulling its weight, but doesn’t fit into your overall core business, then you should still consider getting rid of this product. In this article we will take a look at some of the reasons you might want to keep or remove a product that is not performing.

Reasons Why a Company Might Want to Remove a Non-Performing Product or Service Completely

  1. The product can be a distraction that takes away from core business operations.
  2. Funds allocated to the product could be used instead to build the core business or make improvements that are not in the current budget.
  3. While the product could ultimately be profitable with increased resources, the funds would be better allocated elsewhere.
  4. The product could be profitable. There could be some buyers, private equity groups and companies that are looking for a product line they can use to supplement their existing ones. Some buyers may want to build a new business around a given product line.

 

Getting rid of a non-performing product is not always simple. It is important to step back and consider the negative impacts of discarding the product. Maybe the product line has key employees attached to it. There could be company culture issues related to removing the product, such as causing disruption within your company. Also consider if the product could eventually play a role in the sale of your company.

An acquiring company may feel that the product line is a great fit for their existing distribution chain. Maybe your non-performing product might fit into a new product line that the acquiring company has launched. It is important to evaluate every aspect of the product or service before making the decision to remove it from your company. Understanding the needs and goals of your most likely buyers should play a role in your decision-making.

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