By nature, you as a small-business owner are optimistic. This means that you may not be detecting the signs that your business is failing. You should be vigilant and realize that the odds of small business success are stacked against you. Every small business goes through turbulent times. However, you need to identify the symptoms of business failure before it is too late.
Fortunately, the danger signs that your business is failing regularly show up long before your small business is in serious trouble. This provides you as a small business owner sufficient time to act and remedy the situation.
The 10 Signs that Your Business is Failing
Here are the 10 signs to watch out for as a small business owner:
- Rising Customer Complaints: One of the earliest warning signs of a failing business is when the customers start complaining. This early symptom of business failure can sometimes be fixed by simply reviewing the business processes causing the complaint. If not, you need to identify the root causes of customer dissatisfaction and do whatever it takes to fix it. If customer complaints are not addressed satisfactorily, you will lose customers.
- Declining Sales or Sales Growth Rate: One of the most dangerous signs of a failing business is when the sales growth rate slows down meaningfully. Even worse, when sales take a sudden nosedive or have a downward trend over time. Sales is the lifeblood of every small business that provide the cash flow to fund business operations. Declining sales or sales growth rate require immediate action. Most likely you need to update the mix of your products or services offerings. They must satisfy your customers’ expectations and preferences.
- Loosing of Key or Loyal Customers: The failure of small businesses is more likely when they rely on the revenue from a small number of customers. If you have lost a key or loyal customer, you need find out why and try to win the customer back. Furthermore, you need to develop strategies and put procedures in place to prevent this from happening in the future.
- Cash Flow Problems and Not Paying Your Bills on Time: Successful small businesses pay their bills on time and rarely experience cash flow problems. If your small business is experiencing cash flow problems, you need to find out why and fix it. If you do not fix it, you might go out of business very quickly. Being profitable is good but you need cash to keep the doors open.
- Lack of Customer Interaction and No Positive Feedback: Another symptom of business failure is when you as small business owner haven’t had contact with existing and potential customers for a couple of months. You must talk to customers and customers must talk to you and others about your business. Small businesses need referrals, favorable online reviews and positive word of mouth to drive sales. Be innovative give the customer experience that is worthwhile talking about.
- High Turnover of and Disgruntled Employees: Unhappy employees are not loyal, motivated or productive. Furthermore, customer service most likely are deteriorating. A rapid turnover of employees is another sign of a failing business. It distracts you in running your business and it is costly. Either way. you need to take a critical look at yourself and how you compensate your employees. When employee morale is high, and they are excited about their work, it benefits everyone, including your customers.
- Resignation of Key Employees: The unexpected resignation of key personnel could be detrimental to small business success. It is your responsibility as a small business owner to understand that big business or the competition can steal your good employees. However, if there is a trend, you must find out why and what you can do to retain them.
- Fighting Fires all the Time: Constant chaos and spending most of your time handling one crisis after the other is a clear sign that your business is failing. You will have no time to build your business and you will burn out. If you need help to fix it, get it.
- Nothing New in Your Business: If you are successful as a small business owner now, that does not necessarily guarantee that you will be successful in the future. You need to constantly reinvent yourself and your business to stay relevant. Furthermore, failing to keep up with technology could result in lost opportunities and reduce competitiveness (service, maintenance cost, business efficiency, quality, speed, etc.). Many small businesses fail just because they fail to keep up with technology.
- No Competition: If you do not experience any competition, you must ask yourself if your products or services are at the end of the lifecycle. You might have to revitalize your business model to remain in business. This could be one of the less evident signs that your business is failing.