Here’ s how to tell if your business is headed for the undertaker .Business deaths are rarely sudden . Like lead characters on TV soapies , few small businesses die overnight but are typically drawn out affairs with lots of warning signs on the decline .
So why do thousands of ventures collapse every year across Australia , terminally unprofitable and cash flow starved ?
Rhondalynn Korolak says it ’ s prudent to look out for early warning signs a business is failing .
Business coach and founder of Imagineering Now , Rhondalynn Korolak , says it comes down to failure to detect commercial illness early .
“Almost every business will experience financial distress or pressure at some stage and the key to survival lies in the owner’ s ability to diagnose problem areas and take corrective action quickly, ” Korolak says .
So what are the symptoms which , left untreated , will prove terminal ?
Here are six symptoms from The Sydney Morning Herald of a weak business pulse :
No new customers
You started with gusto, networking like crazy and marketing at every turn. Business grew . Then you stopped hunting jobs.
The earliest sign a business is failing is when there have been no new customers for six to 12 months , according to Iain G . Mackenzie , author of business titles including Results in a Minute.
“ Existing customers drift away for a variety of reasons over the years and if you are not connecting with new ones you are already going out of business , ” Mackenzie says .
Prognosis: Can be treated . “ Drop the employee mindset ‘ no, we have enough business, I am busy enough , I don ’ t want any more customers ’ and start turning things around, ” Mackenzie says .
Do you know how much money is in the bank, moving in and out of the bank and what you do that actually makes you money?
If you don ’ t have your back office paperwork in order , your biz is on a slippery slope.
“Sadly too many business owners have a head-in -the – sand approach to their business numbers, ” says Carl Taylor , founder of Business Builders Academy .
“You don ’ t need to be a math whiz, you just need to know which numbers are important and what they mean . ”
Prognosis: Good, if you act fast to engage an accountant or do more DIY bean -counting .
Dodge commercial rot by making sure your business produces timely financial statements and reports , invaluable quick references for calculating and forecasting your business ’ s all-important cash flow .
Serial price cutting
“Discounting is a major problem in small business as everyone seems to think they need to do it , ” Taylor says .
“But they keep eroding their profit margins until they just are not sustainable – no more business . ”
Prognosis: Curable if you can stop competing solely on price , increase prices and add value where possible . Expert and excellent service goes a long way to appeasing customers querying a price rise .
Over-reliance on borrowed funds to pay loans and meet other business costs ( wages , inventory , leases etc ) means your business is going to flat – line sooner than later .
“If a business is experiencing difficulty paying creditors and tax obligations and has a continual need for capital injections and loans because business is not generating enough operating income internally – often selling but not collecting payments quickly enough and relying on credit cards to cover this period – these are sure signs of financial crisis , ” Korolak says .
Prognosis: Certain death – unless you reduce debt, immediately .
Inject your sick business with new life by collecting outstanding debts , renegotiating debts, contributing more equity via partnerships or your own money, or selling unused inventory .
Can ’ t convert a prospect to a done deal? No repeat business ? Sounds like sales woes are killing your business .
Poor pipelines, problems converting sales or trouble retaining customers can quickly sap life from your biz , says director of sales consulting / advisory firm Trinity Perspectives , Cian McLoughlin .
Prognosis: “ Death by a thousand cuts ” if business owners do nothing , McLoughlin says .
“The good news is there is much a business owner can do for low or no cost to remedy these problems and the first thing is asking ‘ where are we going right , and wrong?”’
High staff turnover
Losing staff hand over fist ? Definitely time to run an HR health check .
Every time an employee leaves it is an intellectual capital loss , and often the loss of customers in service industries including hairdressing , dentistry and accounting.
“You have to teach someone all over again and that takes time away from growing business, ” Korolak says .
Prognosis: Recovery likely if you fix underlying workplace culture problems .
“If someone leaves you have to survive it ; you don ’ t really have a business if it is tied to one person including yourself , and create a culture in which people want to stay . ”DON'T MISS: Download Edujandon.com News app and get latest news updates directly to your phone!