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Business Survival

8 Telltale Signs Your Company Is Going Under

Boundless optimism is required to launch a business but a steady grip on reality is required to stay in business.

John Rampton

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You’ve heard it time and time again: 90 percent of all startups fail. Yet, we keep taking the risk and following the dream of owning our own business, despite the high risk of failure.

What separates the successful entrepreneurs is their uncanny ability to realise when it’s time to walk away from the business. It’s not an easy decision but, instead of pumping more time and money into a failing business, they cut their losses, learn from their mistakes and move on to the next business venture.

If you’re still uncertain that you’re business is in serious trouble, then pay attention to the following eight telltale signs.

1. Low sales

The first, and most obvious, sign that your business is sinking is low sales. This could either be lower than expected projections or a decrease in sales than the previous quarter. Your business can’t succeed without a steady income to pay all of your expenses.

When you notice that there’s a sudden decrease in sales, you need to diagnose the problem. Begin by surveying your employees and customers, conducting a competitive analysis and examining the outside environment, like societal changes or natural disasters.

This should give you a better understanding on why there’s a decline in sales and if there will be a turnaround. If it doesn’t seem likely the industry or your business can turn things around, then it’s rather clear that your business is in trouble.

Related: Your Business Failure is Your Fault

2. You can’t remember the last-time you spoke to a client

Customer service reps aren’t the only ones talking to your customers. Even as a founder and CEO, it’s your responsibility to talk to your potential or existing customers to understand their needs and how to improve your business. It’s a trick that everyone from Sam Walton to Slack’s Stewart Butterfield have relied on.

It’s another troubling sign for your business if you can’t remember the last time that you spoke to a customer. Either you’re not actively engaging them or they just don’t have an interest in your products or services anymore.

3. No one is talking about your business

no-social-media-marketing

This almost goes hand-in-hand with the previous point. Something is wrong if no one is mentioning you on social media, leaving reviews or getting in-touch with customer service reps. It’s either because you’re not interacting with your audience or they simply don’t care about your business.

Make an effort to reach out to your customers by asking them to leave reviews and boosting your engagement on social media. If there’s still silence, then that might not be enough to save your business. I personally blog about payments a lot to attract people to my company. It helps!

Related: Don’t Let Business Failure Keep You Down

4. You regularly question your motives

We all have moments where we ask questions like “Why am I doing this?” or blurting out statements like “I can’t take this anymore.” That’s normal during the entrepreneurial journey. However, if that mentality is becoming more and more frequent, than it’s time to move on from your business.

Even if your business is successful, you stay may want to shut-it-down. That’s what Flappy Bird creator, Dong Nguyen, did in 2014. He was tired of the scrutiny, relentless criticism and accusations. Instead of marching-on, Nguyen decided to pull the plug on the Flappy Bird before things got any worse.

5. There’s nothing unique about your business

Your business needs to stand-out from your competitors. Take a moment and jot down all of the characteristics about your business, products and services, then compare it with the others within your industry. If you’re different from your top competitors, then you have a competitive edge you can use to your advantage.

If not, you can be certain that your business won’t stand the test of time. Either find something that makes you unique, or find an industry where you can differentiate yourself.

6. Complacency

Blockbuster is the poster child of business failures in recent history. The main reason that the company went kaput was it failed to acknowledge that its customers wanted something different. Instead of driving to their local Blockbuster and paying hefty late fees, people enjoyed having Netflix deliver or stream movies. Reportedly, Netflix executives offered a partnership with Blockbuster around 2000 but was laughed out of the office by Blockbuster execs.

In short, complacency was Blockbuster’s demise.

If you’re sitting there wondering why your business is in danger, ask yourself when was the last time that your business introduced something new into the market?

Related: The #1 Reason For Failure of Businesses Over Two Years Old

7. Employee turnover and hiring turnover

high-staff-turnover

Sometimes your employees realise that there’s a problem before you do. Whether it’s as obvious as not getting paid, or subtler like no longer believing in your business or frustration with management, you need to get to the root cause of high employee turnover.

It costs more money to hire and train new employees then to retain the employees that you currently have. Things can get real tricky when you don’t have the budget to replace those employees. That means that you’re expecting your already frustrated and overworked staff to do more work for you. How much longer do you think they’ll put up with that? It’s a vicious cycle that can ultimately bury your business.

8. There’s serious cash flow struggles

Cash flow is the money that is coming in and out of your business. It’s generally accepted that if you want your business to survive it has to have a positive cash flow, which means that you’re bringing-in enough money to manage all of your expenses.

If you’re having cash flow problems due to debts, poor bookkeeping, growing too quickly, and not accurately forecasting your future earning and spending, then there’s one of the most obvious warning signs that your company is going under. If not correctly dealt with, don’t expect to keep your business open very much longer.

This article was originally posted here on Entrepreneur.com.

John Rampton is an entrepreneur, investor, online marketing guru and startup enthusiast. He is founder of the online invoicing company Due. John is best known as an entrepreneur and connector. He was recently named #2 on Top 50 Online Influencers in the World by Entrepreneur Magazine and has been one of the Top 10 Most Influential PPC Experts in the World for the past three years. He currently advises several companies in the San Francisco Bay area.

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Business Survival

How To Have Your Store Run Smoothly Without You (So You Can Take A Well-deserved Break)

Below are some tips that can help ensure the smooth running of your store even when you’re not around, and let you take that break without the stress.

Higor Torchia

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It can be hard for business owners to take time off from their retail stores – whether that’s because they’re too busy, need to be around to make decisions, or simply feel they can’t relax without knowing how the business is tracking. But taking a break can be incredibly important, if not sometimes necessary. And as we head into the busiest retail season of the year, taking a break now before the rush could be the best thing you do – for yourself and even for your business.

Below are some tips that can help ensure the smooth running of your store even when you’re not around, and let you take that break without the stress. 

1. Make the most of technology that lets you keep an eye on your store from anywhere

The beauty of living in this modern age is that there’s an abundance of tools that can help you run your store even when you’re away. To do this, cloud-based software is the way to go. Using a cloud-based solution to run your store means that you will no longer have everything housed on your computer server in one place. Instead, you can access files, sales and stock data, financials, business reports, customer and even employee data from anywhere, in real-time, and from any device provided you have an Internet connection.

The other beauty of cloud-technology is that it’s usually relatively inexpensive compared to more traditional systems. If you haven’t done so yet, look into some cloud-based software options, such as point-of-sale and inventory management, accounting and finance, customer management, and employee management and scheduling.

Related: 5 S-Words Make Your Store Site Pay For Itself

2. Develop a store manual

Create a manual that your staff can turn to when you’re not around. Document procedures, contact information, and anything else that will help your employees to know just what to do in your absence. Some of the sections you may want to include in the manual are: 

  • General store information – What do you stand for? Who are your target customers? Instil this information in your staff. The more they know (and love) your business, the easier it’ll be for them to make decisions in line with your company values. Include details on personnel conduct, pay and scheduling, store access, conditions of employment, store policies, etc.
  • Customer service – Have an entire section dedicated to taking care of customers. Include information on conduct, customer service standards, lost and found procedures, and dealing with difficult customers. Also, provide detailed instructions on how to handle theft and shoplifters.
  • Cashier procedures – Include information on the operation of your POS software, the types of payments you accept and how your loyalty program works.
  • Contact information – Take note of the tools you use in your store (computer, accounting software, analytics, cameras, etc.), and provide basic instructions on how to operate them. These tools likely come with their own manuals, so make sure that employees know where those documents are and how to contact the vendor if required. Include the contact details for the individuals or entities that your store deals with, including vendors, suppliers, business partners, contractors, etc. Also have a list of emergency contacts, such as the local police and fire department, as well as medical facilities in the area.

3. Appoint a second-in-command

Pick a second-in-command (or 2IC) to take charge of the store in your absence. This person should be someone you trust who knows the business.

It’s best to hire someone from the inside — ideally an individual who’s been in the business for a few years (this demonstrates loyalty) and has shown strong leadership skills or initiative.

Related: Why Launch A Member-Only E-commerce Store?

4. Empower your staff

Of course, the success of your store doesn’t depend on your 2IC alone, which is why it’s important to empower all your employees always do their best, even when you’re not around. This can be accomplished by giving them adequate training and by fostering an open environment that recognises the efforts of each team member. Encourage questions and be sure to give them specific as well as big picture answers so they know exactly how their actions affect the company.

It is important that you clearly define the roles of each staff member. Establish who’s in charge of what and require your employees to be accountable for their actions. Finally, believe in your employees and show them that you do. Trust you did your job right when you hired and trained them and that they’ll be fine even when you’re not there.

5. Do a test run

When should you start planning for your absence? That depends on the nature of your leave and how long you’ll be away. If you’re planning to be out of the office for a few days, then giving your staff a heads up a week or two before would be enough. But if you’re planning for maternity or paternity leave, then obviously your team needs to be notified months in advance.

Still worried? Implement a test run by consciously getting out of the staff’s way for a day or two. Work from home for a while or stay in your office instead of the sales floor and tell your 2IC to handle the store. Consider hiring secret shoppers who can put your staff’s skills to the test and have them report the findings, so you can figure out ways to improve. 

With Christmas and holiday season fast-approaching, now is a great time to start empowering your team so you can find the time for a well-deserved break.

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Business Survival

Stop Surviving And Start Thriving In Business

It will inform your operations, which will inform your human and asset capital and lastly, the financial investments you make.

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To thrive – and not just survive – in business you need three basic building blocks: 1) attract more customers and clients; 2) who spend more; and 3) buy more often. But how do we make this happen in the tight, recessionary environment we find ourselves in South Africa?

Despite the tough economic conditions, businesses can still thrive. In fact, many small businesses have been found to thrive in difficult economic conditions and are known as counter-cyclical businesses.

So how do you turn the tide from surviving, to thriving? You need to start thinking creatively, making informed decisions and being agile in the business environment. Always start with your marketing strategy. It will inform your operations, which will inform your human and asset capital and lastly, the financial investments you make.

Related: Business Basics: The Four M’s Of A Successful Start-Up

Ansoff Growth Matrix

Business leaders continuously explore various growth strategies to retain and grow market share. One of most respected and often used is the Ansoff Growth Matrix. It was first published in the Harvard Business Review in 1957, written by strategist Igor Ansoff to help management focus on the options for business growth. Ansoff suggested that an effective strategy considers four growth areas, varying in risk. This strategic planning tool guides us to understand our current situation, contemplate strategic options and consider the associated risks.

  1. Market Penetration: Market penetration has the least risk of the four options. Here you are selling more of the same things to the same market. You know your product and market well. The question is, how can you defend your market share and sell more to your existing customer? You may consider special promotions or introduce a loyalty scheme.
  1. Product/ Service Development: Product and service development is slightly riskier as you introduce a new component into your existing market. The advantage is that you sell to a customer/ client that you know, and they trust you. Ask yourself how to grow your product and service portfolio? You may consider adding new services and products or modifying your existing offering.
  1. Market Development: With market development you target new customers and clients with your existing products and services. You sell more of the same things to a different market. You can consider new sales channels, online or direct sales. Do a proper market dissection to target different groups of people, considering different age groups, gender and demographics.
  1. Diversification: Diversification is very risky. Here you consider introducing a new, unproven product or service into an entirely new market that you may not fully understand. You may need new expertise, acquiring another business or venturing into another sector. The main benefit of diversification is that during difficult times only one component or element of the business may suffer.

Related: My Business Is Growing… What Now?

The fifth element: Passion 

In addition, I would add one more element critical to business growth: Passion. It is the single component most critical to business success and, combined with any one or combination of the four areas of the Ansoff Growth Matric, it can equip small business owners with all they need to thrive in their business environment. Passion determines your business success, so make sure you have it in heaps to reap the rewards of your hard work.

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Business Survival

6 Common Decision-Making Blunders That Could Kill Your Business

Among the logical errors nearly everybody makes is thinking only everybody else makes logical errors.

John Rampton

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Humans are often very irrational. If you’ve ever explored behavioural economics or psychology, you may have found a host of examples demonstrating situations when we make objectively bad decisions.

Below are six of the largest decision-making blunders we all make. Avoiding them will dramatically improve your decision-making, your quality of life and success.

1. Sunk-cost fallacy

Of all the ones on this list, the sunk-cost fallacy is the most common. Many of the decisions we make are final or difficult to change. For example, let’s say you invest R1 000 in Facebook, and the price of the stock goes down to R600 the following day. The fact that you put in R1 000 initially is irrelevant to the situation at hand; you now have R600 worth of Facebook shares.

What this means is that once the decision is made and our cost is incurred, there’s no point thinking back. You already put in the time, money or other form of investment. Considering that in any future decision is illogical, despite how tempting it is. Instead, present yourself with the new options at hand — without considering the sunk cost.

Related: The 3 Dumbest Business Mistakes New Entrepreneurs Make Most Often

2. Narrow framing

Would you take this bet? You pay me R1 000 if a flipped coin lands on heads and I pay you R1 200 if it lands on tails. Most people would say no. We tend to be risk-averse, unwilling to risk something like R1 000, despite the reward being a bit greater.

Now, what if I offered you that bet, but I promised we would flip 100 coins? Each time, the loser pays up. Would you take it then?

Almost certainly, right? The chances that you lose money, overall, are extremely slim. This idea can be applied throughout life. When we’re in situations that will repeat themselves over time, we should take a step back and play a game of averages.

3. Confirmation bias

Another common one in the worlds of psychological and behavioural economy is confirmation bias. It hurts our ability to keep an open mind and shift our opinion. When we have a held belief, we typically look for information that confirms our opinion while ignoring data points that tell the opposite story.

For example, if I’m really excited about a new software product that I just integrated into my business, with ten of my employees as users, I might have made up my mind about the quality of the service before we put it to use. I would then be more likely to listen to the three employees who enjoy it, not the seven who don’t.

There’s almost always information that will validate our opinions, no matter how wrong they might be. That means we need to always look for conflicting evidence and, from there, make judgements based on more well-rounded information.

Related: 6 Rookie Investor Mistakes You Must Avoid For Profitable Investing

4. Emotionally driven decisions

When we’re angry or upset, we’re much worse decision-makers. When you have to make an important decision and happen to be in a bad mood, you should hold off. Instead, wait until you cool down and can think more clearly. It will remove the outside influences and let you think more rationally.

5. Ego depletion

This one makes intuitive sense, but it’s one of the most common ways to make bad decisions. The idea of ego depletion is that when we’re drained, physically or mentally, we’re less likely to think critically. Think about the times you’ve been exhausted after a long day of work. In those moments, you don’t want to have to think hard about anything. Instead, you want your brain to work automatically.

What that means is that when you’re tired and faced with challenging choices, you’ll rely more on your instinct or automatic processes as opposed to analysis and thought. That can be extremely problematic in situations that require effort.

6. Halo effect

The halo effect says that once we like somebody, we’re more likely to look for his or her positive characteristics and avoid the negative ones. This is similar to confirmation bias, but it’s oriented around people.

Related: 10 Stupid Mistakes Smart People Make

For example, let’s say I just hired someone named John, who was great during his interviews. Through his first few weeks, John does a few things well at work, but he also does many things poorly. The halo effect — brought on by his wonderful interview persona — could cause me to ignore his poor attributes and emphasise his good traits.

This can be detrimental to our ability to make judgements about others. We have to realise our biases toward certain people and eliminate them.

These are a handful of the many decision-making errors we’re all prone to. Although it’s challenging to scrutinise your preconceived notions, doing so is worthwhile. It gets easier over time and will, ultimately, make you a more effective decision-maker — personally and as a business owner.

This article was originally posted here on Entrepreneur.com.

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