It’s common for a business to go through ups and downs. Unfortunately, it’s also common for businesses to fail altogether. According to statistics, about 40% of businesses don’t survive after a major crisis. Obviously, no business owner wants to see their blood, sweat, and tears go down the drain. Fortunately, there are many business courses, seminars, and related resources on how to keep things running smoothly even during hard times. Owners can stay on track if they take steps early on to ensure things remain viable and growing. There is an extremely long list of causes of failure, but the warning signs your small business might be in trouble are fairly apparent. Here are just a few to pay attention to.
Low or Consistently Decreasing Sales
Low or consistently decreasing sales is one obvious sign that a business could be out of balance and in need of change. Two ways to understand this is by conducting market research and an in-depth financial analysis of the past year to discover potential culprits. Possible results could be heavy competition in the sector, an inappropriate sales channel, and external impacts beyond your control. The outcome of your search will determine the approach to use in resolving the matter. Some common solutions might be to solicit customer feedback, increase marketing or advertising efforts, and be more active in the local community.
Profits keep a business running and growing. Therefore, if cash is dwindling at an alarming rate, the future of your business could be at stake. Low cash flow reduces your enterprise value, affecting credit, the future sale of the business, and investor support. Again, homework is in order, regarding what could be causing a decline in money. For example, are your products or services under or overpriced? Are you targeting the right audience? Are you overspending in other areas of the business? Answering these questions can help you strategize and potentially turn things around.
Having a solid accounting system to monitor your expenses and cash flow is a good investment when it comes to funds as well. You can hire an accountant or outsource if you have the budget. Fortunately, even if you can’t get an accountant, you can still access resources like software that help you do it yourself.
Lack of Passion
Many women start businesses based on their own passions and interests. However, passion alone cannot sustain a business. And after running it for some time and going through the ups and downs, it can begin to feel like more of a burden than a pleasurable experience. Yes, passion serves as the initial motivation and can carry a business owner through for a long time. That said, people change and so do circumstances. I recommend taking an inventory of how you feel frequently to avoid any pitfalls. Think deeply about why you started the business in the first place. If you’re unable to regain the passion after this introspection, consider what might be missing. Consider all options before letting your business go or watching it fail. Remember, change isn’t a bad thing. It can be a stepping stone to explore other interests and create something you love again.