In today’s competitive marketplace many businesses, even established ones, are struggling to survive. There are many reasons why businesses fail, ranging from inadequate cash flow, to high overhead costs, bad management, expanding too quickly and poor credit. Over the years, however, we have identified five less obvious actions that can destroy your business. These “hidden nuances” are all too common practice among business owners and can set you up for failure when times get tough.
Getting a second job
During times where businesses are facing severe financial stress, it is not uncommon for the business owners to seek another source of income as a contingent back-up plan.
Straddling the fence, however, only sets you up for failure. Energy put toward maintaining a back-up plan keeps you from making a full commitment to your businesses.
Instead, in difficult times, scale back on the “big bold sell” and focus on the “low hanging revenue generating services” that are in high demand and have the capability of generating immediate income.
Not understanding your financials
Operating in the blind puts your business at high risk for failure. Know what you’re spending on what and where you can cut back.
There needs to be systems and processes in place to control purchasing and inventory and budgets need to be followed. It’s important that you not only generate financial reports but that you understand them. It is your responsibility to watch over business finances, not the accountant, the bookkeeper or the division managers.
Your dream vs. business opportunity
The “I” mindset will keep a business from succeeding. It’s not about your dream or fulfilling your interest, but about whether there is a need for your product or service.
The No. 1 focus for any business owner should be to fulfill a need in the marketplace.
Not being prepared for economic downturns
During difficult economic times, when the cash flow slows substantially, the lack of savings and lack of a solid plan can be devastating.
Stay abreast of your customers’ buying trends, identify those customers that may be entering the “slow pay” zone (70- to 90-day payments), restructure staff duties in an effort to increase productivity, and cut back on unnecessary spending.
No follow-up may mean no
We’ve all taken customers for granted. Once we obtain their business, we don’t follow-up or ask, “How are we doing?” Moreover, we fail to ask, “Is there anything we can do better?” By not following up, you are likely losing out on repeat business.
Lack of follow-up can appear in the form of a decrease in sales or customer complaints. By the time you reach that point, it is often too late.
The lack of follow-up and not responding to complaints immediately, positions businesses to fail. Avoid the possibility of losing business by taking the time to recognize your customers, ask them for feedback and ask them how you can do better. ●
Garnett Newcombe and Kay Woods are business experts and award winning CEOs who have joined forces to start the speaking platform CEO Real Talk. Through CEO Real Talk they share a realistic foundation for long-term profitability as businesses continue to grow and diversify. Newcombe is co-founder and CEO of Human Potential Consultants LLC, an award-winning employment solutions company. Woods is founder and CEO of Precious Treasures Childcare, an award-winning 24/7 child care center. For more information, visit www.ceorealtalk.com.