It isn’t a pleasant thing to wake up one day and realize that your small business has gone under. If you are proactive from the beginning, you will understand the warning signs of your company’s demise early on and prevent a collapse.
- Low sales
This is the single biggest reason behind a business’ collapse. If you are unable to make sales, you choke your revenue stream. This eventually leads to a cash flow problem and your business declines.
- High employee turnovers
Employees understand a business very closely and if you experience a high employee turnover, it is likely that there is a problem.
- You have lost touch with your business
It is okay for CEOs and founders to be stuck in several tasks at once, mostly jobs that make them spend time outside office. However, if you have lost touch with your business completely, problems are likely.
- You feel a lack of purpose
A small business depends largely on the owner/founder for inspiration. If you, as a founder, have lost meaning or purpose, the business is set to fail.
Markets are developing very quickly in this world, creating a complacency problem. If your business fails to understand that your customers need something new or innovative, it will die. Even if you are a grocery store, you need to change.
- No buzz
If your small business doesn’t create buss, it could lose out on heavily marketed counterparts. Marketing, advertising and networking are essentials to any business and you must do these regularly to stay relevant.
- Your business has an alternative
Does your business have an alternative that is quicker, cheaper and more technologically advanced? If yes, you may not retain your market for too long. Blockbuster was thrashed by Netflix for the same reasons.
- Consistent discounting
It has become a norm for small businesses to provide ridiculous discounts to their customers to keep getting business. However, it reduces your profit margins sharply. Eventually, your customers start expecting lesser prices and your profits erode completely.
- Bad accounting
A bad accounting practice could easily ruin a business. If you don’t have any idea about the money you have in your account, your account payables and receivables, your business will eventually collapse, regardless of how great an idea it is or how great your management and marketing skills are.
- High debt
Does your business thrive on debt? If yes, then it is high time you change your credit dependency and become more self-reliant. A little problem with the debt could crush your dreams in minutes.
The same should be said about funding dependency. Is your small business trying to score a funding? If yes, then you must be extremely careful while spending that money. You must try to register either growth or profits as quickly as possible to justify the spending.
If you see any of these signs in your business, act quickly and ensure that you always take the right decisions at the right time.