By Shritika Dona
We like to talk about successes and how to succeed in business, but the truth is many (most?) new small businesses fail. So, understanding how to recognize when things start to go south is obviously important. It’s not the end of the world though… at least not yet. There are always some steps you can take to try to “right the ship,” so to speak. Is your business struggling? Are you losing customers or money and don’t know how to plug the hole? Here are three things to look at when your business is failing.
Are you losing customers?
If you find that customers are drifting away, it could be a coincidence, or there could be a common underlying reason (or several reasons). The best advice I can give is to reach out to each departing customer. Attempt to learn why they are leaving you and what is “greener” on the other side. See if you can offer up something reasonable to save the relationship. You may end up retaining a customer that you would have otherwise lost. At the very least you’ll learn some valuable pieces of information from them that you can take away, and this info might allow you to curtail similar outcomes with other clients. This could mean the difference between staying in business and closing your doors for good.
Are you losing too much money?
If money seems to be the sole issue, you may need to look hard and fast at your expenses and your outgoing cash flow. Bring in outside help if you’re not as good with finances as you thought you were.
You may need to begin examining business finances every week rather than every month. Catching problems earlier can make a huge difference – 10% cost overruns are far easier to fix than 50% cost overruns.
Would switching to upfront customer billing (if it makes sense for your business or service) help your cash flow and cash planning process? I incorporated this with nearly all of my clients two years ago and it was a huge help in terms of how I was able to plan the business cash flow and marketing activities, as well as just ensuring my plate was always full.
Also, more frequent oversight of your outgoing expenses can help you determine services you have just stuck with that you could decrease or eliminate in order to reduce your overhead. Switching from Verizon to Sprint for my mobile service alone saved me considerable money over the course of a year.
Are you falling behind in skills, technology, or visibility?
It may be gut check time. Are you just slipping? One of these may have come to light when you went to your clients on the fence in the first action listed above. But, if not, take a long hard look at each one of these. Are you a dinosaur? Are you not being innovative enough (because your competition probably is)? Do you seem archaic?
Ask some trusted customers these or similar questions:
- Are you cutting edge enough for them?
- What do they see as your missing link? What would they like to see new from you?
- Do they feel well connected to you? If not, then these customers may be your next ones exiting.
If the ship is sinking, meaning your business is going under, there very well may be nothing you can do about it. But my guess is that since it’s your business – your baby – you want to do everything you can (within reason) to save it. Start by getting some facts and taking a hard look at the little things you may be overlooking. These actions and how you react to the information you get may make the difference and actually save your business.