Many people come to see me when they’re worried that their business might be failing. One of the tricks of my trade as a business mentor is to recognise when the business is actually failing, and can’t be revived, and when it just need some TLC.
The TLC might consist of working on an entirely new strategy, bringing in some investments because the business can only work on a bigger scale or just a shed load of much better marketing.
But sometimes, the business is dead, and it’s only being kept alive by the business owner giving it constant CPR
This article is to help you to recognise which one of these applies to your business, and to take early action to sort things out if your business might be failing.
Your business might be failing if:
- You’ve not made any headway in one of the risky areas such as restaurants/cafes, publishing, complementary health or hotels
- You’ve poured in money from your savings/credit cards/friends and family and the business is only keeping going because of your directors loan
- You’ve tried taking yourself out of the business and working on the business, especially the marketing, but it hasn’t made any difference
Note that this is not the same as getting an a student to do some extra social media for you or engaging a marketing consultant who ripped you off and didn’t deliver results.
Your business might be failing if you see the following danger signs:
- Your most loyal customers are leaving, and apologising for it
- Your business depended on one key member of staff, and she left to work for a competitor
- You’ve ended up having to go back into working in the business, rather than being the MD, to save money on staff
- You’re working more than twelve hours a day in the business, and it’s still losing money
- You’ve applied lots of the tactics you’ve read about on the joy of business blog, but none of them seem to work
- You’ve experimented with your pricing, but you still can’t make a profit on particular jobs
- The main thing that you used to sell lots of is now being sold in Sainsbury’s for half the price
- You’ve got a loyal tribe of great people who love what you do, but less and less of them spend any money with you
- Your main supplier costs have gone up rapidly, but your competitors have not raised their prices
- As well as your directors loan, you owe lots of money to the bank and to suppliers
- You haven’t paid yourself for six months
None of these mean that your business is definitely failing.
I’ve seen lots of businesses that have several of these indicators, and we’ve been able to turn the company around, so this list isn’t definitive in any way. But if you’re getting a feeling of recognition from several of these, then it might be time to think about the next step.
Indicators that don’t mean that your business might be failing
These are things that more about you, and about the business itself:
- You don’t look forward to going to work any more
- You worry about the future for your staff
- You feel like a failure (this is normal)
- You’ve fallen out with your business partner
- You’re worried about sales next month, even though you’ve got lots of potential leads and prospects (this is normal)
- You’re working twelve hours a day
- You’re frustrated that you haven’t made that big breakthrough yet (this is normal)
- You have family and financial responsibilities, and you’re worried that you won’t be able to support them (this is normal)
How to really tell if your business really is failing
The problem is, that you won’t be able to see the wood for the trees. None of us can be objective about our own business, and how is doing, because we’re too deeply embedded in it. I have all of those worries in the second category from time to time as well, that’s just being a human being, my business isn’t failing, it’s all fine.
You need somebody else, somebody who is an expert in business to tell you what’s really going on. You need to be ready to share with them deep dark secrets of your accounts.
Which means that you need your accounts to be up-to-date. I say this because a lot of the time when I talk to business owners who are in trouble, they don’t have a clear view of what’s happening with the business financially, and they’ve been so busy running around desperately trying to get money in that they have not spent time doing their bank reconciliation, so the accounts are out of date.
Here are your options to get some expert advice to find out what’s really happening with your business
Go and talk to your accountant. Sometimes business owners are a bit shy of going to their accountant, a bit like how people with a health problem are a bit shy of going to their GP about that persistent cough. Your accountant, like your GP,wants you to come and talk to them sooner rather than later. If you do have to close the business down, your accountant is your first call anyway, so you might as well talk to her now.
Get a trusted friend, one who has experience in running their own business, to look at the accounts with you. They should be able to tell you whether your worrying about nothing, or whether there’s something that need serious surgery.
Book a decision-making session with me. I promise to give you a completely objective view of the business, based on my experience of working with hundreds of businesses. I’ll be able to tell you whether you should take it off the life support machine, or, as often happens, give you some immediate tips on how to resuscitate it