Many people come to see me for business coaching when they’re worried that their business might be failing.
One of the tricks of my trade as a business coach is to recognise when the company is failing, and can’t be revived or to see when it just needs some TLC.
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 company might be failing.
Your business might be failing if:
- Your business is in one of the risky areas such as restaurants/cafes, publishing, complementary health or hotels but it’s not made any headway
- Money has been poured in from your savings/credit cards/friends and family, and the business is only keeping going because of your director’s loan
- You’ve tried taking yourself out from the company and working on the business, especially the marketing, but it hasn’t made any difference
Your business might be failing if you see the following danger signs:
- The most loyal customers are leaving, and apologising for it
- Your business depended on one key member of staff, and she moved to work for a competitor
- You’ve ended up having to go back into doing the work for clients, rather than working as the MD so that you can save money on staff
- You’re working more than twelve hours a day, 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 seems to work
- You’ve read my Sweetspot Pricing book and tried some of the advice in there, but things still seem to be going downhill.
- The main thing that you used to sell lots of is now available 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 supplier costs have gone up rapidly, but your competitors have not raised their prices
- As well as your director’s loan, you owe lots of money to the bank and suppliers
- You haven’t paid yourself for six months
- Your business fails the Tesco test
None of these automatically means that your business is failing. But they might.
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
- Worrying about the future of your staff
- Feeling like a failure (this is normal)
- Falling 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)
- Working twelve hours a day (here are some tips on this one right here)
- Being 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 tell if your business 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 it is doing.
We are 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 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, 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.
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 happening with your business
Go and talk to your accountant. Sometimes business owners are a bit shy about going to their accountant. A bit like how people with a health problem are a bit shy about 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 you’re worrying about nothing, or whether there’s something that needs 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 companies. 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.
Here are a couple of blogs to help you constructively think about your business and reflect on how it’s doing