Failure is event entrepreneurs are encouraged to embrace although they should fight hard to minimise. Some would say, failure is part of the journey to becoming a successful entrepreneur and most are always on the lookout for tiny glitches in business operations. Note that failure in business goes way beyond the temporary cash flow shortages or the seasonal decline in sales synonymous with most startups. What you should be wary of is a gradual and almost imperceptible decline in business operations which will characterise your business operations as it gravitates towards imminent failure. If you fail to notice these small yet critical changes, you might find yourself out of business one day. In this article, I attempt at exploring some of the telltale signs that your business could be heading for failure and these should help you to put proper measures in place before your business tumbles.
Key Note About Failure
Arguably, in this competitive business environment, no one really wants to fail. For most people, failure doesn`t feel good wherein business it can cost you a sizeable amount of money, time and other such capital resources. But, you should embrace the fact that if you are heading for success then failure will be an inevitable part of your life journey. In this regard, most successful people whom we look up to view failure as a good occurrence with possibly far-reaching benefits than losses. Firstly, benefits are realised when we fail and accept that we have learnt of a way which does not bring the desired outcome. Secondly, our ability to cope with and emerge out of the failure is important in so far as it will give you more courage to find other means to make things work. Hence, in the life of an entrepreneur, these two elements and more make failure a priced occurrence. However, more often failure comes with possible losses in the capital and other resources, an entrepreneur should always be on the lookout for early signs of failure so as not to lose more than what is reasonable.
So, here are some key pointers indicative of business failure which you should be on the lookout for.
You Do Not Have a Marketing Plan
Quite often as a startup owner, you will be caught up in your business idea to a point that you assume everyone else will love it too. They call it the inventor’s dilemma. Such a dilemma prompts you into making assumptions that only work to limit your focus towards marketing and advertising your business. Because you think your idea is brilliant, you usually fail to fully appreciate the amount of work and resources needed to carry out a marketing campaign. Because of this, due diligence in reaching out to your customers will not be observed and the result is a business which does not have a clear picture of where exactly its prospective customers are and which methods to use in luring them. This goes against the rule that each business must have a clearly defined target audience from which it will learn from and adapt to. Otherwise, the absence of a marketing plan is one sure sign that you are directing your business towards failure. In fact, how do you expect to make sells if you do not invite your customers to your business?
It is the norm that for a business to be in existence there is a need/demand for its services and a business will thrive proportionate to this demand. Now, as your business begins to gain traction and sales are booming, you could be on the right path but when you begin to notice a reversal of the trend then corrective action is needed before failure sets it. Many factors come to play in driving demand and sales and in some instances, customers might feel that your product/service does not meet expected standards. Some would think that your offering is just too expensive in comparison to other market options. As a business owner, you should be on the lookout for this in as much as you desire to make corrective measures.
Always Paying Your Bills Late
Being in business comes with certain fixed and variable costs which have to be taken care of in the respective business cycle. A business is supposed to pay its employees, the landlord, suppliers and where applicable finance providers such as banks. All these are costs necessary for a business to produce profits and where a business fails to meet these obligations, the business owner might be forced to fork out money from his personal funds. If this happens regularly then it might be time to sit down and review the business system in its entirety. It is worth noting that quite often a startup business might struggle to make payments here and there, but if this grows to become more of a recurring trend in your business then it could be a warning sign demanding your immediate attention as a business owner.
High Employee Turnover
While it is normal for companies to lose employees all the time, it is the rate at which a given company loses employees that should be of concern. In instances where your employee turnover rate is high to the point of losing employees every month on end, treat that as a sign that all is not well in your business system. Usually, a failing business creates situations conducive for low salaries, substandard working conditions and generally ineffective management which in turn leads to poor staff morale. Where staff morale is low, productivity always follows suite and in business, this serves no purpose. At the sign of this and the above pointers, you should commence to search for and attend to the possible causing factors for your high employee turnover otherwise your business will then be affected by costs relating to employee recruitment and training.