Warning Signs You May Need To Change Course
Wouldn’t it be nice to have a GPS system for your business that alerts you to an obstacle down the road? Instead of standing still in the marketplace, it would reroute you to a different strategy. Then you could still reach your business destination on time. There may not be an app for that yet, but there are signals your small business may be veering off course. See if any of these warning signs sound familiar, then look for an alternate route.
Warning Sign #1: This is the second month you’ve had trouble paying bills.
Every business experiences a short-term cash-flow problem at one time or another. Maybe a client is late in paying or a machine unexpectedly needs repair. But when a negative cash flow lasts over a period of time, you need to pay attention to that warning light on your business dashboard.
Start by looking at areas like accounts receivable, expense management and inventory control. These are often the source of cash-flow problems. Here are four cash-flow mistakes that could hurt your small business.
Warning Sign #2: You’re experiencing high employee turnover.
It’s understandable when an employee leaves to go back to school or moves to another city. But when you see a pattern of people leaving because they’re unhappy, you may have a more systematic problem. Your employees are your direct link to customer service so maintaining their productivity is important.
Rather than wait until an employee leaves, conduct periodic “stay interviews.” The purpose is to uncover potential retention issues while there’s still time to address them. Here are some sample stay interview questions.
Warning Sign #3: The number of repeat purchases is declining.
It costs five times more to acquire a new customer than to keep a current one. So if you’re not getting repeat sales from current customers, you’re not maximizing the return you could be getting on your acquisition costs.
Consider conducting regular customer satisfaction surveys to uncover issues. It might be as simple as asking them at the time of purchase or providing a link on the receipt to an online survey. Some businesses conduct a customer service SWOT analysis to get a more global view. Here’s how to do one for your business.
Warning Sign #4: Nothing gets done right unless you do it yourself.
Running a small business is personal. After all, you’re the one in charge. You think of it as a measure of your personal success. So you want to be involved in every aspect. But being “involved” doesn’t mean you have to be the one actually doing the work. In fact, attending to every small detail can keep you from focusing on the bigger picture.
That’s where delegation comes in. You hand off day-to-day duties to an employee (or outsource them) so you have time to manage. Start small with the appropriate training. Then establish checkpoints along the way to check progress and provide feedback. Remember, the individual may do things differently than you. That’s OK. Focus on results, not process.
Warning Sign #5: Turning business away because you don’t have the capacity.
Sometimes too much of a good thing can turn out to be a headache—if you’re not ready for it. Consistently rising orders means you’re doing the right thing. You’ve tapped a customer need and they’re coming to you to satisfy it. But you’ll lose that momentum if you can’t fill the order.
Maybe it’s time to scale your business. That means having the right things in place so you’re able to do more, without jeopardizing the progress you’ve made so far. It could involve adding staff or more technology. So you want to be sure you’re ready to make the investment. SCORE offers these five steps to scaling a business.
It’s easy to get off course when running a business. Steer clear of these obstacles by reading the signs along the way. If you recognize any of these warning signals, it might be time to check the map and reroute your path.