By Marcus Jensen
One in four new businesses fail during the first year of doing business. By the end of the first decade around 75 per cent of them are no longer operating.
Observing the market, we’ve concluded that there are more businesses out there that aren’t getting a proper ROI but are still keeping their firms alive, hoping things will change. And sometimes things do take a turn for the better, but other times, keeping a business floating on hope rather than actual money has the tendency to drive a firm into enormous debt.
If you’ve been struggling and you are unsure where you currently stand in your business, here are clues that may suggest your small business is failing:
Customers are floating (away)
Every successful business prides on managing to keep their current customers happy and tease new customers into coming in; however, the moment you notice your customers are abandoning you, this should be your first clue you are doing something wrong. Are your prices current? Is your offer just as good (or better) as your competitor’s? Are you treating customers with the same commitment you did when you were starting out?
Factors for the customers leaving are numerous, which is why you need to dig deeper into the core of the problem and fix it. Some old customers may even be willing to give an input and tell you why they left – this way you’ll have a clue where to start fixing the problem, or at least take their suggestions into consideration.
Refusing to progress
Depending on your line of business, it’s normal you’ll want to keep things just as you know them – done in a certain way and with certain tools. However, the constant progress and change we are witnessing in the market are asking for constant and undivided attention and improvement. Thus, you are set for failure if you refuse to make a change in the way you operate. Think of Kodak – this company is a perfect example of how complacency can exclude you from the market. The world leader in the camera market for generations, Kodak refused to accept the rise in popularity of digital photography (i.e. refused to accept the change), which resulted in now being a mere shadow of its former self. Being stubborn about the way you are doing business isn’t the way to go. Respect the changes in the market and go with them.
Toxic working environment
For a business to be successful, it is essential to have a high quality work force and leaders who know what they are doing. If you’ve noticed that the work chemistry between your staff and team leaders is misbalanced, this may be the first clue that things are going south.
No owner needs unhappy employees in their team or toxic managers potentially causing the staff to feel that way. If any of the members of your team comes to you with a problem, listen carefully. If, however, you sense that things in the team aren’t working out yet nobody is coming forward with a complaint, be observant and take things into your own hands.
Talk to your employees and team leaders to get feedback and understand why there exists a miscommunication in the team. Also, it may help to organize a team building or hold a meeting where you’ll explain to your team how crucial it is for everyone to get along for the business to keep existing.
Encourage your employees to come forward with problems as these people are your base, your core and you need them happy.
Miscalculating the market
Miscalculating the market is one of the most common reasons businesses fail; investors and founders can overvalue or overrate the way a company will be received by the market, which potentially leads it into a collapse.
If you are investing in a business, starting one or changing business tactics on a business that already is, the way to best evaluate the marketplace is to ask these three questions:
Is the market opportunity what I thought it was?
When I go back and read my original investment thesis, is the market what I thought it was?
Is the company unable to attain the market share that I thought it would?
Start changing your strategy the moment you notice your competitors are outpacing you. If you feel it’s already too late, there is no shame in leaving the game by acquisition. True, not all companies can exercise this option, but those that can should start working on their exit strategy as soon as possible.
Deciding it’s time to call it quits is a brutal realization. Financially, it’s a huge hit on your current living habits, but it can also be a lifeboat from a sinking ship. Still, to give yourself the opportunity to succeed somewhere else, you need to give yourself permission to walk away from something that’s simply not working out.
Bio: Marcus Jensen is an IT professional. He is an editor-in-chief of technivorz.com, and writes about technology, business and marketing.