According to the U.S. Small Business Administration, around 50 percent of new businesses fail in the first five years. Bloomberg Businessweek paints an even gloomier picture, declaring that eight in ten businesses don’t make it past the first 18 months. Neither figure is particularly inspiring.
Here are seven signs that your business is about to join the thousands of ventures that barely make it past the starting blocks:
You Can’t Pay Your Bills on Time
While it’s natural for startups to run for several months with a negative cash flow and it’s okay for established businesses to experience slow seasons, a growing stack of unpaid bills is a clear warning sign that your business is on the rocks. If those bills include your employees’ paychecks, don’t try to kid yourself that your situation is not as dire as it seems and it’s just a temporary cash flow problem. Failing to pay wages and other bills is a slippery slope to failure.
Your Talent Is Walking out the Door
Losing the odd member of your team to a better deal is normal, but if you notice your staff are flocking toward new pastures, you have a serious problem on your hands. According to Inc., a business that continually hemorrhages employees is probably suffering from mismanagement. That’s a problem in itself, but your misery won’t end there. Replacing a staff member can cost your business between 30 and 400 percent of their annual salary. Ouch.
All Your Income Comes from a Handful of Customers
The world seems like a better place when your business is doing well, but is it doing as well as you think? The Pareto principle tells you that 80 percent of your sales will come from 20 percent of your customers. If you find that figure is less than the accepted 20, it could be time to jump on your cell phone to talk to customers who don’t contribute to your takings as much as they should.
You Realize Your Business Is No Different than Your Competitors
Unless you’ve struck gold and discovered an untapped niche, the chances are you’re offering exactly the same product or service as a competitor or two. Differentiating your business from others in the same market is key to your success, and contrary to what you may believe, it doesn’t come down to price and price alone. Standing out from your competitors might take the form of great customer service or unbeatable after sales support. If you aren’t doing things differently, your business could be in trouble.
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