Small businesses are made from blood, sweat, and tears and it can be heartbreaking to see them failing after all the work you’ve put in. Mitchell Law Firm can help your small business do a 180 and go from failing to thriving. Whether your small business is struggling or you are wanting to open a small business, contact us at Mitchell Law Firm and we can help make your small business dreams a reality.
Some small businesses thrive, while others fail miserably. According to the Small Business Administration, 20% of businesses fail during the first two years. You heard that right, folks. One in five small businesses will fail.
If you’re not looking out for red flags, you might find your business falling into the above statistic (and no entrepreneur wants that).
I’m sure you want your business to boom for many years to come. So, you need to know the signs that your business is on track to fail. And, learn ways to avoid these types of mistakes in the first place.
7 Signs Your Small Business Is Failing
Are things really fine and dandy at your small business? Or, are you just in denial? Be on the lookout for these seven warning signs that your small business is failing, and learn how to steer clear of these mistakes.
1. All-Time High Turnover Rates
Do you find your employees dropping like flies? If so, poor retention could be a sign that your business is doomed for failure.
Sure, every company is going to have employee turnover. Heck, it’s a part of business. But if you find your business suffering from high turnover rates, you probably have more to worry about than replacing employees.
According to one source, 87% of employers said that improving retention is a priority for their business.
If employees aren’t happy and don’t see a future with your business, they’ll quickly jump ship. To combat this issue, you have to put in some work.
Boost your employer brand and show employees that you appreciate them. To do this, you can:
- Offer competitive pay or benefits
- Provide a welcoming environment
- Have team-building activities
- Give praise and recognition
- Show employees a clear career path
2. Funds Are Dwindling
Your profits help drive your business to success. But if your cash flow is continually low, your business’s future might be shaky.
If you find your company’s funds are low (or nonexistent), you could have a huge problem on your hands.
To increase profits and the likelihood of your business surviving, do some homework. Why isn’t your business making money? Are prices set too high? Too low? Are you targeting the wrong customers?
Along with pinpointing your problem areas, you can also create a business budget, cut down on unnecessary expenses, and regularly track your cash flow. To help stay on top of your business’s funds, consider investing in accounting software. That way, you can easily monitor your cash flow and expenses.
3. You’re Constantly Extinguishing Problems
Do you find you constantly have to put out business fires left and right? Does it seem like every time you turn around, there’s another issue? Answering yes to both of these questions could be a sign that your business is heading down the wrong path.
Every business owner experiences problems once in a while. It’s part of being an entrepreneur (believe me, I know). But if you find that you’re facing problems nonstop, that can be … well, a problem.
If you want to extinguish issues before they arise, get to the root of your problems. Chances are, one of your smaller problems is causing a bigger issue. Extinguish and avoid small problems to get rid of a possibly bigger one down the road.
List out your problems to determine ways to tackle and resolve each issue. Then, plan ways you can avoid the same issues in the future.
4. Sales Are Plummeting
Let’s face it, sales go up and down. As a business owner, you’ll likely have peak seasons and slow seasons. But, a year-round “slow season” could be a sign that your business is failing.
Plummeting sales and disappearing customers are things no business wants to see or admit to having. If you find these issues becoming a pattern at your business, you need to make some changes … and fast.
So, what can you do to help reverse this issue and avoid this sign altogether? If sales and customer counts are taking a nosedive, you can:
- Ask current customers for feedback
- Offer coupons and giveaways
- Have in-store promotions and sales
- Increase advertisements
- Be more active in your community
5. You’ve Lost Your Passion
Think back to when you started your small business. Remember how passionate you were about starting your company? Remember all the blood, sweat, and tears you put into making your dream a reality? Do you feel the same way today?
Losing your passion for business can be a telltale sign that it’s sinking.
Passion drives your business to success. And if you’re not motivated, your small business will suffer the consequences.
If you see the signs of lost passion, take a step back, and think about your business’s past and future. Think back to why you started your business in the first place. Dig deep and figure out if your heart is still in your business.
If your passion isn’t fueling your business, you might need to make a change for the sake of your business’s success (e.g., stepping down or selling your venture).
6. You Keep Making the Same Mistakes
Everyone makes mistakes. And whether or not you want to hear it, you’re not a perfect business owner. You’re bound to make a mistake every once in a while.
But, your startup could be doomed if you find your business making the same blunders time and time again.
Making the same mistakes repeatedly can be a major red flag for your business. It could mean you’re getting careless when it comes to problem-solving. Or, it could mean you’re not taking the right course of action.
To turn this problem around, find out where mistakes were made and come up with a game plan to prevent them from occurring again.
Remember, don’t hang onto your past mistakes. If you want to keep your business above water, figure out what went wrong, fix it going forward, and move on.
7. People Aren’t Talking About Your Business
Word-of-mouth marketing and customer reviews are oh-so-important for every small business owner. Customers not buzzing about your business might be a sign that your company is flopping.
Silence is loud when it comes to small businesses. You might have a major problem in store if no one is talking about your company. And if people aren’t talking about you or your business, they’re most definitely not telling their friends to stop by your business for a visit.
So, what can you do to get people talking? Get to know your potential and current customers a little better. Pinpoint why they’re not talking about your business. Have they heard something negative about your business? Did they have a bad experience?
Consider encouraging people to talk about your business by asking customers to review it online. You can offer an incentive, such as a discount or free item, for giving feedback about your company. Plus, you can use reviews to improve your business.
If you see the sign that people aren’t talking about your business, give them something (hopefully good) to talk about. Provide great customer service, engage with customers, and listen to their concerns.