Managing a young business is much like parenting… you need to know about a lot of stuff. This is especially true if you own and run your own, small business. To stay afloat in the turbulent ‘corporate waters’, you must cut down your margin of error to near perfect proportions. Knowing how to effectively manage your investment is a good armor to have, and that is what we give to you, through our ‘Corporate Waters Series’.
Today, we focus on the indicators that your business needs an external intervention.
There are business running effectively, and those that are merely scrapping through. There are also those that are neither of the two, so defining where your venture stands is crucial. The most dangerous situation, however, is when you are satisfied with the situation of your business.
Ordinarily, it helps to find a consultant before your firm is too far down the line.
It leaves you complacent and stagnant. Keeping your firm moving ahead is as important as any other aspect of the business, maybe the most important. Business growth and profits are good, but never turn down the chance to work with a consultant.
The consultant is not as passionate about your business as you are, so would see it for what it is. It’s said there exists a line between businesses in desperate need of bailing out, and those that are far gone to be saved. In most cases, you won’t tell which side of the line your business stands, but the consultant will.
Ordinarily, it helps to find a consultant before your firm is too far down the line. Where this is the case, ability to see warning signs in time will save your firm immensely. Some of such signs are as discussed herein;
When using own cash to sustain the business
It is not uncommon for people to use own cash to grow their business firms. What is uncommon is using own funds to keep your firm in business. It is one of the loudest red lights, and you are better off heeding to them. Funds used may be derived from own savings, house mortgages, selling assets and similar acts to raise funds and sustain your business. Taking loans to enable operations is as risky as any of the above, and only points to a failing business. You have to intervene.
Continued year to year revenue loses
The unpredictability of business environments mean that financial performance numbers will fluctuate from one period to another. That is to be understood. This is not to be confused with a scenario where your revenues continue to fall consistently, especially where your competitors aren’t going through the same.
In cases of market shrinkage, restructure your business model to adapt better and keep your firm afloat. Using consultants with experience in varied industries may be able to help you think about your business in new and different ways and to create a plan for the future.
Continuously losing key personnel
Regardless of the time or whatever is happening with your firm, the loss of key employees is never a good sign. There must be very compelling reasons behind your best personnel departing the firm, and it is prudent you find out what it is and how the problem should be fixed. Understand likely internal reasons and their most suitable fix, but do not overlook the possibility that your competition is wooing them. Continued loss of important employees weakens your firm faster than any other thing, and other employees might be on their way out soon after.
While you can count on your more loyal employees, as well as those with little to no better choices, it is helpful to work and stop the bleeding before much harm is sustained. Again, an external consultant will be objective and detached enough to find and rectify the underlying problem. Furthermore, your employees are more likely to open up and reveal to the consultant the kind of information likely to be withheld from you.
You must heed these red flags. Identifying them in time would save you money, and even business. As a business owner, it is right to be vigilant all the time, and exercise healthy levels of entrepreneurial skepticism to protect your business. As these signs do not always appear at ago, vigilance and skepticism allows you to solve the problems well in time.