Is your small business failing?

Is your small business failing?

If you own your own small business, then you need to be aware of its chances of success, or failure.

Like anything to do with debt, being able to spot the warning signs early on is often the key to preventing more serious debt problems further down the line. But unfortunately, spotting these signs can be far from easy.

You?ll probably be struggling away at the coal face of the business and find it hard to step back and see the bigger picture. Or you could just be feeling disenchanted about your struggling business and unable to make clear judgements about your situation.

Here are some potential warning signs to be aware of, that could indicate your small business, and you, could be heading for trouble:

No New Customers
New customers are the lifeblood of any business. If you just rely on your existing customer base you?ll end up with problems. This is because existing customers have an unfortunate habit of defecting, self destructing or even dying off.

Unfortunately the process of gaining new business invariably involves investing money in sales and marketing ? money which may often be hard to find, for the very reason that the business is stalling.

In addition, the prospect of selling may put you off. If you have a small business and you are your own sales director, then the prospect of putting yourself out there whilst you are also worrying about the business can be off putting to say the least.

Brick Wall Syndrome
This warning sign is most often found amongst new start-up businesses, but can also occur in more established businesses as well.

Basically, how long can you go on banging your head against a brick wall before you realise your business just isn?t working?

It might be that your great idea for a new product or service simply isn?t selling, even though you?ve tried every possible combination of pricing and promotion.

It could be that the structure of your business isn?t working. For example, your fixed overheads could be too high because you are overstaffed, holding too much stock, or your premises cost too much.

In this situation, you need to make tough decisions. You can call it a day, and wind up the business or hopefully sell it before you get swamped with debt.

Or you can make radical changes to the business itself, even if this means redundancies, restructuring or shifting your focus.

Why are we here?
With all the day to day distractions of running a small business, you can often overlook the very reason why you do it.

The answer is surely to make a profit. But it?s surprising how many small businesses actually lose sight of their own profitability; the very reason for their existence.

Some business owners focus too much on cash flow and making sure that the money is there to pay the bills and wages on time. Cash flow is important, it?s true. But not at the expense of knowing if the business is actually making a profit or not.

If your business is running at a loss without you knowing it, it won?t take long for the problems to start mounting. And simply extending the overdraft isn?t the answer. You need to look at the key issues contributing to your business finances:

- What price am I selling at, am I making a profit, and can make more?
- How much am I selling, is it enough, and how can I sell more?
- What am I spending, is it too much, and where can I save money?

A small change in each of these key areas can mean the difference between business success and failure.

Running a small business is hard work but ultimately rewarding, both financially and personally. But having invested so much time and effort into your business, you owe it to yourself to be honest, objective and realistic about its prospects.

In business, one thing?s for sure. Doing nothing simply isn?t an option.

Or else you'll end up with type of debt problems you can read about at www.debtblogger.co.uk




debt blogger