Businesses don’t fail overnight, and if you are able pull up your socks at the first signs of trouble there is no need for it to get that far. Here are some of the telltale signs that your business may be well on its way to becoming stagnant.
1. Profit margin is low
Research has shown that the majority of small businesses fail within the first five years, simply because they fail to make a profit.
A business cannot be successful with profit, and granted, it does take a while before any start-up business actually starts making any profit at all, but if a few years down the line you still aren’t seeing significant progress you may need to consider a different strategy.
An equally unpleasant scenario is when your business has made profit in the past, but now seems to have slowed down. This is a clear sign that you need to change the direction you have been going in or you’ll soon see the low profits become no profits.
2. Your marketing budget has been cut
If your marketing budget has been cut to save on expenses, you can be fairly sure that your business is or soon will become stagnant. Marketing is the lifeblood of any company, and in business, if you’re not moving forward, you’re moving backwards.
In order to stay ahead of the competition, you need consumers to see you, be familiar with your products or services and have a reason to pay for them. If you are spending more than you are making then by all means, cut down on your expenses; but your marketing budget should not be the first thing to go. Look at it as an investment, rather than an expense.
3. You know each customer by name
Although there is a certain appeal to personally knowing each customer, it isn’t necessarily a sign that you are branching out and reaching new people with your services or products. With a small business you certainly will have more of an opportunity to get to know your customers than if you worked in a large corporation, and that can be a good thing. But don’t get so comfortable with your current client base that you forget to win over new customers.
4. You are afraid of taking risks
It’s good to be cautious with money, especially when your business is on the line, but being too safe won’t get you very far either. Smart businessmen know when it’s time to save and when it’s time to spend for the good of the company.
For example, you may be saving some money by hiring employees without any specialization, but you are likely also losing money because they are not as competent as someone who has studied a certain area and knows the tricks of the trade.
5. You do things the way they have always been done
Some small business owners still cling to the rather primitive mindset of “why fix it if it’s not broken?” Unfortunately this mindset can be dangerous as it may prevent a small business from growing and evolving with the current market trends and needs.
Customer demands will change over time and if you can’t adapt to their needs, they will simply take their business elsewhere.
6. Employees are unmotivated
Unmotivated employees are often a very clear warning sign that your business is sliding backwards rather than pushing forward. While it would be easy to get frustrated and fire anyone on your staff who doesn’t seem to be doing their best, a better approach would be to try to find out why they feel that way in the first place.
Do they feel unfulfilled in their current position? Do they feel unappreciated? Are they overworked? Are they unhappy with some of the rules or procedures you have put in place? There are many reasons why employees can start to lose interest in the job they carry out each day, and unless you understand the cause, you’ll never be able to fix the problem, even if you were to bring in a whole new workforce.
On the other hand, some employees may simply be lazy, too familiar or have bad work ethic. In the case of small businesses, managers or owners tend to have a more difficult time drawing the line and firing someone, simply because they often have a much closer working relationship. However, problems should not be tolerated just because they have been around for a long time.
Bring in some fresh staff with whom you are less familiar, and set clear boundaries to prevent these issues from cropping up in the future.
7. You still try to do everything yourself
It’s natural to want to do things yourself, but eventually, as your business expands, you simply won’t be able to be on top of everything the way you were when your business was just starting out. That’s what you’re paying other people to do, and if you don’t trust them or believe they are competent enough to do the job, then why are they still on your payroll?
Trying to do everything yourself will only cause you to be stressed, and your business will suffer because you won’t be able to do anything properly if you have too much on your plate.
8. You can’t remember when you had your last brain storming/staff meeting
Getting your staff members together regularly is not only good for the team spirit; it will also encourage creativity and allow you to get feedback about the different aspects of your business. If your staff is unhappy or has ideas about how things could be improved, you need to know about it.
Be open with your team, let them know how things are going, and ask for ideas and feedback. You may be surprised at the things your employees have noticed that you failed to see before.
Ally is part of the team that manages some of the most successful personal finance sites in Sydney, Australia, which provide helpful tips about Budgeting Planner and Saving Money Fast. Before joining the team, she was a Media Planner in McCann Worldgroup Philippines, Inc., wherein she had the opportunity to work on several innovative and globally recognized outdoor advertising executions.