PKB Accountants’ mission is to help businesses flourish. And over the years of doing that, we have noticed several surprising – but reliable – signs that a company might be in more trouble than it realises. Here are the top four signals that your business is struggling, and our simple, effective ways to solve them.
Sign: Lack of customer engagement
Happy customers are easy to spot: they leave good reviews, thank you for work done well, and sing your praises to everyone who’ll listen. As well as reliable income, delighted customers also provide a valuable marketing resource for you – promoting your services to their friends and colleagues, and leaving positive reviews on your social media.
Unhappy customers are equally visible: they stop using you, or they cancel their contracts.
The hardest customers to spot are those in the middle. Not so delighted with your services that they rave about you to everyone who’ll listen, but not so unhappy that they’ve gone. They’re disengaged. And in this state of mind, they’re easily tempted away by your competitors, or liable to stop using you as soon as they need to cut costs.
As part of your Business Development, set aside a regular amount of time for Repeat Business Nurturing. Create special promotions for Existing Customers, so they’re not tempted to jump ship to get a special New Customer Deal elsewhere. Scan back through past emails to look for missed opportunities or a chance to follow up. Even a quick email just to check in (without asking for anything in return) can go a long way towards reminding these disengaged customers that they’ve built up a valuable history with your brand, and convincing them they’d be mad to let you go.
Sign: High employee turnover
One of the most reliable signs that your business is in trouble is that the best people begin to leave.
The superstars on your team are constantly being contacted and approached by rival companies. So when your business begins to stall, or stagnate, your biggest hitters will jump ship. This starts a downward spiral inside your company, as performance starts to suffer, and morale among the remaining staff (who are now stretched, or just stressed at having to adjust to new colleagues) dips.
The most worrying sign that dark clouds are gathering is when your longest-standing employees move on. That can be a warning sign that your business has evolved past its original ethos, and that you might have lost sight of the reason you all began the company in the first place.
Always use resignations as a chance to gather valuable feedback. If your best people are leaving – where are they going to? Are your rivals poaching your best staff, and luring them with bigger salaries and more exciting prospects? Can you offer anything to make them stay?
And tackle the problem way before your staff begin to look around. Ensure your business has successful processes in place to check in with its teams regularly. Offer informal, open-door times of day, where employees are able to talk to management. Set clear, understandable targets, and consider offering incentives to reward excellent work. Make sure your company ethos is visible to all the new staff: print it in your contracts, or hang it on the wall. And ensure you check in with your ethos regularly: are you still living up to it?
Sign: Your rivals are flourishing
If your balance sheets are running dry, but your competitor’s staff car park is suddenly full of luxury motors, it’s time to perform a reality check. And one of the best ways to do this is by “Benchmarking” (see below).
If you don’t already use Benchmarking, please click this link for a brilliant explanatory guide. (And don’t forget that PKB can always help you find ways to monitor your company’s performance.) In short, Benchmarking allows you to compare your performance in various areas – for example, profit, efficiency or Best Practices – to other companies’. Even if you’re a small business, it’s a good idea to set some Benchmarks against the very biggest businesses in your sector; by emulating them, you could easily outperform your nearest rivals.
Another way to monitor your rivals’ success is to follow them on Social Media, monitor your trade media, and sign up for alerts whenever they are mentioned on the Internet. Whenever a customer leaves you to work with a rival business, use it as a way of getting feedback: what in particular drew your customer towards the rival firm? Get specific.
Remember, all business is competitive, so don’t see your rivals’ growth as a bad sign. In fact, it really means there are opportunities for growth in your area. Find out what they are doing, and how it’s working for them. Then use that (and Benchmarking) to set clear, actionable steps for your own business.
Sign: You’re late paying bills every month
PKB can help you understand your cash flow, so always contact us for help in setting up your monthly and annual forecasts.
But the small, surprising sign that your business might be failing is when you stop being able to pay your regular monthly expenses.
We know that business owners can go through periods of boom and bust, especially at the beginning. But the Bust periods can put you out of business completely; they send a signal to your suppliers that you’re mismanaging your money, which can cause them to start pulling out of dealing with you. And they mean you accidentally spend additional money, by paying late-interest fees, or missing early-payment discounts. Over time, these additional costs can make your monthly bills unmanageable.
Book a meeting with your finance team, or a firm of Accountants who specialise in helping small businesses succeed, and set up payment schedules for all your regular bills. Ensure you have enough monthly payments to meet them.
If you’ll be running in negative cash flow for a while, ensure you have a date when you’ll be out of trouble, and a set plan to get you there. If you’ll need to borrow money, ensure you can meet the repayments on top of your regular bills.
Look through your accounts – do you have chronic late-payers on your books? If so, contact them to discover what causes the hold ups, and see if you can find a satisfactory fix together. Offer early payers a discount and (if you don’t already), ensure you charge interest on overdue amounts.
Look at cutting back your monthly expenses. If your office overheads are crippling you, could you downsize, or work remotely? Think laterally. Having an impressive office space, or company cars, doesn’t look so impressive when you’re six weeks behind on the electric bills.
If you need any help running your business, PKB Accountants are here to help. We have helped many businesses weather some unexpected storms, and helped them move back towards sunnier outlooks. Contact us for a friendly chat, and see how we can help you.