Business Failure Signs

Business Failure Yardstick
Business Failure Signs

Business Failure Signs

In every clime the first five years make or mar a business. This is the period that determines if the business will succeed or not. Not until few months to the final melt down do entrepreneurs realize the business is going under and start scrambling to save it meanwhile the business failure signs had been there forever.

A business does not just collapse suddenly; there are signs but most entrepreneurs ignore the signs while most do not even recognize these signs. If these signs had been taken into consideration and dealt with early on the chance of survival would have been higher.

What are these business failure signs and how do we know a business is heading towards closure?

It is a general belief that entrepreneurs have it easy; no they don’t. A lot goes into making a business stand the test of time. There are economic, social, financial, technological and psychological factors that affects the continuity of a business. A perfect or almost perfect blend of all these factors increases the survival of a business.

It is of the essence to recognize the most common and visible signs of a failing business before doomsday so as to decide whether to pivot (change the direction of the business) or persevere (stay the course but make necessary changes to enhance the survival of the business). For further understanding of Pivot or Persevere I recommend you read the Lean Startup book by Eric Ries. You can get it here.

SIGNS OF A DYING BUSINESS

  • Poor cash flow management. Cash flow is the life blood of a business; if not properly managed sends the business crashing. There is a big problem when you do not know when and what to spend on or save.
  • When your clients have nothing positive to say about you or your business and cannot even refer you.
  • Your clients constantly get excuses instead of results.
  • When the satisfaction of the entrepreneur(s) comes before the customer’s.
  • Whether a business is non-profit or not one of the entrepreneur’s motivating factor is profit; if at most after a year the business is not making profit or breaking even there is a problem.
  • As an entrepreneur if you do not love what you do; how do you get people to buy into your idea thereby sustaining the business?
  • When a business lacks in innovation and unique ideas it is gradually dying.
  • When your employees have low morale; employees are the internal customers, satisfying them goes a long way in determining how well they satisfy the external customers.
  • A business set up by greedy entrepreneur(s) is headed for the rocks.
  • When an entrepreneur constantly ignores the market trends and his competitors.
  • The negligence of an entrepreneur and his management is a recipe for business failure.
  • When the growth rate of a business is slow and the parties involved are not driven to proffer solutions to the problem.
  • Expansion without focus: Before expansion a business should focus on one thing. After it succeeds in that one thing it can diversify into other areas.

The points listed boils down to the factors listed in the diagram above. Failure to properly put them into consideration while planning would eventually lead to a business failure. Avoiding these loopholes increases the chance of a business surviving.

Do you feel we have left out helpful tips as to how to identify business failure signs please feel free to drop them as comments.

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Comment (1)

  • How to Save a Dying Business - Welcome to MoKrystal.com Reply

    […] We have identified what signs to look out for to know if a business is dying but why wait till the business plunges when we can be observant in the daily operation of the business. Even when you see the signs that you have a dying business on your lap it is still not enough reason to pack up shop rather it is a wake up call to ensure all your efforts and resources does not go to waste. […]

    November 16, 2015 at 8:38 am

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