As well as taking inspiration from our clients and business, I look in various other places for ideas on what to write about in our blogs. I want our content to be relevant and useful, and topical. So, I also use Google. I like to play a little game, where I start to type something and see what Google suggests as the search topic (Wreck-It Ralph 2 has a great scene depicting this!!). The top suggestions shown are usually those that are most often searched, so you get a good idea of what the general population have been researching.
Today, I was really surprised when I typed ‘my business is’ and the top prediction was ‘…failing’. I’m not sure why I was surprised, as I know this is extremely common with new and start-up businesses. But it just hadn’t occurred to me that ‘fail’ might be in the results. So, I brushed past it and carried on. I tried ‘my business has’ and the search returned ‘…failed’. Interesting; I tried some others. I typed ‘my business was’, ‘my business will’, ‘my business should’, they all returned the same top results … FAILING. I was a little frustrated and about to start down a whole different route, when it occurred to me, this is obviously topical! Why not share some thoughts and advice on how to avoid business failure? And so, here we are…
5 Thoughts To Help Avoid Business Failure
Is your business model profitable?
If your prices are too low, or your overheads too high, your business model will become unprofitable. Similarly, if you’ve not accounted for ‘hidden costs’ (7 ‘Hidden’ Costs of Running a Small Business), your business may make a loss based on things you didn’t necessarily anticipate having to pay out for. Ensure you’re monitoring and considering all income and expenditure, if you let anything slip, it could have a real impact on your profit margins. As you grow, you should continue to review your business model to ensure its ongoing profitability. As things develop, your overheads (staff, premises, assets etc.) are likely to increase and what was once generating a profit margin of (e.g.) 35% may now only be generating 17%. You should continue to review your business model, plans and structure to ensure ongoing viability.
What are your business goals?
I think it’s Stephen Covey’s 2nd habit that states, ‘start with the end in mind’. To understand what you need to do to get to where you want to be, you need to know where you want to be in the first place! If you want your business to last, having clear direction and goals will help you to structure and monitor your progress. Decide where you want your business to be in 5 or 10 years, then, working backwards, you can start to understand what you need to achieve each year and then each month, each week etc. to work towards your ultimate goals. Keeping your goals fresh is important too, as over time they will likely evolve. Reviewing them every 6-12 months will also help to keep you focussed.
Do you really know what your customers want?
The key to the ongoing success of any product or service is keeping up to date with the needs and wants of your customers, and these may change frequently. What you know to be true when you first start your business could vary each year, as consumer habits change, and the ‘market’ evolves. Regularly talking to your customers and prospects and doing surveys or other proactive research will help to ensure you’re providing a product or service that your customers’ actually want, not something you think they want. Keeping in touch is also a great approach to customer care and will let your customers know you value them and what they want.
How do you manage your cashflow?
It’s easy to get caught up in chasing new customers and providing your services every day – after all, it’s how you grow your business, right?! Unfortunately, if that’s your sole focus, it can lead to background admin piling up, including invoicing and credit control. Which in turn can have a nasty effect on your cashflow. Cashflow is key to the longevity of any business and it’s vital to make time to produce your invoices, as well as keep track of which ones have been paid and which ones you need to follow up on. Don’t be afraid to speak with your customers about payment. You have upheld your end of the deal, so they won’t be surprised to know they must uphold theirs!
Are you getting help?
You’re an expert in the products or services that you provide, and that’s why you went into business. But that doesn’t necessarily mean you’re an expert in all other areas it takes to run a business. It can be lonely and a false economy trying to do everything alone. Utilise your networks, get out and meet new likeminded business owners, get a mentor, outsource the jobs you’re not skilled in or don’t have time to do. If you invest time and money wisely in all these areas, your business is more likely to flourish – two heads are always better than one…
If you’d like to know more about how we can help or want more information on our ideas for avoiding business failure, please get in touch: makeithappen@mbsmih.com : 01903 688789.