You know how your body would show symptoms when something is wrong with it, so also would your small business indicate its state through some warning signs.
Small businesses that collapse or go bankrupt do not just happen without warnings, it usually happens over some time after it has shown many warning signs that the business owner fails to decipher.
Here are some symptoms or warning signs that indicate that your business may be in trouble:
1. Inability to Make Payments – There is no business without expenses and sometimes a business may be in a temporal bind and find it difficult to meet its expenses but when that inability continues over time then there is a problem. Say your small business is unable to make repayments on a loan for a few months, that may be fine but if that trend continues for more than a few months it would certainly indicate a bigger problem like cash flow problems etc.
2. High Employee Turnover – It is fairly normal for employees to leave a business for better opportunities, but it becomes a sign that indicates trouble when you have a high number of your employees leaving your small business. Apart from the costs, you have to incur as a result, high employee turnover indicates that you can no longer take adequate care of them or have created an unconducive working environment for them.
3. Declining Sales – Business owners know that sales do not always go up no matter how much they may wish it does. They typically go up and down and higher in some seasons than in others. But when your sales are consistently falling over time, you know that it is a sign that your business is in bigger trouble. Your products may no longer be providing sufficient value for your customers or your marketing strategies may no longer be effective. Whatever the reason you know it means trouble for your small business and the earlier you resolve it, the better.
There are so many other signs that may indicate that your business is in trouble. Like having your costs outweigh your income, or being owed an increasingly high amount of money. Whatever the signs, what is important is that you look at what the possible root cause may be and take action as fast as you can to resolve them.