By now, it should be clear to us that the coronavirus pandemic left nothing untouched. From travel to hospitality to health care to retail, we feel the brunt of the pandemic because of poor sales, low revenue, and unsuccessful marketing campaigns. It is now harder than ever to get people to buy from your business. But is this temporary, or is it a sign that more trouble is brewing in the future? What are the signs that your business is in deep trouble?
According to experts, more than 30% of new businesses fail in the first two years. In five years, that percentage will rise to 50%. As your business grows older, the challenges it faces also grow stronger. However, if you know the signs that your business is doing poorly, you can save it before it is too late.
You Cannot Pay Your Debts
Is it harder than ever to pay off your business loan? Are you having a hard time paying the rent and your employees’ salaries? These are not the biggest indications that your business will not rise from the ashes. Plenty of businesses experience these, too, but could last long enough to pull themselves from the loss. However, if this has been happening more often, even before the pandemic, it is time to plan how you’re going to get the money you need to keep your business afloat.
The Cash Flow Is Decreasing
Some businesses have seasonal fluctuations. However, if your business is losing cash faster than it is making money, then you have to monitor the expenses. How can you cut the expenses? Is there a way for you to operate with less of the usual expenses you are spending on? Decreasing cash flow is the number one reason why businesses fail. When you don’t have money to pay your employees and buy the supplies, it is time to close the shop.
Your Business Is Losing Customers and Employees
It is bad enough that you are losing customers to your competitors, but employees, too? The reason your customers are checking out other brands is that they aren’t satisfied with yours. Pull them back in with a couple of discount strategies, events, and promotions. As for your employees, you have to compensate them better and provide a healthy work environment. Losing customers is one thing but if you’re also losing employees, look into how deeply flawed your organization is.
You Are Investing Too Much in Inventory
Even though your business is doing great sales-wise, you might be losing money because you are holding too much inventory. Are you spending your money on products that are not sellable? You can use that money instead to pay off your debts, rent, and employees. Moving your main products quickly is not always an indication of success. Wrong investments will hold back your capital. Make sure that you are doing inventory regularly so that you can put on sale the products that are taking up essential space in your warehouse.
Getting Your Business Back in Track
Closing your business is not the only solution to getting out of this problem. You can try these three methods first: organize your financial information, review your records, and sell old and excess inventory. Once you are taking better care of your business transactions, you can identify the problems and address them.
It is hard to admit failure, but failure doesn’t always mean that you will back down. If you believe in your business, you must muster the courage to take risks and face challenges. This is what makes a great, and ultimately successful, entrepreneur.