The most rewarding part of owning a consulting firm has been helping business owners improve their companies and see tangible results.
On the other hand, the hardest part has been meeting someone who had allowed problems to progress to the point that their business was in desperate trouble. In many cases, it was questionable whether it could survive.
Sometimes they were hanging on by a thread but could still be helped out of a tough situation. Other times they were literally at death’s door by the time they sought help and all we could do was help them shut down, while mitigating damages to themselves and others. The saddest thing has been realizing these companies could have been saved if their owners had found help sooner.
The logical question is why a business owner would allow his or her company to reach such a dire condition without having sought help before things got so bad. After having polled some of these owners and other professionals who work with troubled companies, we’ve concluded there are two primary reasons.
First, these business owners are either in denial concerning the existence of problems or are oblivious to them. Second, if they do acknowledge existing problem, they believe the issues will fix themselves and go away. The result is that by the time they seek help, it’s often too late.
So how can you know if your business has reached a point where it needs outside help? Here are some good indications:
You find yourself putting out fires on a daily basis. When you consistently go from one problem to the next without resolving core issues, you may need help. The causes of problems must first be identified before they can be resolved and you may be too close to the situation to be able to clearly see them. Too many unresolved “fires” can eventually consume a business.
Your company’s financial statements indicate large swings that you can’t explain. Financial statements reflect the fiscal health of your business and are a good indication of how your decisions affect it. If you’re constantly surprised by unexpected swings, you’re not in good control of your finances and your business may be heading in a direction you don’t want it to go.
Your sales are increasing but your profits are decreasing. Any time sales are consistently growing but profits don’t follow, there is something wrong with the business. It could be that your gross profit is too low or operating costs are out of control. If this is happening in your business, then you need someone to help you figure out the cause and what needs to be done to rectify it.
You routinely have cash flow issues. If your business is living “hand-to-mouth,” you’re constantly stressing how to make your payroll or pay your vendors, you have bank overdrafts, or simply don’t understand how much cash is needed to operate the company, you need help. Cash flow problems are one of the most common reasons why businesses fail.
Your business is “bleeding” money. Sometimes there are good reasons for showing financial losses, such as large one-time expenditures. But if this is more than just a temporary situation you may have serious problems. Chronic financial bleeding calls for “intensive care” and you need help right away. These types of losses are usually a sure signs a company has serious problems.
You consistently work 12 or more hours a day — with no end in sight. Most business owners occasionally find themselves in a “season” of unusually long hours that circumstances demand. The key to whether or not this is a problem is whether it’s temporary or long-term. If you continually work harder and harder, and don’t foresee that changing in the future, then you are allowing your business to control you and you will eventually burn out (if you don’t first drop dead from exhaustion, that is).
It’s always sad when a business fails but it’s especially tragic when it could have been prevented. Sticking your head in the sand when it comes to problems in your business is just as dangerous as someone who ignores signs of obvious serious illness in their body. Sometimes all it takes is seeking out professional help to get your business back on track and return it to health. So don’t ignore those danger signs!
Laddie and Judy Blaskowski are partners in several businesses, including BusinessTruths Consulting. They are authors of The Step Dynamic: A Powerful Strategy for Successfully Growing Your Business. Judy@BusinessTruths.com.