Trouble ahoy! The warning signs that no business owner should ignore.
In times of economic uncertainly, many business owners keep their focus firmly on the market, watching keenly for improvements or sudden changes that may impact their operations.
But how long has it been since you took your eyes of the economy and focused down into the heart of your business? It’s not just the economy that leaves tell tale signs of things to come, subtle changes in your business can foretell what lies ahead.
Here are some warning signs that you should be watching out for – the indicators that it might be time to implement some changes, or some improvements of your own.
A sudden increase in debtors
Make sure you stay on top of who owes you money. Just because someone has diligently paid invoices in the past, doesn’t mean they will continue the habit. Don’t be afraid to tighten your credit terms and rein in your receivables.
A store room full of inventory
Don’t get stuck with stock. As a business your goal is to order (or manufacture) stock, market it, sell it and be left with cash.
Make sure your systems give you up-to-the-minute stock counts so you always know where you stand. Take time when ordering, and don’t allow sales reps to just place ‘your regular order’ on your behalf. Know your stock, keep an eye on slow sellers, and make it a rule of thumb to avoid stock celebrating a birthday. Luxury retailers maintain an air of exclusivity by being deliberately out of stock on occasion, so if it’s appropriate for your business, don’t be afraid to sell out every once in awhile and create demand.
A drop in sales or loss of a few regular customers
Monitor your sales on a daily, weekly, monthly basis. Watch your average sale. If sales drop, immediately take action. Don’t put it down to the ‘tough economy’ and allow the decline to continue – if a regular customer suddenly disappears, chances are, they’ve gone somewhere else.
A big change by your competitors
They say that the only constant in life is change. This is particularly true of the business landscape. Stay up to date with current technology and keep an eye on what your competitors are doing to ensure that you’re able to reach your customers in their space. If your competitors suddenly make a massive change to their processes or sales methods, make sure you stop to ask yourself why.
Routinely accessing available credit to finance current operations
Do you have multiple credit cards? Are they maxed to the limit to keep your business afloat? Danger sign.
Changes in supplier’s terms and availability
If your orders are taking longer to be delivered, or your suppliers suddenly require upfront payment (whereas previously they’ve happily offered you credit), stay alert and start looking for alternative suppliers. It could indicate trouble within their company and you don’t want to pay for stock, only to later discover the company has gone into liquidation.
What warning signs have been the catalyst for change in your business?
Have you ever ignored one at your own peril?