Why is my business failing? This is what we see….

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 We see some common issues occur in the businesses we are in contact with. Now, we don’t claim to be business analysts, or experts in modern and global economies. But we do have our eyes and ears open, and these are things we see occurring.





·         The business expands too fast! – Growth in a business is desirable. This is something every owner hopes for.  But when the business grows its staff and product line too fast, you can end up with the need for cash to keep the business operational exceeding the income from the sales.  If you are suddenly looking at new locations, more staff, more supplies and equipment to produce more product….You may need to step back and determine if you want to push into that area, or hold back just a bit.

·         Lack of Control – Do you truly know how much inventory you have? Can you tell in a few minutes, how much cash you will be laying out for orders in the near future? Do you know how much money you have in the bank? How much money is going out for Payroll? Do you have the Administrative password to your accounting software? If you answer No to any of these, you may not be doing as well as you think. In a retail business, inventory is the “Life Blood” that the business needs. You have to have the product to sell it, and if you sell it you need to know that this is being done while generating a profit. Cash is the other factor that must be considered, and as an owner, you should have a pretty good idea how much money is going out in the near future. The reason that I mention the Admin password is due to the number of businesses we have heard from where the Bookkeeper or Accountant had the password, and when asked for it, suddenly needed a vacation. Once the password was removed, it was found that there were paychecks made to employees that did not exist, or checks created for fictitious expense accounts. If the Owner does not have full control of the file at all times, they are not in control at all!

·         Poor Management Practices – A Bad boss is a quick way to demoralize the employees, stall productivity, drive up costs, and paralyze the businesses ability to adapt and seize opportunities. How can you take a good employee and turn them into a “Clock Puncher” with no initiative? There are several ways. One common method is called “Sea Gull” or “Hand Grenade” management. The boss is rarely present, and when they do appear, they immediately advise the employees on everything they see wrong. Walking in and dropping criticisms in this fashion is commonly called “Dropping Grenades”. In other cases they are described   as “flying in, leaving droppings all over, making a lot of noise, then flying away” or “Sea Gulling”. Not communicating information in a timely fashion can leave the employees trying to guess what the boss wants. Since they don’t want to mess up, the safest course of action is to do nothing. Another little thing that can drive a wedge between owners and employees may seem like nothing, but has a bigger impact on moral than you could guess. Not having the payroll done on Pay Day. Take an employee that goes the extra mile for the business. They are dependable, and go above and beyond for the company. Now, don’t cut their paycheck until it is so late in the day they cannot cash or deposit it. Make sure that employee knows that creating their paycheck is a very low priority on your list. You have just taken an employee who goes the extra mile, and told them that they and their efforts are not important to the company! That employee is going to be upset, and will view their hard work as being a waste. Why put forth the extra effort if the company feels that your contributions are not worth paying you for?

·         Lack of Planning – Another huge issue. I have seen business owners that will spend months, or years working to get the right location. Countless hours are spent on a clever business name. Vendors are lined up and products selected. Yet when it comes to the software that is going to drive the sales and inventory tracking, there is an assumption that it can be setup in a matter of minutes. They will often have no idea how they want the departments, and reports laid out, or what they actually want to track. Business owners wear many hats. How you go about implementing a business, and the planning behind that business, can immediately begin to spell Doom or Success.

There are a multitude of reasons for a small business to fail. Survival is difficult with the economy the way it is. That is why now, more than ever, it is time to keep an eye on the business.