Danger signs in SME businesses

How often have you seen owners like the following….

They start out with a dream and much excitement.

They get some early runs on the board, attract some customers and start to see some cash inflows. They’re energised.

Over time, assuming other factors are in their favour, they get busier, so they take on some staff and upscale for more growth expecting the returns to keep growing.

However at some point, perhaps around 2-3 years later, the growth starts to slow.

The owner can’t control everything anymore.

The business is wobbling. Cracks are appearing.

Its like the handbrake is on.

Now the business depends far more on factors other than the owner’s energy and effort. Its the quality of the staff, how well the customers are being looks after, the quality culture in the business, the consistency of the marketing, and how good the systems and processes are that are far more relevant.

Results start to plateau.

The owner gets concerned and digs in further , working even harder, slogging it out in the day to day rather than shifting their role to become the leader, the planner and the strategist.  The leader that the business desperately needs to survive and grow.

The owner is now exhausted.

The weekly costs are relentless and break-even revenue is significant.

Staff aren’t getting the attention or support that they need, and recruitment is always rushed. Consequently some staff have a poor attitude and this shows in productivity and customer complaints.

The owner’s dream now seems a distant memory.

This is the crucial turning point for most small businesses.

Owners either shift their thinking to the next level, or their business continues to struggle along from crisis to crisis.

Unfortunately many crash out. 

This above scenario is an all too common reality.

Many owners at this stage feel extremely confused, isolated, and unsure what to do next.

There is no senior management team, no board of directors, no support team to provide the energy and support that’s so vitally needed.

At the same time many won’t admit they need help. Their pride won’t allow it.

Owners who survive in business beyond this point are the ones who realise its time to ask for help.

Help with staff management, help with planning, help with strategies and most importantly help with re-focusing their thinking.  

There are certain signals that identify businesses like this. Here are 10 of them;

1.    The owner has no growth strategy for the business.

  1. They’ve stopped regular reviews of their product offering and their pricing.
  2. They’re no longer sure which products are the most profitable.
  3. They haven’t refreshed their marketing in some time. In fact they may not have a marketing plan at all.
  4. They’ve stopped asking their customers for feedback.
  5. They’ve got no weekly performance targets in place.
  6. They’re struggling to maintain revenue and margins.
  7. Their motivation and energy is low. They’re more pessimistic than they used to be.
  8. They feel like their staff are against them. They can’t seem to get, or keep, good people.
  9. They have no-one helping them to brainstorm new ideas or develop new growth strategies.

Of course there are other potential danger signals you might discover. The above is just a guide.

Businesses who show more than 3 or 4 of these signals are in dangerous territory.

In many cases their situation can be turned around, if they’re given increased focus and support.

Lindsay King

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