I’ve seen people who will stay in a small business like a bad marriage. The signs of divorce are clear years before but many business owners are determined to make what is clearly failing work, even when the odds are completely against them. It’s as if they are playing the lottery putting up their last money for a magical turn-a-round that will put them back on track but in actuality, they are digging themselves deeper into a hole. Here are some signs your business may very well be in trouble.
You No Longer Enjoy The Business/Loss of Passion
Remember the days in the beginning of the business when you leaped out of bed with a smile on your face ready to take on the day. You may not have been making money at the time but you were driven by your desire because you saw a need and/or you had a passion and you were fulfilling it. There is a reason the old saying “Do what you love and the money will come” rings so true. It’s not an idea or a need to fill a hole that is the driving force for a small business, it’s the PASSION to do it that drives it.
If a person who has a bakery only made cakes because there was no bakery within 5 miles, they would probably be in business for about a year unless they are fortunate enough to find someone who LOVES baking cakes and even then, the owner’s lack of passion for what the company does will eventually reflect how the employees feel so the bakery is still setting itself up for failure.
If you are not rolling out of bed eager to take on the day, full of joy and hope and passion like you once were, this is the first and a MAJOR sign it’s time to seriously think about selling the business or doing something else. Your lack of drive and desire will start to affect the company from the top to the bottom including sales because you can’t convincingly sell a product that you yourself don’t believe in anymore.
Your Industry Has Changed but you have not
Unfortunately, businesses, consumers and demands change all the time. It would be great if this were not the case but it happens. Most vets in certain areas of business are very set in their ways and refuse to change with the business tide. it’s not because they are stubborn, many times it’s because they feel inadequate, too old to learn the new industry or they fear being obsolete so they are stubborn. If you refuse to change, your service becomes antiquated and your customers will start looking, if they even HAVE to look, for someone who can adapt to the current trends.
Competition is fierce and other entrepreneurs, who may have better resources, are always watching our progress (or regress). We’d like to think our current customers will be loyal but they also have to follow trends and if your company is behind the times, there is a great chance that you will lose money and eventually the business. If you run a record store in 2012, for example, you better be offering something totally unique in your market and beyond that drives the hardcore vinyl consumer to purchase from you amongst other things.
Most record stores are out of business today but there are some that still thrive because of what they offer. Amoeba Music in Los Angeles, Berkley and San Francisco is a great example. They thrive because they buy records from customers for pennies on the dollar than sell them for much more. Many of the records from even 50 years ago are still in the rappers because many former music industry people still live in Los Angeles and surrounding areas and they had an abundance of product that they kept stored for decades and now they want to get rid of it.
Amoeba sells product online as well, something many record store franchises refused to do which is why they are out of business, but Amoeba also has auctions of music memorabilia, in store performances and they sell used music as well as videos. Amoeba is a FULL SERVICE record store that also employes hardcore music lovers and the store in Los Angeles is almost always packed. How is it that this record store can stay alive and prosper when all the rest have died? They knew the industry was changing, they did their research and they are passionate about what they do.
You Don’t Trust Anyone to Help you Build the Business
This is a VERY difficult one, even for me because we all know that nobody is going to be more passionate about your brand and business than you are and we have all been through it, we train someone which takes a great amount of time out of our day who is on probation and they almost always doesn’t work out. it’s enough to do our OWN jobs but now we have to train, guide and PAY someone else to do what we do and THEY MAY NOTWORK OUT!
Who in the hell has the time for that, we have a business to run. However, we must consider that if we do it all by ourselves all the time, we will NEVER grow, we will become increasingly frustrated and the business will ultimately suffer. Sorry to inform you that you HAVE to trust SOMEONE unless you plan on killing yourself doing all things all the time, every time or never moving beyond a certain low financial point, never seeing your true potential. We are right in knowing that everyone can’t be trusted but we must also realize we can’t do everything by ourselves..
Not Paying Enough Attention to What is Going on in our Businesses
Believe it or not, there are some business owners who are the total opposite of what I have described above. They depend TOO MUCH on other people to run their businesses while they are constantly on vacation, getting their hair done, playing golf or working on other projects. They don’t have proper management in place and it’s easy for clients and potential clients to see the owner is not present which is a horrific reflection on the reputation of the business.
We have to create balance and make sure the employees know what is expected of them and they should never know our schedule as to when we will and will not be there. These are people that you pay and who represent you and in this instance you are offering TOO much trust.
Spending Lavishly
This is obvious. Any entrepreneur will tell you that running a small business especially in the first 5 years is feast of famine. You may have a great first quarter but the second quarter may be dismal and if you don’t have savings to make up for the lack of business, you will stress yourself out unnecessarily.
That’s why people go on vacations once or twice or three times a year, NOT every month. In addition, once you consider what you may be paying on interest for that new luxury car it may behoove you to see what it would cost you to buy it in cash or used from a private owner who is experiencing financial difficulties because he or she, I don’t know, SPENT MONEY THEY DIDN‘T HAVE?
You can also get a car for damn near 1/3 the price at an auction or you can save a lot of money by buying it from a credit union. Those thousands of dollars would serve you much better in your bank account than going to the car dealer who is charging you a ridiculours interest rate because you have a small business. We can have those luxuries AND have backup funding which is ALWAYS needed if we must spend WISELY instead of LAVISHLY…
Your own Greed
Without question, it takes money to make money and if you are not willing to spend money and you are always trying to get a break from everyone else you will run in circles. I have a friend, another entrepreneur, who wants to damn near be paid for EVERYTHING that he does and he wants a premium price. Yet when it comes to him needing the services of other entrepreneurs, he wants 95% off.
He is so greedy that he refuses to hire anyone to work for him if they require a paycheck, he wants them to work for him for free so he hires interns only… then he complains about them not being dependable. For the past 10 years he has failed to grow and he continues to struggle not understanding why he can’t get ahead. How can you demand top dollar from others when you need them and expect them to work for you for almost free? Sounds insane but it exists.
Fear
The economy has many entrepreneurs concerned about walking away from their situations especially if they are making money doing it. I saw a good friend ran through $125,000 trying to save his business when it was not only dead, but he had absolutely no interest in maintaining it. He was making money but it was only a matter of time before it all came crashing down. He didn’t use the money to hire people, he used it to ignore the business by buying real estate property without doing his homework and to try to occupy him mind. Of course the real estate market went bust and he lost everything… Which leads me to the next subject…
Entrepreneur Depression
Not typical depression, but depressed about the industry that you work in, the economy of the industry you work in or even feeling like your business is no longer relevant.
Entrepreneur Depression has the same symptoms as other depressions except when you are the captain of the ship your depression can destroy the entire business if you don’t get a grip on what’s taking place.
