When we start a business, we envisage it going well, we identify where all the sales are going to come from and all the profits that will come our way. But as well as planning for how it will go well we should also be anticipating what problems we can expect to come up. Here we look at 5 of the most serious and potentially costly issues that can come up when running the company.
Expanding Too Quickly
This may seem like a strange one to flag up as we all want to get more sales and more profit, don’t we? So why wouldn’t we want this to happen as quickly as possible? Well let’s take a fictional example of a company that installs double glazing, the business is set up with one sales team and one installation team. If they had a sudden increase in business then they’d need two more teams to deal with this and the new salespeople who are eager to get more sales and justify themselves price everything too low with slim profit margins. Then the new and less experienced installers are taking 10-15% longer to complete jobs. So, the longer jobs and slim profit margins then combine to cause some jobs to be loss-making and the extra sales actually cost the business money.
So what if you have staff who are not performing as they should be? This can be very costly, firstly because sometimes it takes a while before you even realize that they are not doing their job properly. But you should be sure that you are regularly evaluating staff performance and morale to support, improve and discipline, if necessary, your staff. As if this goes too far then it can be a time-consuming task to fire someone or make them redundant and they will, no doubt, know this is happening and can cause a fair bit of chaos in this time.
Cash flow Crisis
This is one of the most common reasons businesses go out of business, they could be an otherwise healthy enterprise but if they are waiting on invoices to be paid for too long as their own bills stack up then it could spell the end. One solution to this is to ensure you have a good credit line, not to spend money you don’t have but to ease cash flow while waiting on money coming in. You should make sure that your business has a good credit score to be able to secure decent small business loans or overdrafts.
Being visible online is a key concern these days. Everyone looks to the internet and search engines to find services and products. So, you should make sure that you employ a SEO firm to ensure your rankings are good for now and future-proofed against any upcoming Google updates.
Make a regular competitor analysis part of your business strategy. If you know what others in your field are up to then you can react to any new competitors, products or offers your rivals are putting out there.