Only half of all businesses make it through their first five years”  – Forbes. 

Are things wonderful at your business? Or are you just in denial? 

Before you are forced to shut down altogether, there are warning signs your business is in financial trouble. Look at these five red flags and find out if any sound similar to what is going on with your business.

  1. Your cash flow is consistently struggling.

Your profits help your business to succeed. But if your business’s funds are continually low, your business’s future might be shaky. 

Do some homework to increase profits and the likelihood of your business surviving. Why isn’t your business making money? Are prices set too high? Too low? Are you targeting the wrong customers? By answering these questions, you can restrategize policies or procedures to help set your business back on track.

  1. Your best employees are leaving.

One of the most significant warning signs your business is in trouble is when your employee turnover rate is high.

Unmotivated employees, or worse, depressed employees, are a huge indicator of struggling businesses. If your employees are unhappy in the workplace, this could be a sign of one of two things:

  1. It may indicate an inability to pay them at the standard market rate
  2. It could also mean that management is unable to provide a positive and fun work environment

With the drive and positivity sucked out of the workplace, employees will begin to despise being at work, which is never fun. The best employees leaving, therefore, is a true sign that the business is in trouble.

  1. You are constantly extinguishing problems.

Do you find that you constantly have to put out business fires? Does it seem like there is a new issue to deal with every day? Answering yes to both questions could signify that your business is heading down the wrong path.

Every business owner experiences problems once in a while. If you find that you are facing problems nonstop, that is a pointer to a more significant issue at hand.

If you want to extinguish issues before they arise, get to the root of your problems. Chances are, one of your more minor problems is causing a more significant issue. Extinguish and avoid minor problems to get rid of a possibly bigger one down the road.

List out your problems to determine ways to tackle and resolve each issue. Then, plan ways you can avoid the same problems in the future. 

  1. Sales are plummeting

In every business, sales fluctuate. As a business owner, you are likely to have peak and slow seasons. But, a year-round “slow season” could signal your business is failing.

Plummeting sales and disappearing customers are things no business wants to see or admit to having. If you find these issues becoming a pattern at your business, you need to make some changes fast. 

So, what can you do to help reverse this issue and avoid this sign altogether? If sales and customer counts are crashing, you can:

a. Ask current customers for feedback

b. Offer discounts and giveaways

c. Have in-store promotions and sales

d. Increase advertisements

e. Be more active in your community

5. You’ve lost your passion

Think back to when you started your small business. Remember how passionate you were about starting your business? Remember all the blood, sweat, and tears you put into making your dream a reality? Do you feel the same way today? 

Losing your passion for business can be a telltale sign that it’s sinking.

Passion drives your business to success. And if you are not motivated, your small business will suffer the consequences. 

If you see the sign of lost passion, take a step back and think about your business’s past and future. Think back to why you started your business in the first place. Dig deep and figure out if your heart is still in your business. 

If your passion isn’t fueling your business, you might need to make a change for the sake of your business’s success (e.g., stepping down or selling your venture). 

In conclusion,

If your business is exhibiting one of these warning signs, your business is in trouble – or at least heading that way.

If, after reading this, you recognize one or more of these distress signals, the first thing you need to do is act quickly. Identifying these signs can help you rescue your business from being among the statistics of the many businesses that fail within the first few years.

Are you a small business owner looking for tips and tricks to make day-to-day life more manageable? We are here to help. For more business-related articles, check out the Dukka blog. 


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