Warning Signs That Your Business is in Trouble

This is a checklist to identify warning signals that a business is in or is heading towards a crisis state.

Cash flow problems
The business owner might not have a clear report on receivables nor have a process for maximizing revenues. There could be delays
in paying bills and meeting salary and other expenses in a timely fashion.

Lack of profitability
The business owner might not have set profitability goals and/or might not be tracking profits. Or, these mechanisms could be in
place, but the business is just not profitable.

Issues Related to Products and Services
A successful business requires a clear definition of products and services it offers. It is a warning if a business owner cannot clearly define the business, is not monitoring the shifting marketplace demands, and is not offering highly marketable products and services.

Business Owner has Weak Personal Foundation
A business owner might have personal problems affecting his or her ability to effectively manage the business.

Staffing Issues
The staff might exhibit low morale, the company might be losing its best people to competitors, or the overall work environment might not be encouraging high productivity from its employees.

Customer Issues
It is a warning if the business owner cannot define the ideal customer. Other warnings are lack of effective communication channels with the customers, customer lawsuits, high volume of customer complaints, a lot of product returns, and low customer retention.

Business expansions or alliances that are creating problems
A business might expand too quickly or into the wrong markets. It might form alliances with companies that are not a good match and
will not enhance profitability.

Lack of succession planning
A business might lack succession planning. This is a warning for family owned and non family owned businesses.

Lack of business vision and/or mission
The lack of a business vision and/or mission might be evident in lack of teamwork or a weak company culture.

Lack of business growth
The lack of a business plan with clear cut goals could be the source of slow business growth and a strong warning that a turnaround strategy is needed.

How to Produce More Results

1. Start with the end in mind.

Develop a clear picture of what you want to accomplish. State the end results in one sentence that even a child can imagine, understand and remember. Consider the power of President Kennedy's goal "to send a man to the moon and bring him safely back home within this decade". Thousands of people did very detailed work and spent billions of dollars based on this simply stated goal.

2. Develop a written plan.

Get it on paper (or on the computer). Make the plan as specific as possible, in terms of what will be done and by when.

3. Enlist support of others.

Let them know what you are doing, and how they and others will benefit from the results you want to produce. Invite them to lend their support however they can.

4. Set up milestones and reporting systems.

Break the job down into segments, and set target dates for completing each segment. Develop a reporting system on paper or via a good software program. Send regular reports to people who are working on your team, or who have an interest in your project.

5. Have a support system.

Set up the supports you need in your work and in your personal life. Have one or more advisors that you meet with regularly to report progress, and get advice and encouragement. Your personal coach can be one of these key people.

6. Monitor progress and make adjustments.

Realize that even the best plans need to be adjusted in the heat of battle. Make adjustments quickly and respond to new opportunities or short cuts along the way that help you reach your destination faster. If you find it difficult to get around or through certain roadblocks, get help and advice promptly.

7. Form mutually beneficial alliances with others.

Find out what other people or groups are natural allies and team up with them so you can help each other reach your objectives more easily and effectively.

8. Work your plan regularly and continuously.

Maintain a high focused activity level yourself, and get help when you need it. Don't try to do everything yourself. Delegate as much as you can, and follow up with those to whom you delegate work.

9. Keep your allies on your side and your enemies at bay.

Inform your allies about progress you are making and problems you are having. Thank them for their help. Protect yourself from important enemies by setting up and maintaining boundaries between yourself and your enemies. Recognize that enemies can be within you as well as about you. When you find that you are doing things that impede your own progress, replace that activity or habit with a better one. Ask your advisors what you personally can do better. Then put the corrections in place.

10. Celebrate progress along the way and at the completion of your work.

Share the glory. Recognize and thank the people who have helped you produce results.

 

 

Why do some Business managers hit the profit goal more often than others? They do it because they keep their performance pointed
in this direction - management of profit making. They never drop sight of this goal - to finish the year with a gain.

This guide Gives suggestions that should help an owner-manager to zero in on profit earning. It points out that you have to keep
informed, make timely decisions, and take effective action. In effect you must control the activities of your organization instead
of being controlled by them.

Topnotch Performance in golf, shootingfishing demands understanding, training, and perseverance.

Likewise in Small businesses, year-end profit comes to the owner-manager who strives for topnotch performance. You achieve profit
making targets by knowing your operation, by practicing the craft of earning timely, balanced judgments and by controlling the
organization's activities.

Adapt the Suggestions in this manual to your situation. They should allow you to call the shots to keep your company headed in the
right direction - toward profit earning.

First Rule of Profit Making: Know Your Small Business. The Time-honored truth"Knowledge is power" is particularly pertinent to the
owner-manager of a small business. To maintain your company pointed toward gain you need to keep yourself well informed about it.
You have to know how the company is doing before you may enhance its performance. You must know its weak points until you may
correct them. A number of the information you require you pick up from day-to-day personal monitoring, but documents should be
your principal source of information about profits, costs, and earnings.

Know Your Gain. The gain and loss statement (or income Statement) prepared regularly each month or each quarter from your
accountant is one of the most essential indicators of your business's value and health. You need to make certain that this
announcement contains all of the details you will need for evaluating your profit. This announcement must pinpoint each earnings
and cost area. By way of example, it should demonstrate the gain and loss for each of your products and product lines as well as
the profit and loss for your entire operation.

It's a great Thought to have your profit and loss statement prepared that it reveals every single item for the current period, for
the same period last year, and also for the present year-to-date. By way of instance, a P&L announcement for the month of November
would reveal income and expenses for the current month, for November this past year, and prices for the eleven months of this
present year. Many businesses publish their annual reports with a few previous decades so stockholders can compare earnings.

Comparison is The trick to utilizing your P&L announcement. If your accountant is not already furnishing figures which you may
compare, you need to talk about the possibility of having them provided.

Financial Ratios out of the balance sheet also help you to understand if your profit is exactly what it should be. As an instance,
the ratio of net worth (return on investment ratio) shows what the business earned on the equity capital invested.

Know Your Costs. An owner-manager ought to understand costs in detail. Following that, you can compare your price figures as a
percentage of sales (operating ratio). Be sure your prices are itemized so you can put your fingers on those that seem to be
climbing or decreasing according to your expertise and the price figures of your own industry. When prices are itemized, you can
spot the culprit once the overall figure is higher than what you'd budgeted. Take advertising costs such as. You can catch the
offender should you split out your advertising expenses by product lines and by media. Additionally, a thorough check of question
yields from advertisements will help avoid unproductive publications.

In knowing your Prices, remember that the formula for gain is: Profit equals Earnings minus Costs.

Know Your Product Markup. Be certain The pricing of your products supplies a markup adequate to the kind of profit you expect to
achieve. You must keep constantly educated on pricing since you have to adjust for increasing costs and at the same time keep
prices competitive. Knowledge about your markup also can help you to run workouts with your eyes open. Continuing to generate a
product that only a few customers want is a powerful merchandising tool just when you use it on purpose - for example, to hold or
attract buyers for other high markup solutions. Do not hesitate to shed a loser from online.

Garbage-In, Garbage-Out. An Owner-manager shouldn't fudge the records. The acronym GIGO the computer industry uses is true with
manually kept records in addition to with machine-processed ones. If an owner-manager allows"garbage" to go into the records, the
reports will include"garbage." Reports need not be extensive but they need to be accurate.

Search For Trends. Try not to look at a single month's earnings or Profit image alone. The figures on your working statements are
meaningful only when you set the image in the right frame - that is, look in the characters in the context of what has happened
and what is likely to happen. In that fashion, you catch a downward trend before it gets out of hand.

You should also Concern yourself with the figures behind the dollars - for example, the amount Of units offered or the number of
orders. Insist on cost-per-unit statistics. The Fluctuation of the cost-per-unit can be much more meaningful than just looking At
the dollar figures alone. Another idea is to exhibit these comparative Figures on graphs so that significant trends can be seen
readily.
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