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Tuesday, March 13, 2007

Are You Skating On Thin Ice In Your Business?

There are danger signs in any business that act as a warning for you, the owner, or directors to do something about it.

Big Customers, Big Risk

I mean do you have one or two large customers who take most of your output? Whether it's products or services.

And that's the danger. You're so close to your business you don't see that having one or two customers who take everything you do is risky.

What if one stops buying from you? You'll need to quickly replace them with another big customer or several small ones. Almost impossible to do at short notice.

Extended Credit, Kills Business

If your business doesn't follow-up creditors religiously your aged debt can become quite large. In fact so large that it results in negative cashflow. If your business is unique or can be made unique you won't have to offer credit. If you have to offer extended credit you're financing other businesses and have a much higher exposure to bad debts. Which require chasing, letters, visiting and occasionally court appearances. Sounds like a waste of time? Believe me it is and removes your focus from your business.

Working Long Hours, Money Stays The Same

Do you find you're working long hours to accommodate rush orders? Do you find those orders are the ones that actually make the least profit?

Too many rush orders leaves you with the possibility of burning out yourself or your employees. Then where's your business plan?

Dedicated Staff But Losing Customers

Interesting conundrum.

Some of your staff appear to be working their socks off but the customers order sizes have dropped, or you're losing customers.

Think seriously about whether those staff are using your time and materials to provide products to your customers and get paid with money to line their pockets not yours.

Even if you sack those staff getting customers back will be hard. Maybe you'll want to get better customers!

How To Skate Easily Over Thin Ice

The answer is easy learn about all the the different risks that your business faces. Then set-up what I've called your Worry Wallchart.

Using your Worry Wallchart list everything that could remotely go wrong with the business.

Now work out Pain-free Processes for each Worry. So later if you hit the thin ice of that Worry you already know what Pain-free process to use to skate round it, over it or even to paddle through it!

A lot of the Worrys I've listed here can be alleviated by marketing. And that brings me to the biggest worry: "no time to 'do' marketing to get qualified leads to feed the sales pipeline or to keep an ear to the ground with your current customers."


Stop skating on thin ice, or one day it'll be so thin you and your business will disappear under the surface and never be seen again. Go out and do regular marketing.

 

2 comments:

Rob said...

Jim,

I have been made redundant because of the bad debt managers have allowed to grow and the owner had been running his agency for 10 years.

Your comments are insightful but the same mistakes will be made again and again.

Rob

Jim Symcox said...

Rob

Yes you're quite right companies often seem unable to learn from their own or others mistakes.

Check out my new post about how owners/director can kill their companies stone dead!

it's at http://acornservice.blogspot.com/2007/03/are-you-one-who-killing-your-company.html

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