Beware of the 15 Signs that Your Business Might Fail (part 2)

For more details of what to be wary to avoid business failure, here are some reasons that your business might fail, watch out for these signs!

5.      Permanent equipment problems

Why do you have “permanent equipment problems”? Looking back at the second sign – Lack of Capital, one reason for this might be, you bought used equipment thinking that you save budget and utilize your savings from other expenditures. However, the used equipment that you bought already depreciated so you wouldn’t expect a hundred percent condition of your equipment. Thus, causing you operational delays due to equipment problems, and you wouldn’t expect it to be fixed overnight.

6.      Poor credit practices

If you are experiencing rapid increase of your accounts receivables than the increase in your sales, then you might end-up winding up your business. Make sure to watch out for it.

7.      Increase in personal expenses

You might watch out for spending your money on unnecessary personal expenditures, or else you’ll end-up losing your capital for your business, of course you would not want that to happen. Always audit your money, evaluate and think twice whenever you spend it for your personal wants, it is not bad to always assess the savings you have especially when you hold your business income. Or, if you do so, always ensure that you have separate purse for your personal budget and for your business income.

8.      Premature expansion of the business

As always said, “patience is a virtue”, assess and plan well for business expansion before doing so. Don’t be easily pushed on developing your business, it isn’t bad of course, but there is always the right time for it, since you might get off beam without well defined business plan and assessment towards business expansion.

9.      Bad attitude

If you are unaware of your bad attitude and afraid of failing the business you had put up, look around you, do you have good rapport with your team members? How about having good connection and relationship with your business partners, including your suppliers and distributors? If not, think twice and evaluate yourself, you might be the problem. Good leadership will endow with long-term relationship with your people and will give you continuous increase in sales due to your team members’ good performance and hard work.

10.  Too many business expenses

Always review your expenses as you might be spending unnecessary supplies, and make sure to evaluate every single cost you incur on it. Bear out that you have managed well your inventory, meaning you effectively know what is on hand, where it is in use and how much you must dispose. In this manner, you would effectively control your expenses and avoid unnecessary outflow.

11.  Poor collections

If you are fun of giving your friends and relatives credits then, watch out for poor collections of your product’s charges. Or, there are continuously delay on the product deliveries from your suppliers, thus affects your product availability to your customer demands that would as well cause you to having low sales.

12.  Low sales

Low sales would be the easiest sign that your business might fail. Why? Simply, if you have continuous low sales, and even lower than your fixed costs, over time then you might not provide enough to pay overhead and might as well cause you bankruptcy.

13.  Poor inventory management

Poor inventory management will cause you low sales, dubious reputation and finally winding up your business. How? If you carelessly store your retail merchandise and dust gathers on it, you will be rewarded an absolute damage and spoilage of your supplies. And/or, mice and insects will eat up your inventory, meaning you have just let those parasites eat up your money. Consider as well to store your inventory in anticipation of rains and floods to avoid damages and wastes.

Crime these days are high, one to mention are thieves and you would not want as well to be fooled by your employees embezzling your supplies, so always check or let somebody monitor the security system of your storage facility or warehouse, and a well planned and designed security system will avoid robbers from stealing your stocks.  Moreover, to steer clear of inventory stale, obsolete, or unsalable, ensure to practice FIFO or first-in, first-out system.

Remember, having useless inventory is like storing fake money in vault. Treat your inventory as real cash because it is! And, don’t take too much risk on valuable inventory by not taking in insurance policy on them. We don’t know what accident might occur in the future, and future means after few hours, tomorrow, next week, next month, etc. always keep precautionary measures in every decision you make!

Lastly, put some sort of order in your inventory stocks such as storing them by category, shape, size or by part number so you would not be confused.

14.  Competition

Watch out for potential competitors that might outperform your business. This would greatly affect your sales and reputation especially when you do not take good care of your consumers, because primarily your customers would be your family, relatives and friends and when they have acquired quality product and service from you, positive word-of-mouth from them will spread to their family, relatives and friends as well.

15.  Crime

When you have observed the above mentioned signs make sure to establish your strategy legally and avoid committing fraud, “estafa”, tax evasion, etc. just to avoid failure of your business.

Thanks for taking time reading this and I hoped I was able to help you! Do you have something pondering on your mind?


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