The death blow that leads to catastrophic business failure is rarely the cause. Companies built on solid foundations can withstand challenging economies, external events, and evolving marketplaces. Failure comes when the winds of change hit a shaky foundation. The warning signs appear long before the final closing of the doors.
Planning for every possible event is impossible. The best plans can be derailed by unforeseen events. How many companies along the Gulf Coast planned for the oil spill? The disaster was surprising because offshore oil rigs had been operating for a long time with few issues. What about Hurricane Sandy? People plan for storms. Super storms are unexpected.
In 2004, two hurricanes, Frances and Ivan, tag teamed Asheville, NC with 100 year floods. The streets of Biltmore Village, the tourist mecca of local shops and restaurants, became rivers. Elegant shops were flooded. It is doubtful that any of the businesses had a plan that included two major floods in a week apart. Most of them have bounced back. A few never reopened. The owners interviewed on the local television channel cited the storms as the reason.
The storms were the death blow. They were not the cause. Specific causes varied by store. Observant visitors to Biltmore prior to the storms noticed the shops with fewer patrons than others. Some had dated merchandise. The businesses were on life support long before the water started rising.
There are plenty of warning signs that a business is in trouble. Most are hidden beneath the surface. Due diligence is required by the management team to insure that their company is healthy. The following five warnings are signs that business failure is approaching:
Customer Apathy – When customers stop opening emails, reduce visits to storefronts, and fail to respond to great offers, apathy has set in. If your customers don’t care about your products, services, or offers, your business is on the ropes.
Misinformation – The data gathered is only as good as the interpretation. Justification of shifting metrics is a sign that there is trouble brewing and people are burying their heads in the sand. Monitor the numbers used to drive the business to insure that they are realistically portraying the situation.
Lack of Vision – Every business begins with a vision. Founders know what they want from their companies. Time and structure are necessary for growth. They are also the enemy of vision. People start looking at where they are instead of where they need to be. Failure to envision the future locks the doors of opportunity.
System Dysfunction – Processes and systems run companies. They start out as tools to improve efficiency and grow into monsters that interfere with service. Making systems and processes work together is critical to success in a multichannel world.
Employee Morale – Enthusiasm is contagious. When employees aren’t excited about their jobs and company, customer apathy sets in. It is the circle of business life. Low morale can be felt by everyone who enters the business or speaks to an employee via telephone, email, or social media.
Creating a foundation for success is the best thing you can do for your company. Are you ready?
For information on how to build a solid business foundation, email Debra at [email protected]