Guide to common mistakes that struggling businesses make
The current economic climate has made it even tougher for small and medium sized enterprises to get ahead, begin to succeed and start the process of growth and expansion. However, these troubles are not always entirely down to an unstable financial environment, but are often caused by mistakes made within a struggling business or by its management.
Though many small businesses may eventually fail, there are a number of steps you can take to ensure that a business has the highest chance of survival. With this in mind, we take a look at a number of common mistakes that can have a significant impact on a business that is already struggling.
Failing to act quickly
All large problems begin as small ones and crises are often caused by an inability to deal with these small issues before they snowball. It’s incredibly important that any small or medium sized business establishes a system which allows them to identify problems at an early stage, in order to make sure they are dealt with at the source and aren’t left to fester. In most cases, problems will originate in a specific part of the business and will, for a small period of time, remain localised.
This makes it much easier to identify exactly how and why the problem arose in the first place and should offer the chance for you to make changes. Such issues are much easier to tackle when limited by size and scope and should never, under any circumstances, be left to contaminate other parts of the business or the entire organisation. Ignoring such problems only allows them to gain momentum, seriously reducing your power to make changes and successfully adapt to meet these new demands. The longer you wait for the problem to resolve itself, the fewer and fewer options there will be available to you once the time comes to make changes.
Not requesting expert advice
All businesses, even the largest, require external advice at some point or another. This is especially true of small and medium sized businesses, most of which probably won’t have staff with the depth of experience or breadth of knowledge necessary to make informed decisions at every step. Consequently, it’s important that advice is sought and taken from business recovery professionals that deal with the precise problems the business is facing. Whether it is because new business owners are too proud to ask for help, wrongly feel that they have a good enough understanding, or simply fail to realise the extent of the problem, failing to seek professional advice and expertise is a serious business error.
Poor cash-flow planning
In times of financial hardship, particularly if a company is struggling, one of the greatest threats to a business is the freezing up of its cash flow. Without funds flowing freely into the business, through every part of it and out of the other side, the business will remain stagnant and unhealthy. Consequently, it is important to ensure that comprehensive cash flow planning is in place, giving companies the opportunity to understand exactly what is happening with its cash. This can be achieved by making sure that every payment into the company from a client or customer is made on time and that it is understood precisely when this will enter the organisation, becoming available for use. By knowing exactly when funds become available for distribution throughout the business, managers gain a sufficient degree of control over cash flow affairs.
A corporate insolvency specialist such as Moorfields can assist business leaders, financial directors and stakeholders to deliver pro-active solutions for their business, as well as advice on how to adapt to the ever-changing economic landscape.
Overstretching yourself and your company aims
Many small and medium sized businesses fall into the trap of aiming at too large a market and subsequently diluting their appeal to the customers that will drive the company forwards. Rather than over-reaching, it’s often good business practice to focus on a very specific niche, or a niche within a niche, in order to ensure that your products and services are definitely in demand. By specialising to such a degree, businesses are able to become incredibly competitive, boost their reputation and branding, and develop expertise at a far quicker pace.
Forgetting staff create the business environment
Though it is easy to forget, it’s incredibly important to remember that the staff you hire will create the environment in which you work, will become the human face of your organisation and act as the first point of communication with clients, customers and fellow businesses. Consequently, it’s important to not just treat vacancies simply as positions to be filled, but search for individuals that will fit well into the existing work environment. While an employee can always be trained in the skills necessary to fulfill a role, other qualities (such as drive, ability to think originally and communication skills) are much more difficult to acquire. As such, it may be a better decision to look towards workers that you know will commit to the organisation, develop with it and strive for the business.