1. No Feasible Business Plan. A good business plan is your road map to success. You cannot do without a plan. As the saying goes, “if you fail to plan, you plan to fail.”
2. Not Enough Sales to Sustain Operation. Many small business owners do not keep track of sales and expenses. Because of their tendency to regard accounting and bookkeeping as time wasters, they keep their “record” in shoe boxes and just rely on bank statements and check balances as indicators of “good” or “bad” business days. This is risky because unless you have a solid financial plan and a good accounting system, you would not know you have a problem until it is too late to recover.
3. Sustained Negative Cash Flow. Periodic or seasonal revenue losses are normal in business. But if you experience a chronic shortage of cash to finance your operation, you better be alarmed. Something is wrong somewhere. Loan and equity infusions are sometime not the right solutions unless you revise your business plan. At best they are just palliative measures that tend to aggravate the situation. Get to the root cause of the problem.
4. Competition Winning Over Existing Customers. It is used to be said that people needed products in order to survive. Now it is the other way around. Products need people in order to exist. With so many choices at their fingertips, customers could easily switch preferences. There is no such thing as customer loyalty these days. One morning you might wake up to find you long-time customer doing business with your competitor across the street. And all because of one stupid remark that had him walking way in anger from your store the day before. If no customer, you are out of business.
5. Unpaid Overdue Accounts. Credit lines extended to you by your suppliers may help your business grow faster if you know how to manage them well. Often, a good credit with a happy supplier is a lot better than a loan from your friendly bank. Staling vendor payments just so you can keep your cash on hand longer will do your business more harm than good. You could be in trouble before you know it.
6. Low employee Morale. When your employees start wearing long faces, you better watch out. You cannot expect you workers to be fired up when they do not receive their salaries on time. Do not take your employees for granted. They would either help you grow or help you fail. Remember, you need them. They do not owe you their jobs.
In business as in everyday life, anything can go wrong. Sometimes you can keep it from happening. Oftentimes, you cannot. But you can minimize your losses and setbacks if you closely watch for failure signs.
Source: George V. Estrella