Every business is going to have its ups and downs.
And although that fact is inevitable, it’s imperative for business owners to minimize the bad times and maximize the good ones. This is a complex and constantly evolving process that encompasses having a thorough and efficient marketing strategy, the effective implementation of technology and knowledgeable staff to fill every position. But for a business to truly be successful, it also requires knowing when it’s time to change course.
Understanding the signs that tell business owners that what they’re doing isn’t working is essential for companies to remain financially healthy and run smoothly.
Here are a few warning signs that entrepreneurs should be aware of that could signal things aren’t going as well as they could be:
High employee turnover
If workers come and go as quickly as a business owner hires them, it’s a good sign that there are deeper problems within a company. It costs significantly more to hire and train new employees than it does to retain employees and give them an annual raise. For an entry-level employee, it can cost between 30 and 50 percent of their salary to find a replacement, according to Talent Management and HR.
For upper-level employees, that number gets even higher. Employers might spend as much as 150 percent of a mid-level employee’s salary to replace them and a whopping 400 percent of an employee’s annual salary to replace upper-level management. To help retain employees, business owners should regularly check in with their workers to receive feedback on any concerns workers might have about the company. From there, managers can implement a strategy that addresses these issues to keep workers satisfied and increase the likelihood that employees will stick around.
Companies already searching for new hires don’t have to worry about their bank accounts, however. Business owners should consider applying for an alternative business loan to get the capital they need for this process quickly. Unlike traditional lenders, alternative lenders will approve entrepreneurs for a loan in as little as 24 hours so owners can keep their companies running smoothly as they hunt for new staff members.
Poor relationship with customers
It’s not enough to simply sell a customer something and then push them out the door. Business owners need to invest in developing a relationship with their consumers to make their company’s success sustainable. Entrepreneurs who don’t care about customer service increase the likelihood that their consumers won’t come back again, or worse, they will speak negatively about a business to other people.
If business owners find that their customers often don’t return after their first visit, it might be time to reevaluate a business’s customer service practices or retrain employees to make sure customers have a top-notch experience every time they interact with a company and its employees. Business owners who aren’t sure if they have the funds to invest in employee training should consider look into taking out a small business loan from an alternative lender.
This way entrepreneurs won’t have to worry about their business’ bottom line as they sink money into improving employee performances and revamping their business practices to better serve their consumers.
Reduced cash flow
If a business owner takes a look at the books and discovers a pattern of declining sales and profit, it’s probably time to make some changes. A number of things can cause poor cash flow, such as too much spending, weak sales or disorganized bookkeeping. Once business owners identify the problem, they need to take the appropriate action to reverse the problem immediately.
This might mean devising a new marketing strategy to more customers in the store, cutting back on unnecessary expenditures or beginning to use cash flow forecasts, which are a way for entrepreneurs to predict which months will see higher profit margins and times where their company’s budget might be tighter. This tool can help business owners to spend more carefully and leave them with cash reserves when business is slow.
Another way to solve a cash flow problem quickly is to invest in alternative business financing. Business owners can get cash quickly to fill any shortfalls in their revenue without having to meet onerous regulations that traditional banks typically require of applicants.