Business failures occur every day. Business owners must constantly be aware and be looking for telltale clues that their business might be taking a "nose-dive." Most companies that get in trouble do not know what led to their demise. If you learn to monitor your operational areas and look for signs of failure, you may be able to prevent or stop your business from failing.
Here are some important questions that would-be entrepreneurs should ask themselves:
§ Have I prepared a business plan?
If you have not prepared a business plan, chances are you do not know where your business is headed. You are in trouble from the start. Make a business plan and stick to it. There are lots of programmes available to help you. Check out our Business Book page or Software page. You can also make a business plan online at Canada Business Service Centre's New Interactive Business Planner page.
§ Can I or my company change?
If you or your company are unwilling or unable to react quickly and appropriately to a changing market or technology your company sales may drop drastically.
§ Am I spending the company's money properly?
If you do not buy and manage inventory properly, or manage your accounts receivable properly, including delinquent accounts, you may start having cash flow and credit line problems from which your company cannot recover.
§ Do I have monitoring systems in place?
If you do not have good systems in place for verifying, checking, and monitoring key aspects of your business you not only could be out of business before you know it, but you could go out of business without even understanding or knowing how or why. Make sure you at least have such general systems in place as appropriate audit procedures, baselines for comparative purposes, and benchmarks for quality.
§ Is our company debt load too great?
If it is, you are going to have a cash flow problem due to heavy debt servicing. Be honest and realistic about what debt the company can afford to carry monthly.
§ Can the company cope with success?
Is your company able to increase volumes while keeping customers happy? If your company's growth is so fast that you do not have the ability to meet customer demands, your company could get into trouble and ultimately fail due to losing the confidence and business of your valued or repeat customers.
§ Is my inner fire still burning?
Are you still enthusiastic about your company - what you do - where you want to go with all this? Do your employees feel the same way? Do you still believe in yourself and your company?
§ Do I know my level or areas of incompetence?
Do you know your limitations? Are you willing to get an expert in when required? Owners that think they can do absolutely everything are only kidding themselves and could hurt their business irrevocably. Admit when you're over your head. Hire an expert when you need to.
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