Are These Three Critical Threats Weeks Away From Sinking Your Business?
You’re up and running, clients love you, and revenue is growing. These are heady times and I encourage you to savor every victory. While many start-ups are struggling to gain momentum, yours is going gangbusters and growth looks certain.
All you’ve got to do is keep doing what you’re doing and profits will start rolling in. Right? Wrong!
I conducted research on over 300 failed small businesses and the results were shocking. Even when the vital signs look great, three common problems can kill your business just as you’re thinking about scaling it up.
# 1. Is Cash Flow Your Ticking Time Bomb?
About 60% of the businesses I reviewed were profitable when they failed, but they were upside down in terms of cash flow. What does that mean for you? Simply put, profits don’t pay the bills … until you collect your receivables.
You’ll incur the costs of expansion months before you reap the rewards. If your cash flow doesn’t let you cover essential payments to employees, suppliers and the tax man, it’s Game Over!
Before you take on huge new sales, invest in capital items, or hire new employees, you need a solid cash flow projection. With this information in hand, you can make an informed decision about planned growth and managing the risks you face.
Take a look at the following great resource from BDC to spark ideas on how to improve and manage cash flow.
# 2. Is Your Business Model Crushing Productivity?
Most people are all fired up about what their businesses do. And not so hot on planning process improvements, managing cash flow or even learning to be good leaders. Successful entrepreneurs don’t just stumble into profitable growth – or at least not often.
Your business model supports HOW you want things to run. It makes the difference between focusing your talent where you find satisfaction and reward, or racing around putting out fires.
Business models align with the way you deliver value to your customers. For example, if your goal is to be the lowest cost provider of men’s bikini briefs (just to pick a vivid idea), your business model might entail sourcing inventory directly from the manufacturer and selling through low-cost, high-volume marketing channels. Everything you do should improve efficiency, and reduce costs.
# 3. Is Your Leadership Style Limiting Your Leverage?
Let’s say you’re a strong extrovert, with a passion for new things and connecting with people — a classic profile for entrepreneurs, and an important aspect of your drive to get things rolling.
However, you’re probably easily frustrated with the detail guys who sweat the risks associated with change. If you’re missing out on the value of diverse styles, failure to establish common ground is a common culprit.
Before you get bent out of shape about your differences, make sure you establish a clear and common purpose – the big WHY as I call it. When you all have the same goal in mind, many of the friction points get easier, or vanish entirely.
Will Your Business Outperform the Odds?
The best piece of advice I’ve ever received is to work on your business just as hard as you work in your business. Saying you don’t know how, or you don’t have time, just doesn’t cut it.
I admire the necessary drive and guts to start a business. But, if you want to be successful over the long haul, you need to get curious about what you don’t know. Find someone you really admire and discover how they became successful. And then shamelessly copy them. Surround yourself with talent, so you have the capacity to become brilliant doing something you love, and reaping the rewards that accompany it.
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