10 Early Warning Signs that a Company is in Trouble

no-saleExperts use industry trends and activity to forecast future results. While this information is interesting, it is a global view that has little effect on individual companies. If you are listening to their depressing predictions and wondering how it will affect your business, stop wasting your time and hurting your business. Focusing on the negative stifles creativity and innovation. There are only two times that industry forecasts matter to members:

– If the industry is becoming obsolete and you missed the warning signs.

– To justify poor performance.

The rest of the time, forecasts don’t matter because general predictions have no effect on individual participants. Some businesses fail during boom periods and some grow during downturns. It all depends on management and strategy.

When you are in business, you don’t depend on the global marketplace for your growth and profitability. Your success or failure is dependent on your customers. How you fulfill their needs is more important than the state of the economy.

If your business performance is declining, your first step is to find out why. Accepting that “things are bad all around” without verification is a dangerous position. The economy will affect your operation if your market is mature and your customers are losing their jobs. But, if your customers are still receiving income or there is room to grow in your market, there are other factors. Failing to find them handicaps your potential.

There are always warnings signs before catastrophic business failure. They are hidden in your data, waiting for you to find them. They include:

– Declining average lifetime value

– Increase in hit-&-run shoppers

– Declining value for specific customer segments

– Increasing acquisition costs

– Declining customer lifespan

– Increasing spam reports and email bounces

– Declining response rate

– Increasing returns and cancellations

– Declining service levels

– Increasing fulfillment costs

You’ll find additional warning signs if you look deeply into your data. Knowing what they are and where to find them is the difference between surviving and thriving.

Takeaway: Ignore outsider forecasts and look within for growth and profitability strategies. It’ll be the best business decision you’ll make this year (and maybe next).

If you want to discuss how this applies to your business, please email me at dellis@wilsonellisconsulting.com.

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