In the current economic climate, almost every business is finding things a little harder than usual, but when do your problems stop being “just the economy” and reach the level of being a crisis? It’s all too easy to assume that any problems your business is having will blow over when the economy picks up again; thinking this could lead to the mistake that’s fatal to your business.
If you’re feeling a little concerned about the direction of your business now, and need a little guidance, we’ve addressed a few of the most common signs that your business is on the brink of a crisis.
1 – You Depend on One or Two Suppliers
I’ve seen this issue crop up several times, especially with restaurants and take-aways, where frequent deliveries of fresh produce are essential to the survival of the business. One or two late deliveries can be dealt with using your crisis communications skills to explain to your customers why there’s no tuna on the menu tonight, but if you can’t change to a new, more reliable supplier very quickly, you could lose a lot of goodwill, and a lot of business.
2 – Most of Your Income Is From One or Two Customers
This is a common issue for consultancies. What would you do if your biggest customer stopped buying from you tomorrow? Do you have enough funds saved up to keep the business afloat until you find another customer? If not, start saving so that you have a few months’ worth of running expenses in the bank otherwise you could find yourself out of an office in a matter of weeks. It’s also a good idea to start working on a plan for discovering new customers too.
The secret behind good crisis management is staying calm. Keep the rest of your business running as normal and implement your backup plan. Without that plan, things are apt to fall apart pretty fast. We don’t mean to panic you, but it’s always better to be prepared than sorry.
3 – You Only Have One Successful Product or Service
When you first start your business, you may well launch with just one thing, but as your company grows, it’s a good idea to diversify. Eventually, demand for your key product or service might die down as a result of a new fad. Having other product lines to keep you afloat is important if you find one of your products or services is no longer the in thing.
4 – One Person Pulls all The Strings
Unless you’re a one-man-band, having one person with all the power in the business can be a dangerous thing. Having a partner or even some shareholders to report to offers the opportunity for some valuable reality checks, which are essential during those times when you need to manage a crisis and think on your feet. Having someone on the outside to help you look at the bigger picture can also help you to see things from other people’s points of views and is a valuable tool to have in your arsenal.
5 – You’re Borrowing to Trade
Sometimes, people do need to borrow money to invest in new equipment, open a new store, or move to bigger premises. That sort of borrowing makes sense. If, however, you’re borrowing to stay afloat, then you should definitely re-evaluate the way your business is going. If you can’t sustain your business on a day to day basis without needing to borrow money then you need to find a way to cut costs, or increase your income.
The above are just a few signs that a crisis could be around the corner. If you recognise any of these points in your business, don’t ignore the signs. You may be able to get out of a tight spot with effective crisis communications, but it’s even better if you can recognize trouble early, and make changes before the iceberg hits.