Running a small business can be a challenging endeavour at the best of times. With so many obstacles and hurdles to overcome, it can feel like your work as an entrepreneur is never done, and indeed, it isn’t; if you think that you’ll ever be able to relax and rest easy when you’re a business owner, you may want to check those expectations. Still, there are certain situations, moments, and specific obstacles you should be on the lookout for at all times. Here are 10 red flags every small business needs to watch out for.
1. Insufficient funds
Obviously, not having enough money in the bank should be a giant red flag for your business. It can always be difficult to know the reason behind that deficiency; while you might be tempted to blame momentary blips or malicious actors, the fact is that this could be the culmination of a trend you haven’t noticed, so if you’re seeing low numbers, take a look at your accounts and make sure everything is in order. Remember, too, that there’s no shame in using personal finance options and even online loans to cover deficits.
2. Underperforming staff
When a staff member isn’t pulling their weight, that can mean serious losses for your business. It’s important to check what the underlying cause of an underperforming staff member might be. A staff member might be undergoing personal problems, in which case it’s important to be supportive while still maintaining a firm grip on your company’s bottom line. On the other hand, it may simply be time to let a staff member go if they aren’t suitable for your company anymore.
Staff members not pulling their weight isn’t the only thing you need to watch out for among your workforce. Toxicity is also an important thing to be on the lookout for; if employees aren’t treating each other well or aren’t showing you enough respect, that could indicate a deep underlying problem with your business philosophy, your leadership style, or your employees’ attitudes. If you’re noticing toxicity popping up regularly, make sure to schedule a meeting or two to address it as best you can.
4. No long-term plan
Running a small business can feel like a seat-of-your-pants kind of affair. It can be tempting to simply go with what works and put your long-term plan to the back of your mind, but doing this would be doing your business a disservice it doesn’t deserve. If you don’t have a long-term plan, then your business is going to suffer, because you won’t know what the big picture looks like. Keeping your focus exclusively on the short-term could spell disaster for your enterprise.
5. A lack of motivation
Whether it’s you, your employees, or your partners, a lack of motivation can be lethal for a business. It’s important that you keep motivation high, and one of the ways you can do this is to constantly remind employees of what they’re doing, why they’re doing it, and what they’re achieving in the long term. This is another reason you need longer-term goals; if you don’t know what all of your work is leading towards, then there’s no reason for your staff to believe in their work either.
6. Customer drop-off
When you start noticing that customers are abandoning ship, it’s time to find out why. This is a delicate process; you can’t simply send out emails asking customers why they haven’t shopped with you or used your services for a while. Instead, try to keep your ear out for brand mentions on social media, because there might be something happening that you’re not aware of. You might be able to turn that knowledge into leverage for changing your business, too.
7. Social media buzz
Sometimes, organic social media buzz for a business is good, but it could also mean that business has fallen foul of something or someone. If you start seeing your business’ name getting mentioned on social media a lot, then you definitely need to do some digging in order to find out why. There are ways to manage a social media crisis for your business, but if you catch it too late, then your response might come across as glib or dismissive.
8. High staff turnover
If you get a lot of resignation letters, then it might be time to start asking yourself why. Of course, staff move on all the time; your staff might think it’s time for a career change, or they might have accepted a more attractive offer elsewhere. There isn’t always something you can do to retain even the best-performing staff, but if your turnover is high, that might indicate a problem within your company. Be sure to regularly check in with your HR personnel in order to keep track of employee gains and losses.
Are you making an increasing number of excuses to your staff, your investors, and even yourself? Do you find that you’re constantly saying “we were outperformed by X rival”, “we weren’t able to breach that market because the conditions weren’t right”, or “we just need to weather this storm and we’ll be fine”? If so, then it might be time to exercise some of the brutal honesty that entrepreneurs need to be able to summon. Owning a struggling business isn’t fun, but denying it’s struggling will only lead to problems.
10. No backup plan
Finally, another red flag you should look out for is having no backup plan. Not having a long-term plan is bad enough, but not having a backup plan in case things go wrong or the market downturns repeatedly could be fatal for your business. It’s important to plan for as many contingencies as you can so that your business is prepared for even the toughest of times. Of course, this won’t always be possible, but you should cover as many bases as you’re able to.