According to the U.S. Bureau of Labor Statistics, 20% of new businesses fail during the first two years of being open and a whopping 45% fail during the first five years. There are different factors affecting a business’s lifespan, including the market demand, the economy, and the cost of living.
Failure can mean different things to different businesses but it’s mostly about whether or not the company is profitable. Every small business owner has their own perspective on failure so it can be hard to see whether your business is failing or facing a temporary hiccup.
Keep reading to learn the main signs of running a failed business and what to do to keep it afloat.
You Have a Growing Number of Unhappy Customers
If you’re wondering how to recognize a failing business, ask your customers for feedback. Read their reviews about your business, see how many of them return to buy again, and most importantly, discover why they’re unhappy. Another red flag is if you notice your most loyal customers are no longer buying from you.
For example, if you see the same complaint from different customers, investigate the issue and why it happened. Then, resolve it with every customer individually to gain back their trust.
Your Sales Are Down
If you’ve been wondering “When does a business fail?”, the answer is – when sales are plummetting. And if you’re not selling, you can’t pay your employees, you can’t pay the bills, or yourself. You also can’t plan for the future and expand your business.
If you notice sales are constantly down and not showing signs of recovery, it might be time to reconsider your strategies. For instance, organize an event, have a giveaway, do a sale, or offer some freebies with purchase to lure customers back in. You may also want to invest in social media ads to create a buzz or rebrand to freshen up your business.
You Have a High Employee Turnover Rate
If your employees are leaving the company soon after you hire them, it’s a surefire sign of a failing business. This can be because they see there’s no future for them in your company, the pay is too low, there’s no potential for growth, or the company culture is not a good fit.
If you want to discover the main reason behind this, it might be time for business coaching consulting for your business and get some guidance on how to move forward.
Recognize the Signs of a Failed Business and Start Fixing Things Today
Whether this is your first year in business or you’ve been around for years, knowing how to recognize the tell-tale signs of a failed business can save you a lot of headaches, money, and stress. This way, you can make a decision to either close shop or take the necessary steps to fix things and start over.
Want more tips on running a successful, thriving business? Check out the latest articles on our blog on this topic and come back often to discover more of the best industry news and trends.
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