Every business has a life cycle. It starts with an idea, a dream, and lots of planning that leads to forming the business and offering products and/or services for sale. Businesses that succeed beyond startup may experience slow growth over time while others might catch “lightning in a bottle” and experience rapid growth that can be dizzying and difficult to manage. But regardless of the nature of the business, it will – they all will – come and go, rise and die. It’s just a matter of time. It’s the circle of life applied to the business.
So, knowing that businesses have a finite life cycle, what are the warning signs that a business is in decline? And once those signs are recognized, can the causes of decline be rectified? Can the overall business life cycle be extended for sustainable success? Read on for those answers:
Signs of Decline
You see it in the news practically every day: another business is shutting its doors. Sometimes these are smaller businesses that impact few in the marketplace, but sometimes they are massive American icons that cling to life and teeter on the brink of extinction (Sears, anyone?).
In most businesses, there are clear signs the company is in some state of peril. Oftentimes, however, these warning signs go unnoticed, unheeded, and unaddressed. When that happens, naturally, the problems fester and flare. Before long, small problems become big problems, further endangering the business. So, what are some classic warning signs the business is in trouble?
Diminishing sales is the most obvious clue. While short-term downturns can be expected in most businesses, when those downturns trend month after month and year after year, trouble lurks. Going hand in hand with lower sales, of course, are the loss of market share and market clout, along with less revenue to spend on updating the business, its products or services, and its people.
Other warning signs could include the problem of aging. Not only do company principals get older (and sometimes become more resistant to necessary change), but company products and services age, too. Once-thriving offerings now no longer dominate the market; in fact, they may have been passed by as new technology or new competitors emerge. Thus, that sterling reputation you had in the market can change quickly, leaving you regarded now as the company with the old technology, no longer the cutting-edge leader. And when this happens, it can be very difficult to reverse course and regain your pristine reputation.
Finally, human resource challenges can signal threats to the viability of the business. For example, if employee turnover rates rise or you have difficulty recruiting and hiring top talent, the employee market may be telling you that your business is no longer a desirable place to work. Indeed, sometimes those outside the walls of the business have the clearest view of what is going on inside.
Causes of Decline
There can be many causes in play when a business begins to fail. As discussed, technology is a big one these days, as technological advances can happen so quickly it can be tough for smaller businesses to keep pace. Often, new technology also brings new competition that disrupts the standard operating practices of industry stalwarts. Just as Uber disrupted the taxicab market and Square disrupted merchant credit card processing, unexpected technological advances and new applications of systems can threaten businesses that enjoyed a stable environment for decades.
And don’t forget the impact of cyclical market and economic forces; weak economies have doomed many businesses, especially those not prepared to weather the storm.
The biggest cause of the decline of a business, however, might be complacency. Doing things the way they’ve always been done – and being content to remain in that rut – can erode the foundations of just about any business. New companies that came to your doorstep due to your great reputation and offerings now don’t do that at the rate they once did. Your lack of proactive sales efforts might not have harmed you for years, but now your complacency in dealing with that core issue is contributing to your decline. Complacency is closely related to denial, as well. Indeed, many business owners may be aware of threats to the business but choose to not deal with them until it is too late, or nearly so.
Reversing the Decline
Business failure is seldom the result of a singular cataclysmic occurrence. It can happen that way, of course, if, for example, a company’s entire inventory is lost in a fire and the insurance had lapsed. But often many small elements have been contributing to the slow decline of the business. Eventually, the heat of those contributing factors grows stronger until the pot boils over. Regardless of the sequence or pace of these factors, there is typically a triggering event – large or small – that results in the business owner recognizing the seriousness of the situation and realizing he or she can’t fix it. That is the first step in correcting the problem.
The next critical moment comes when the owner also recognizes that no one else in the organization – singularly or as a team – is equipped to handle the problem either.
And the final critical linchpin in beginning to address the situation is when the owner understands the consequences of not fixing the problem. This is usually the awareness that without direct external intervention, the business is irreparably “broken” and will die, sooner or later.
Looking Outside the Organization for Help
Once the need for help is acknowledged, consultants like the licensed sales management consulting Advisors at Sales Xceleration can swing into action. Each client situation and solution is different, of course, but there is often common ground to be crossed. For example, the Advisor will consult with the business owner and sales team principals to fully assess the situation, including diagnosing the scope and nature of the problem, as well as establishing specific goals and metrics that will indicate a successful turnaround. From there the Advisor will assist in setting up sales strategies and processes and put into place mechanisms for monitoring progress and managing ongoing sales.
Can the business life cycle be extended to add years of success for a business in decline? In most cases, yes. The sooner the signs and causes of the decline are recognized, and the sooner help is sought, the better the chances for saving the business. The smart business owner is always vigilant for these signs and causes and isn’t afraid to seek help from a sales management consulting professional when necessary. To connect with a Sales Xceleration Advisor in your area, click here, or simply contact us today at 844.874.7253.