I’m talking to you today about three early warning signs that your small business is in trouble.
They’re out there. Whether or not you pay attention to them is up to you. But if you do pay attention to these early warning signs, you might be able to take care of some problems before they become big ones.
The first one I want to talk to you today about is your good employees. You start noticing that your good employees are quitting. When your good employees stop expressing themselves to you because you’re not listening to them and you don’t think their ideas are valid, etc., they’ll often quit.
Why are they quitting? Because they’re good at what they do, and why not go work for a business that may understand them and also offer them an opportunity to excel? No one wants to be part of a sinking ship.
Identify your good employees. Typically, look at your top 20 percent of your employees. If you have 10 employees, 2 of them are going to be really great, 2 of them are probably going to be poor, and the rest of them are probably going to be average. You’ll want to do that and make sure you take care of that.
I think that’s something that Jack Welch did with General Electric when he was running that company. Look at what your good employees are doing.
The second thing is the frequency of interaction of your top customers starts to decline. What that means is out of our customer base or client base, you have a top 20 percent of customers or clients who really generate a lot of business for your business. They interact with you quite a lot.
What you will notice, though, is if your top consumers stop having as frequent communications with you, or transactions with you, that’s an idea that’s something is amiss. Something is not working as well as it could.
If, for example, a customer comes into your bakery once a week and all of a sudden, they start coming in once every two weeks, then once every three weeks, that’s a sign that there’s something at play.
It could be it has nothing to do with your business. It could be they’re not doing as well financially and don’t want to spend the money splurging. But it should give you an idea that your top customers have found something wrong or some other way to satisfy their need, etc., and want to communicate with you, but really don’t know how to tell you.
So they tell you by how they do business with you. How they communicate with you and how often they communicate with you. Pay attention to those top customers and really listen to them, talk with them, communicate with them. If you do notice that they stop coming there as much, reach out to them.
Give them an offer. Casinos do that all the time with their cards. They manage these players’ cards and they know when their best customers are not coming in, and they offer them an incentive to come in.
Do something on those lines and really connect. Communicate often, which I’ve said many, many times before. That monthly e-newsletter is a great way for you to communicate with them. Ask them, listen. “Can you tell me what is good about our restaurant? What is bad about our restaurant? What is good about what we do? What is bad about what we do?” etc.
Try to get them to communicate. Because you may just need to adjust things. For example, Disney World adjusts what they’re doing. They don’t have the same rides as they did in 1971. They have different rides. They have a bulk of their rides stay the same, but they’re always adjusting what they are doing.
So that their new customers will enjoy a great experience of the old rides, but also they get to enjoy the new rides. Their old customers, for example, will get to experience new rides. You’ll want to make sure you’re always listening to these top customers, customers and clients, and adjusting what you do.
In a third way, an early warning sign is that you’ll stop actively marketing. One of the reasons why many small businesses decline is they stop marketing. They stop putting money, energy, and effort into getting people to be aware of their business.
Most of their dollars should be spent on reaching out to existing customers or clients, especially if you got a sizable track record, sizable client base. But if you stop marketing, that’s a sign. You’re deciding that you’re not going to let other people know what you’re doing.
Marketing doesn’t always mean money. What I said is actively marketing. You stop feeling great about that business and you don’t want to let other people know consistently about it. You open up the doors and whoever comes in, they come in. You see this more often than not with restaurants.
I know I use restaurants as an example a lot, but you and I have probably seen hundreds of restaurants that have opened their doors and closed their doors within a couple of months. Often, it’s because they haven’t put the money into marketing. They put the money into the restaurant, the kitchen equipment, tables, everything else, but they stopped at the crucial point which is marketing.
If you’ve been in business for a while, you’ve got to remember you’ve got to actively market. The big companies like Apple, Microsoft, Amazon, they all realized they’ve got to market. Google markets. You have to do the same thing.
If you notice yourself stop actively marketing, then that’s a sign that your business is probably going to be overtaken by somebody. It may not happen overnight, but it can happen.
If you combine those other early warning signs as well as everything else we’ve talked about in these marketing podcasts, for example, you’ll see that you’re in a bad situation. You need to do something to change that.
To review, three early warning signs that your small business is in trouble are if your top employees are quitting or they’re becoming disengaged, the frequenting of interaction with your business starts to decline, and you actively stop marketing.
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