The many challenges facing businesses today aren’t made any easier by the ups and downs of the economy, the rise of fraud and the ever increasing rules and regulations that business owners need to follow in order to stay above the law. However, the laws and economy aside, there are other issues which you may deem ‘small’ that could be massively affecting your business.
Many business owners feel that as long as the money is coming in, they are safe, and therefore when new business starts to dwindle, some may struggle to identify the problem. If your company is starting to struggle with business, and your cashflow is starting to become unstable or unpredictable and you can’t source the root of the problem; here’s five reasons why this could be happening.
1. You aren’t keeping happy staff
One aspect that is now more commonly appreciated in the workplace is to keep happy staff. Your staff can both make and save you money if they are kept satisfied in their jobs. If they are stimulated, happy and feel appreciated in the workplace, they are more likely to inject positive attitudes into their sales efforts and promote your business in a genuinely positive light and not just for the sake of making the sale. Secondly, they can also save you money. If you have a high staff turnover, you are constantly spending money on advertising for the role, interviewing and training. Not to mention the first few shaky weeks where they are still getting used to the role and perhaps not performing as well as you’d like them to be. By keeping your current staff happy you are saving on the cost of new staff and you are benefiting from their experience and previously formed customer relationships.
2. You’re not targeting the right people
If sales are dwindling, it could be down to your marketing efforts. If you are spending money on advertising and creating marketing campaigns that are targeting the wrong people, you won’t see any return on investment. In the quieter summer months approaching, use this time to sort through your data and make sure who you will be targeting are the right people. Creditsafe’s Marketing Prospects can help you target the right people by offering you 22 different variables that you can customise your data with, such as turnover, net worth and geographical location. Another tip is not to target the same people all the time. Move around industries, professions, or even levels of employment; just make sure they are relevant people to target. See our blog post ‘how to target creditworthy companies with your marketing programme’.
3. You’re paying out money more than your getting in
A common problem for everyone, not just businesses, is that we can sometimes live beyond our means. We all want things that maybe we can’t quite yet afford. Business is no different. When a business is first set up, there are essential things you need to have, such as an office, computers, a telephone, etc. and getting into debt is very common. The problems arise when you get into ‘bad’ debt- money you can’t afford to pay back. There was £12,567,889,275 worth of debt owed in the UK last year and 39,085 insolvencies. Bad debt and poor cashflow is directly linked to the level of insolvencies there are, so don’t get carried away with your borrowing and always make sure you have a solid repayment plan in place for when you do need to borrow money.
4. You’re all about new business
Bringing in new business is a priority for most businesses, but it’s important to find a balance between new business marketing and existing customers marketing. Customer retention can be a massive part of a company’s revenue, and customers should get full access to your team as they are using your services. If a customer feels valued and is happy with the service you have provided they are more likely to continue a contract with you or purchase from you again. If you feel you spend too much time and effort on bringing new business, or you don’t get many returning customers then there’s a good chance that your customers feel as if they have been passed along after they have parted with their money. Even following up a sale or just having someone available 24/7 to deal with enquiries would be beneficial for building great customer relationships.
5. You’re dealing with the wrong companies
One of the biggest things that can really disrupt your cashflow is bad payers. If a customer is paying you late, or worse, refusing to pay you at all, this will cause problems for you. If you have a big contract with an uncreditworthy customer and they don’t pay you, your cashflow will take a massive hit. Separate yourself from bad payers. Don’t sign contracts or go into business with any company that you haven’t credit checked beforehand. Doing your due diligence could save you money, stress and arguments further down the line, you can’t afford not to.
Creditsafe offer a range of business solutions to help you with these common problems. One of our credit reports can give you a company’s credit rating, credit limit, the amount of days they take to pay their bills and any previous adverse payment information. You can also find director details, group structure and key financials. By checking a credit report of a company, you can relax in the knowledge that this company can and will pay you.