Watch Out for These Serial Killers that Can Murder Your Bottomline Figures (2nd Part)
6. Unreliable Inventory System
Always put everything on record and check often. You might be strangling yourself in worry because of poor profits when you actually have non-moving capital stored inside your warehouse. Double-check your system and your physical items. Know accurately which items are no longer available and update your website immediately. Informing your customers that everything is available for them and then, finding out at a latter time that you are running out of stock, can create complaints and lose your customers along the way.
7. Poor Security System
Ensure that you have policies and procedures that protect you and your business from any theft. Aside from placing a security camera and hiring a security staff in your business premises, put in place a process flow that can countercheck your receivables and safeguard your profit.
8. Non-Paying or Late-Paying Customers
Collection issues will surely drag the company’s profit down because time is of premium importance to any businesses. The longer the days past due (DPD), the bigger the problem is. Use signed service agreements that show in detail the payment terms, penalties, etc. Provide billing statements ahead of time. Send out overdue notices on the dot. Document all your efforts in asking for their payment so you can have a legal support for your court claims. On the other hand, you can also divide your payment procedures into two (or three), just so we can avoid bulk payments that can make it more difficult for the customer to settle. You can make use of 50% downpayment on the first business engagement and full payment when your have completely rendered your products and services.
9. Too Early to Branch Out
Most business owners get excited on their first few years of operation that they wanted to put up another branch at once in another location. It is okay to speed up growth but make sure it is a calculated risk and not out of impulse. In fact, Kalen Smith of Consumer Media Network mentioned that an estimated 49% of businesses fail during their first five years of operation and approximately 30% of businesses can’t even survived for its first two years and that is, a worldwide scenario. So, how do you know that you are ready for an expansion? Well, make sure your brand is sticky enough in the market – that is, you have a good number of loyal customers asking for your products and services. You must make sure as well, that you have a positive cashflow, a reliable team of employees to back you up and a well-founded operational system in it. If these are not yet visible in your current business, then it means that you should wait before you branch out.
10. Employees' Attrition Rate
Employees are very crucial in our organization. Whenever there is a high attrition rate, our revenue also suffers. Why? It takes approximately two to three months of formal and informal training combined, before an employee gets to produce outstanding results for the Company. Moreover, this also challenges customer loyalty. Your regular customers have a preferred staff of yours to assist him or her. S/He trusts him or her already because of the quality of service s/he provides (s/he already knows his/her service preferences). Your customers became loyal to you because they are at first, became loyal to your service staff (not only to your products). Your service staff creates a face to your inanimate products. They humanize your brand whenever they build a professional relationship with your customers. However, when you keep on replacing your employees, you cannot build firmly on their loyalty because they keep on adjusting to your different pool of service staff.
11. Planning Too Long, but Executing Late
I have handled Strategic Planning Management Workshops to companies and guess what, all of their ideas and plans were all really good. As what I have always said, the purpose of planning is to execute (at once). Execution should not be delayed. Why? It’s because the current organization problem seems to be a living organism because it can develop itself overtime. A problem which you have identified two months ago can become a full-grown crisis that can pull down your digits in no time. Therefore, take action immediately.
12. Brand Integrity or Brand Reputation
Volkswagen is a well-known car brand from Germany which has been operating since 1937. It is difficult to decipher how they are now confronting a monumental challenge of billions of dollars fine and a series of lawsuits from their estimated 500,000 clients. This was due to cheating their customers by using a piece of software that reduces nitrogen oxide emissions during testing. The hazardous effect of nitrogen oxide can result in a form of asthma and any lung diseases. It is a pity that a 78-year old brand is endangered to cease its operation because of fraud. With this news all over the media, you cannot anymore expect a loyal following of customers who would still pay a great fortune for their products and services.
I believe that our consumers’ trust is the most reliable currency in the world, by far. Perhaps, you may not be as unfortunate as this company has been facing now but still, inspect for cracks in your business. Are you living out what you have promised to your customers? How about your internal customers? How are they being served by the company? They are your free-of-charge, mobile and living advertisers, too. Do they get to experience your products? Are they treated right? Just like your external customers, if your internal customers are served well, they will do all means to promote you and your business.
A positive cash flow is paramount to any kind of businesses because only then, can you be assured that your Company will continue to operate in the years to come. Identifying your profit-killers mean you have already won half the battle, the other half comes through your EXECUTION. Don’t waste anymore time. So, ACT NOW!