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posted on February 11, 2009 10:38
TOP 10 REASONS WHY BUSINESSES FAIL - Poor Sales Performance
Nothing happens without a sale! If you don’t have a sales process or are using only one strategy, your sales performance and profits will struggle. What are you doing to increase sales? Are you tracking and measuring your daily performance?
- Lack of Organizational Management Systems and Controls
Failure to implement systems within your organization can cause confusion, lack of performance, and decreased profits. Each function in your business should have a specific process to perform—each process needs to be measured, managed, & controlled.
- Insufficient Working Capital and Management of Cash Flow
Businesses who fail to manage cash flow and build reserves for the future may go out of business when a recession, low sales, and other threats attack the stability of the business.
Every business should be striving to increase their working capital (reservoir of liquid cash) that can be used as a backup support when sales are low or a new piece of equipment needs to be replaced.
- Inexperience
Although many may have experience in a specific trade or skill, they may not have enough experience in other areas to run a successful business such as: business operations, accounting, sales, marketing, law, human resource management, economics, investing, and computer technology. Therefore, it is absolutely critical to use the resources of other advisors that can help your business sustain long term growth.
- Purchasing Extravagances, Overspending, Misuse of Money
Purchasing extravagances to improve your image or spending money to impress others will end up doing just the opposite and be detrimental to your business. Also, be careful about using business funds for personal use. It is important to keep your personal and business finances separate to avoid IRS red flags.
- Dishonesty and Lack of Ethics
People work with those they know and trust.—they want to work with honest and ethical business owners. When you take advantage of others for personal gain, you will destroy your reputation, trust, and your business.
- Overly Optimistic or Unrealistic Outlook
Businesses go into debt by spending large amounts of money in a variety of areas with the hope that it will give them a high return on their investment.
Unfortunately, it doesn’t always happen the way they had planned. Make sure you do your research before making a decision you may regret. For example: with advertising, test the market using smaller demographics to study its effect on sales volume before you spend $1,000 of dollars on something that may not work.
- Personality Issues, Poor Behaviors, and Bad Habits
People make judgments about your personality within seconds. The way you act and behave around others will make or break a relationship faster than anything else. Word of mouth travels fast, so be careful how you interact and address those you associate with.
- Poor Credit Policies
Extending credit or allowing customers to charge on account without a credit policy in place is a dangerous game. If there are no rules or systems in place, many people will pay late or not at all.
By establishing a credit policy, you can reduce the risk of bad debt and collections. This may mean you accept only certain kinds of payment methods, check their credit history, and extend credit only to those who have proven themselves over a year’s time.
- Misunderstood Accounting Information
Misunderstood accounting information and incomplete accounting systems will cause any business to fail quickly. The information needs to be accurate, up-to-date, and presented in a way that can be understood by the business owner.
Accounting information is used to help make critical decisions and increase company and employee performance. Business owners can manage and control financial details quickly and efficiently when they fully understand how to manage their business by the numbers.
For Further information on what to look for, Contact us for a free consultation.
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