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10 Danger Signs for Business – Part 1

danger We’ve heard that diagnosing a medical condition early greatly increases the chances of successful treatment. The same is true for our businesses – we want to spot the minor issues so they don’t become major problems.

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Cash to a business is like blood to our bodies. It has to continue flowing or we won’t survive. As a small business owner, the bottom line is that you can’t run out of cash. So you have to know how to diagnose and treat the source of the ailment before it spreads. With that in mind, here are ten signs that your business may be heading for trouble:

#1 – Lost market share

Your sales may be growing, but your share of the market may be falling. Are they up because you’ve increased prices? Is the growth of your sales keeping pace with the growth of the markets you serve?

Market share is precious – among other things, it provides leverage to raise prices as your costs increase. As competitors enter your market, you have to work even harder to maintain (and hopefully increase) your share.

#2 – Declining customer counts

Your sales may be holding steady, but fewer and fewer people are making purchases. Your remaining customers are spending more, possibly because of price increases. There’s nothing wrong with that, but you have to find a way to attract new customers because a certain amount of customer attrition is natural.

We don’t want our customers to leave because they’re unhappy. But you can’t make everyone happy all the time so even that will happen. We’ll also have customers move away, pass away, grow out of our product or service, and the like.

#3 – Low repeat and referral business

Many businesses actually lose money to get a customer for the first-time. If they break-even, they’re very happy. It’s the follow-up purchases that make a difference to our bottom line.

A healthy percentage of repeat and referral business also shows that your product or service is still meeting the needs of a core base of people. And these people are the ones who will refer other people to you, which is much less expensive than depending totally on advertising to grow your business.

#4 – Declining sales

Right now, a lot of businesses are experiencing this. It may have nothing to do with you – it may be your industry that is experiencing trouble. So you have to ask yourself … is this a long-term trend or is it cyclical? That’s the first thing you have to determine.

Next, ask yourself, will my industry recover? Some industries were facing challenges even before this recession. It’s only accelerating the long-term trend. Other industries will do just fine coming out of it. You have to know which one applies to you.

Once you’re satisfied that your industry will survive, you have to look at your own business. A lot of shake-out is happening even in healthy industries. Isolate whether it’s a problem with your business or the industry as a whole to know your best strategy.

#5 – Disproportionate sales to a small group of customers

Picture this extreme situation – all of your sales come from one customer. You’re totally at the mercy of that customer. It’s like being an employee without the safeguards that go with employment!

Generally speaking, if more than ten percent of your sales are to one customer, you may face trouble at some point. Five percent is even better. Bigg customers are great. But serving a bigg number of customers leads to bigg success.

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Thank you for reading our post today. Join us next time when we talk about five more early warning signs of trouble ahead in your business. Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00348-031109.mp3

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It Pays to Cooperate with Your Competitors

By Bigg Success Staff
06-26-08

Bigg Success in Business

cooperation 

Business owners are often a very competitive group. They want to stamp out their competition so they can gain market share. They’re always looking for a competitive advantage.

But sometimes you can make more money by working together.

Here’s an example
There are two established car dealers in a small community about thirty minutes away from a large city. Obviously they compete for the business of the people in their immediate community.

But at some point, they both approach the maximum amount of business that they can get from these people. Can they continue to grow?

Yes!

What if they promoted both of their dealerships together to people in the city? Talk about how they’re committed to saving people money to make it worth the drive.

It’s likely that neither one could afford to advertise in the larger market by themselves. But by working together, they can bring a whole new market into their stores.

It seems that you hear about “coopetition” with internet competitors. But it works offline as well.

Has it worked for you?

Hear today's lesson and laugh on The Bigg Success Show. 

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Danger: 10 Warning Signs of Trouble Ahead for Your Business

By Bigg Success Staff
03-19-08

Bigg Success in Business

danger

We’re told that diagnosing a medical condition early greatly increases the chances of successful treatment. The same is true for your business – seeing the warning signs early gives you the opportunity to solve minor issues before they become major problems.

Cash to a business is like blood to our bodies. It has to continue flowing or we won’t survive. The bottom line is that you can’t run out of cash. So you have to know how to diagnose and treat the source of the ailment before it spreads.

With that in mind, here are ten signs that your business may be heading for trouble:

#1 – Lost market share
Your sales may be growing, but your share of the market may be falling. Market share is precious – among other things, it provides leverage to raise prices as your costs increase. As competitors enter your market, you have to work even harder to maintain (and hopefully increase) your share or your business may get into trouble.

#2 – Declining customer counts
Your sales may be holding steady, but fewer and fewer people are making purchases. Your remaining customers are spending more, possibly because of price increases. You have to find a way to attract new customers or your business is headed for trouble. 

#3 – Low repeat and referral business
You need a healthy percentage of repeat business because it’s much less expensive to keep a customer happy than to get a new one. It also shows that your product or service is still meeting the needs of a core base of people who will refer other people to you. If your customers aren’t coming back, your business may face trouble.

#4 – Declining sales

If your sales are falling, you’re definitely headed for trouble. It may have nothing to do with you – it may be your industry that is experiencing trouble. Isolate whether it’s a problem with your business or the industry as a whole to know your best strategy.

#5 – Disproportionate sales to a small group of customers
Picture this extreme situation – all of your sales come from one customer. You’re totally at the mercy of that customer. It’s like being an employee without the safeguards that go with employment! Generally speaking, if more than ten percent of your sales are to one customer, you may face trouble at some point.

#6 – High employee turnover

When you lose employees, customers are affected – they deal with less experienced people who don’t know your business or the customer’s needs as well as long-time employees. The costs of training people so they’re fully productive are also significant. If you can’t retain employees, your business will likely face trouble.

#7 – Costs rising faster than sales (declining profit margins)
Costs rise for a number of reasons. As your sales rise, so will your costs. If they don’t, why do you need that cost at all? So rising costs are expected. However, costs that rise faster than sales means you will face trouble at some point because you’ll have less and less profit for each dollar of sales. 

#8 – Disproportionate purchases from one vendor

You don’t want to be dependent on any vendor for purchases in any category. That gives that vendor too much leverage in your business. They’ll be able to pass on costs to you that you may not be able to pass on to your customers. If you don’t have a diverse base of vendors (or at least a back-up plan), your business will probably face trouble sometime.

#9 – Unwarranted increase in receivables
It’s great to make sales, but not if you don’t get paid! That’s worse than not making the sale at all because it costs you money to make a sale. Slow paying customers also create problems because you can’t pay your bills with receivables. If you don’t control your receivables, your business may be headed for trouble.

#10 – Unjustifiable inventory build-up
Depending on your business, inventory may be even less liquid than receivables. First, you have to sell it; then you have to collect on the sale. Inventory that’s not turning over is dead-weight. So if your inventory is building up too fast, your business will likely experience a cash crunch at some point.

Hear today's lesson and laugh on The Bigg Success Show. 

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10 Laws of Survival and Success

By Bigg Success Staff
03-17-08

Bigg Book Review 

book_cover

It all started as a speech. The speech was received so well that Mark Amtower wrote a book from it – Why Epiphanies Never Occur to Couch Potatoes.

Mark, a noted consultant, speaker, radio host, and author, thinks that everyone experiences epiphanies that help us understand reality. However, not everyone recognizes them for what they are – nuggets of wisdom that will make a difference in your life.

We highly recommend this book to you, especially if you’re the leader of an organization. However, it is a great read for anyone who wants to take the high road through life.

At its essence, this book is about adopting an ethical standard for living. That standard, which leads to survival and success, springs from these ten laws: 

#10 – The Law of Tithing
The more successful you are, the more you must contribute to your community.

#9 – The Law of the Food Chain

You must accurately define your market position to maintain momentum.

#8 – The Law of Communication
Simply and truthfully state who you are and what you do.

#7 – The Law of Fidelity

Be loyal to people with influence in your personal and professional life or you may be viewed as unstable and untrustworthy.

#6 – The Law of Divine Right to Attention
You will receive the amount of attention you deserve, base on the value you deliver.

#5 – The Law of Spontaneous Generation
You gain both mindshare and market share incrementally, not instantly.

#4 – The Law of Market Ownership

Market share is rented, not owned. Remain humble and continue to learn.

#3 – The Law of Creation

Epiphanies are worthless without action. Action creates more epiphanies.

#2 – The Law of Leverage
If you live in accordance with the previous eight laws, you’ll be hard to move.

#1 – The Law of Gravitational Pull
If you’re in harmony with the previous nine laws, people will be pulled to you and your chosen niche.

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