The Tribune

by DEIDRE BASTIAN

Imagine starting a business that you built into a ‘million dollar company’ through sheer hard work but, after a few years, you notice it is failing. You begin to encounter multiple problems such as decreasing revenue, customers shifting towards competitors, and investors not providing funding any more. Why would this be happening even though you have done everything right? Why is your business not making money? Are prices set too high? Too low? Are you targeting the wrong customers? Lots of questions and so few answers.

We have seen many well-known businesses or brands slip, and go under, due to ignoring signs of business failure. Can you fix something if you do not know it is broken? How do you know when a business is not profitable? Simply put, profitability is the amount of money that a business earns. And, likewise, if a business is not profitable it is obviously losing money.

Analyzing your cash flow statement, balance sheet and profit and loss accounts will tell you a great deal about your financial position and why you are not turning a profit. If a business is poorly managed, it will struggle to make a profit, which can lead to careless spending, mismanagement of resources and other difficulties.

How do you know your business is failing?

If you find your company’s funds are low (or non-existent), there may be a huge problem. New companies may be entering the market to offer a similar product or service, or perhaps sales are low due to influences outside your control. To determine your own company’s profitability, you will need to gather all financial information, including receipts for expenses, together and total them.

Along with pinpointing your problem areas, you can also create a business budget that offers the ability to cut down on unnecessary expenses, and regularly track your cash flow. To help stay on top of your cash flow, consider investing in an accountant to keep you abreast of your company’s overall financial position.

What will happen if you do not make a profit?

Without sufficient capital or financial resources to sustain and run your business, failure is imminent. No business can survive for a significant amount of time without making a profit.

Let us face it, sales fluctuate up and down and, as a business owner, you will likely have peak seasons and slow seasons. But experiencing a year-round “slow season” is a whole different event, which could be a sign that your business is failing.

Plummeting sales and disappearing customers are situations that no business wants to see or admit to having. If you find these issues becoming a pattern, make every effort to make some changes … and fast.

Think back to when you started your small business. Remember how passionate you were about starting your company? Remember all the blood, sweat and tears you put into making your dream a reality? Do you feel the same way today?

Passion drives your business to success. And if you are no longer motivated, your business will suffer the consequences. If you see signs of lost passion, take a step back and think about your company’s past and future. Think back to why you started your business in the first place.

Additionally, if your passion is not fuelling your business, you might need to make a change for the sake of its success. Ultimately, creating a profitable business is a gradual process. On average, a business takes roughly two to three years to become profitable. Many factors determine profitability and, while some small businesses fail within the first year, others with low start-up costs can be profitable within that time. Until we meet again, live life for memories as opposed to regrets. Enjoy life and stay on top of your game.

• NB: Columnist welcomes feedback at deedee21bastian@gmail.com

ABOUT COLUMNIST: Deidre M. Bastian is a brand marketing analyst/skilled graphic designer, international award-winning author and certified life coach.