Is Your Business Underperforming?

Knowing the truth about how your business is actually performing is the critical first strategy in making it work better. Owners need to know if the performance of their business is deteriorating.

Deterioration in business performance is rarely an overnight event; it usually occurs over a period of time. It can often be difficult to recognize from within by those closest to the problems; i.e; by the owners, leaders, and managers. However, to an independent observer outside the organization the signs of deterioration can be rather obvious.

Deteriorating performance is a process that typically advances through several of the following stages;

• Complacency at leadership.
• Loss of key personnel or key customer.
• Weakening of key Indicators.
• Failure or resistance to acknowledge that problems exist.
• Declining revenues, declining margins.
• Increasing losses, crisis sets in – major turnaround required.
• Possible bankruptcy.

Do you recognize any of these stages within your business?

The great news is that that there are literally dozens of indicators that alert you to each of these stages of declining performance. Here are some of the most common warning signs that your business is substantially underperforming, and that an intervention is likely necessary.

1) Leadership and Management issues

• No written business plan, budget or cash flow projections
• Lack of current financial information
• Indecision and poor communication
• Lack of suitable CFO
• Leaders feeling overwhelmed.

2) Loss of key employees

• Not feeling supported
• Burnt out
• Undercompensated
• Poor leadership and management
• Will others be leaving?

3) Loss of key customer

• Faulty product
• Late delivery
• Unfulfilled promises, poor service
• Will other customers be leaving?
• Will lost sales be replaced?    

4) Cash flow problems

• Significant uncollectible accounts
• Stretching creditors or COD
• Unpaid CRA deductions, GST, PST, or WCB

5) Lack of profits.

• Declining sales
• Lowered selling prices, lower margins
• Increasing costs
• Recurring monthly losses

6) Distracted Ownership Group

• Personal issues – death, illness, divorce
• Dissension between partners
• New business ventures

Top performing businesses monitor these warning signs and many, many others. They understand that small underperformances require small interventions; while major crisis require major interventions.

“The shortcoming of the leaders was not their inability to solve the problems, but rather their failure and unwillingness to see and acknowledge the problems.”

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