SALMON JOBS

Excessive turnover. Employees can often see a failing business more readily than the owner. The sign that this may be the case is an unforeseen exodus by multiple employees at the same time. If this seems to be the case, ask in exit interviews if they have concerns about the long-term viability of the company. Sometimes this could just be a great maneuver by a slick competitor to take your best people or it could also just be a rumor mill that has people running scared about nothing. Find out for yourself with the exit interviews and maybe some department meetings on employee concerns.

Excessive price cuts. If you find yourself slashing prices more than you thought you would, that implies a desperation that may be fatal — if for no other reason than you're cutting into your profit margin.

1. Paying with plastic. If you're resorting to a credit card to meet payroll, you're only adding to a debt level that's ultimately going to strangle you. Don’t bankroll your payroll with a credit card. A Visa card is not the answer to meet payroll unless you are purposely trying to dig yourself a debt grave. Find out exactly why you don’t have the cash. Slow payers? Lack of work? Too much R&D spending? It could be a number of things and each of them has their own way to be fixed. The key here is- when you are ready to hire employees, you should get yourself a line of credit from a bank that will cover 2 months worth of payroll, benefits and taxes if possible. At least a month’s worth.
2. Too much stress or not enough happiness. Keep an eye on yourself as well. If the business is killing you- trouble sleeping, short temper and the like- that can signal a business that may not be worth keeping afloat. Remember your enthusiasm to get working everyday when you started the company? Well, you can’t expect to have the same exact passion a few years down the road but you sure should expect to get up in the morning to see how your personal creation of a money machine is doing. You got in it for freedom, or money, or creativity or something that made you feel good about yourself. If you’re still not at least a little pumped for a new business day, you might have a problem on your hands.
3. Knowing signs of trouble may allow you to head problems off in time. Listen to those closest to you for guidance and counsel — not merely for potentially fatal flaws but insight that may solve the problem before it becomes terminal. Talk to your advisors, your lawyer and accountant. They can often tell you when your business is in real trouble. Friends and family members can also often see the signs without even being involved in the business, but by being involved with you.

Very few entrepreneurs want to close their business. Sell, yes. Merge, maybe. Shut it down, I doubt it. The reality is that more than 50% of all new companies opened in the U.S. and Canada close within the first three years. That means you need to know when, in fact, it may be best to cut your losses and get out. Yes, it might happen to you. It’s happened to me so I’m speaking from a lot of experience here. Perhaps the single biggest obstacle to overcome is to accept the reality that when you start a business, you need to be prepared to close it. You should have included in your initial business plan a formula or timeline with a set of criteria to determine if the goals you feel are necessary to survive are being met.

In many ways, knowing when it may be time to close down a business is a particularly tough call for a small businessperson. Not only do large corporations have significantly greater resources to address potentially fatal problems, but the lone wolf mentality that allows an entrepreneur to flourish can also blind him/her to reality. A business owner has to go into operating a company with an attitude that says “I am excited and I will succeed” but they also must be aware of the possibility that the company may not survive. A true entrepreneur often gets emotionally attached to their company because of the passion and efforts needed to make it even have a chance to succeed. Unfortunately that emotional attachment can also cause them to not see what is actually a sinking ship and not just a rough sea.

Keep the following points in mind. They don’t mean the ship is necessarily going down, but noticing them may allow you to reverse a bad situation that will sink the ship you worked so hard to keep moving full steam ahead.