Sometimes when you're so invested in a project, you can't see when things aren't working out. There are always warning signs which show your start-up might not be in the best of health, you just need to spot them.
It's a sad statistic, but 90% of start-ups don't make it past the first five years. The problem is, many start-up owners are so personally invested in their new company that they're blind to trouble looming. Your start-up is special to you. It's your baby. But sometimes difficult decisions have to be made, and there are always warning signs that something is going wrong.
For starters, a high churn rate. If you've hired staff who are packing it in after one or two years, then something is up and you have to ask what's driving them away. A high turnover of staff is also a drain on finances, because recruitment is costly as time and money must be spent training someone new.
There may be other financial warning signs. If you're struggling to meet the cost of overheads, then it's hard to turn a profit. Half of businesses which fail do so because they don't have enough working capital. Often that's because as they grow, they have to take on and fulfil more orders without being paid upfront. If you're short on cash-in-hand, it's time to start worrying.
Finally – and most painfully – it could simply be that nobody wants to buy your product or services. It's a difficult thing to accept, but if there's no market, no customers, then there's no cash. No cash means no viable business.
When you start spotting these signs, it's no time to bury your head in the sand. Either you put an end to your start-up, or you get serious outside advice on how to salvage your new business.
High staff turnover
Overheads spiralling out of control
Not enough working capital
You aren't making enough sales
