Sure Signs Your Business is Heading for a Crisis

In the current economic climate, almost every business is finding things a little harder than usual, but when do your problems stop being "just the economy" and reach the level of being a crisis? It's all too easy to assume that any problems your business is having will blow over when the economy picks up again, and that mistake can be fatal for your business. This article will address some of the more common signs that your business is on the brink of a crisis.

1 - You Depend on One or Two Suppliers

I've seen this issue crop up several times, especially with restaurants and take-outs, where frequent deliveries of fresh produce are essential to the survival of the business. One or two late deliveries can be dealt with using your crisis communications skills to explain to your customers why there's no tuna on the menu tonight, but if you can't change to a new, more reliable supplier very quickly, you could lose a lot of goodwill, and a lot of business.

2 - Most of Your Income Is From One or Two Customers

This is a common issue for consultant. What would you do if your biggest customer stopped buying from you? Do you have enough funds saved up to find another customer? If not, start saving so that you have a few months’ worth of running expenses in the bank. Start working on a plan for finding new customers too. The secret of how to manage a crisis is to stay calm, keep the rest of your business running as usual, and implement a backup plan. Without that plan, things will fall apart fast.

3 - You Only Have One Successful Product or Service

When you first start your business, you may well launch with just one thing, but as your company grows, it's a good idea to diversify. Eventually, demand for your key product or service might die down. Having other product lines to keep you afloat is important.

4 - One Person Pulls all The Strings

Unless you're a one-man-band, having one person with all the power in the business can be a dangerous thing. Having a partner or even some shareholders to report to offers the opportunity for some valuable reality checks, which are essential during those times when you need to manage a crisis and think on your feet.

5 - You're Borrowing to Trade

Sometimes, people do need to borrow money to invest in new equipment, open a new store, or move to bigger premises. That sort of borrowing makes sense. If, however, you're borrowing to stay afloat, then you should definitely re-evaluate the way your business is going. If you can't sustain your business on a day to day basis without needing to borrow money then you need to find a way to cut costs, or increase your income.

The above are just a few signs that a crisis could be around the corner. If you recognize any of these points in your business, don't ignore the signs. You may be able to get out of a tight spot with effective crisis communications, but it's even better if you can recognize trouble early, and make changes before it hits.

Written by Amy Fowler on behalf of Insignia, who can help you manage a crisis and teach you the secret to effective crisis communications.