3 Signs Your Company Needs an Intervention Are you taking out a second mortgage to sustain your struggling company? Uh-oh.
By Doug and Polly White Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Companies that seek our consulting services typically fit into two categories: desperate -- or inspired. Desperate companies have an issue or issues that are holding them back, or in some cases crippling or destroying their organization. Inspired companies, in contrast, have a vision that they need help to achieve.
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Most companies out there don't fall into either category. They are happy with their circumstances, growth and profits, and therefore believe that they need no help from consultants. While inspired companies are fun and exciting to work with, our work with desperate companies holds a special reward.
However, there is a small window between desperate and too far gone to help. Those companies face two challenges. The first is realizing when they are in that window. The second is being willing to reach out for help before it is too late.
So, if your business is trending toward desperate, watch for the signs. Don't wait, because you need "an intervention." Take immediate action to get help from a competent consultant that can work with you to right your organization. Here are those signs:
1. You are using your own cash to sustain (not grow) your organization.
Several companies have contacted us after their owners have used up their personal savings, taken second mortgages on their homes and sold assets to sustain their business. Worse yet, some of these companies have taken loans with interest rates that are beyond usury.
If you find yourself in this position, you have a broken business model. You can keep pouring cash into the business until you have exhausted all resources, but that business is unlikely to have a positive ending. Until you change the model, you won't crawl out of the hole. Stop digging and ask for help.
2. You are losing revenue year over year.
If your revenues are dropping, ask yourself if the entire market for your product or service is shrinking or if you are losing share.
If your market is shrinking, you may need help in structuring a plan to change your business model, but be reasonable. If you were a saddle maker when Ford started producing cars, that didn't mean you should have started manufacturing automobiles. Instead, you should have built on what you knew. You could have taken your knowledge of cutting and sewing leather and made seats for the new "horseless carriage."
We have helped more than one business through this process. Consultants with experience in varied industries may be able to help you think about your business in new and different ways and to create a plan for the future.
If you are losing market share, analyze why your competition is winning your customers. Is it your product/service package, pricing, service level, marketing or something else? Getting a fresh perspective can help you discover why you are losing customers, and assist you in putting a plan in place to get them back.
Related: 6 Lessons I Wish I'd Known Before My Business Failed
3. You are losing key personnel.
If your best employees are leaving, there are likely good reasons. Perhaps your culture is declining. Maybe your customers are unhappy, and that is hurting morale. Alternatively, your competition may be wooing them away. Whatever the reason, the best employees leave a struggling organization because they can.
Unfortunately, when this occurs, the speed at which your organization will decline will increase. When talent walks out the door, the other employees will smell blood in the water. Only the most loyal and those who have no other good choices will stay. Often a third party can discover what is going on within the ranks. Employees will disclose to the right consultant information that they will withhold from you.
With this information, you and your consultant can stop the turnover and salvage the talent that remains.
Related: 5 Signs Your Startup Is Destined to Fail
If your company is experiencing any of these three situations, don't wait. Doing more of the same will not change the outcome. You need an intervention. There is no shame in reaching out for help. However, there may be regret if you wait too long and your window of opportunity closes.
