7 Warning Signs of a Failing Business

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While the start of the New Year signals new beginnings for most of us, there are some who are actually facing the New Year as being the end. Specifically, the end of their business. The demise of their dream.  And that is what I am going to talk about today: FAILURE.

Some of you have viewed the short video I uploaded to Facebook a few days ago, 'Another one bites the dust', talking about another restaurant in our area, here in Las Vegas that has closed it's doors.  Another one that did not last even a year. In fact, this particular one was 2 different restaurants in the span of 9 months. That's because they closed the doors on the first concept after less than 6 months, did some minor facade change, re-branded, and reopened as something completely different. New name, new concept, new style of cuisine, new staff.  The only thing that stayed the same was the Chef/Owner and I'm guessing, the investors.

As I mentioned in my Facebook video, I am always saddened when I see a business-especially a restaurant, close.  I think of the staff who lost their jobs, the vendors that service that account, the community that loses another venue to patronize, and I even feel for the competitors in the area.  Businesses closing down in one area is never a good thing for competition.  I also feel for the owners/investors because they had an idea, a concept and they thought it would be successful. Maybe they were told or believed that "If you build it, they will come", but alas, it failed.

In this particular area of Las Vegas, in the few short years that Michelle and I have been here, there have been 9 different restaurants in 4 venues that have come and gone. Different concepts and cuisine.  Different styles and price points.  And they all Failed. That is staggering to even comprehend. Actually, a slight clarification: one of those restaurants is still in business and doing quite well. The other 3 locations are vacant. Empty. Closed. Some people have commented to me in conversation and have even mentioned on Yelp, that the area or the venues must be cursed. One might think that mindset has some credence.  Yet in this same area there are another half dozen or so restaurants that are succeeding. Some are locally, independently owned. Some are corporate.  All different styles and cuisine. From a cafe to a steakhouse and everything in between.  They are still in business, and for longer than just 9 months or a year. Even a casual observer would ask himself, "Why?".  But my focus is not to answer that question, at least not in this post.

As I mentioned above, today I am going to focus not on why some fail while others succeed.  Rather,  I am first going to talk about the Signs.  Signs that a Business,  it could be your business, or a business that you patronize, or a business that you work at, is Failing. I don't pretend to have inside knowledge of the inner workings of each of these failed businesses.  However, I have been a patron, supporter and friend of each one of these failed restaurants.  I know, or at least have met the staff, the owners and the management.  So, this is merely my observation of some common signs that I saw along the way.  And because I recognized the Signs, while I was saddened each time one of these entities closed their doors, I must say unfortunately, I was not surprised.

I'm sure there are a myriad of Signs a Business is Failing, but these are the ones that come to mind for me.  Also, while I am speaking specifically about restaurants, these Signs can be applicable to any type of business in any industry.  So, if you notice these, consider it a warning.  I am not saying that any business that displays these signs is going to close tomorrow.  What I do propose though, is that said business is probably in danger of failing.

In NO Particular order-Here they are:

7 Warning Signs of a Failing Business

1.  Limited Presence of Owner/Management (Apparent Apathy)

Many times we hear an owner say they put their heart and soul into their business. However, they don't seem to have their mind and body physically present on the property. This is very disheartening for the staff, and it leads to them beginning to adopt a similar nonchalant attitude. If the owner/managers don't care about the business, why should the staff?  Often in a failing business, the owners/management only appear to get the numbers. Find out how much the business is making or losing. They are not there to encourage and lead their team nor to engage & appreciate their customer.

2.  Multiple and Continuous Changes of Product Offering

In the case of the restaurants, every single one of them, without exception, were constantly changing the menu.  Rearranging items, inconsistent pricing. The kitchen seems to be unaware of certain changes.  This becomes frustrating for both the front of the house and the back of the house, but more importantly, it frustrates and confuses the customer. A customer comes in and has an expectation based on their previous visit, or on an advertisement they saw, and they are told that that is no longer on the menu.  In that short span of time, it makes it difficult to build loyal customers if they think something is going to change every time they come in.

3.  Confusing/ Inconsistent Signage

When a business is not doing well from the start and they are not drawing in the amount of customers that they had hoped for, it seems to be very common for that business to make changes not only to the menu/product offering, but also to their hours of operation.  They will change the days they are open. Change the hours. They may even close down early. It's not busy on Friday night? I know the sign says they're open til 10pm but if it's 8:30pm, and they decide to, nothing is stopping them from 'shutting it down'.  Business hours on the menu say one thing, the sign on the front door says something different, while the website, which is not as easy to change and is often forgotten about, says whatever the original hours were.

So, now it becomes a guessing game for the potential clientele that the business is hoping to attract.  This also holds true for a failing business in regards to their Happy Hour. Is it from 4-6pm or 5-6:30?  Is it Monday thru Friday? No, now it's every day. But the pricing, the product and the menu items have changed. It's no wonder, your customers are going somewhere else.

4.  Poor Service & Hospitality

When the staff does not provide even good or average Service & Hospitality, that is a strong sign of a failing business. Nobody on the team  seems to care. They're on a sinking ship. They're probably more focused on getting their resume out there (so they won't be left hanging when the ship goes down) than on serving their customer.

If your business is not providing excellent Service and Hospitality, it's only a matter of time before the few customers you do have, go elsewhere.  When customers don't feel welcomed at a place of business, they will take their hard earned dollars and patronize a business that makes them feel appreciated.  If a customer is ignored upon entering a business, it's a sign that business may be closing soon.

5.  Quality & Quantity of Product Decreases

Perhaps it's a sign that this failing business is attempting to save itself by cutting costs.  So, they start using lesser quality ingredients, lessening the portion size while still charging the same price. To say that this would upset the customers that business is trying to attract is an understatement.  In many cases it infuriates them. But guess what? A business isn't obliged to maintain the same portions or even quality of the original offering of their product.  Unless of course if it clearly states on the menu- for example that they are serving you and charging for Wagyu beef and instead they give you a Porterhouse steak.  Usually this sign is evident in small, seemingly insignificant ways. In the wine pour they offer, in the amount of pieces in their sushi rolls-It used to be 10 now it's 8.  There are many examples of this.  The point is, if what you first received in quality and quantity of a menu item has decreased from what they were originally serving when they first opened-it's a sign that this business is not flourishing.

6.  Staff Changes-Key Players in Multiple Roles

 This is a very glaring sign.  I have seen this happen all too often.  A business opens and has a nice team with multiple managers and staff members. Each with their corresponding roles. Managers are managers, bartenders are bartenders, etc.  Then one day you walk in and find out that one of the original managers has been let go. No big deal, one might think. That's pretty normal. Then, next time you come in, another manager is gone.  Not sure why, and the one manager that is left, now works all but one day of the week and fills in as lead bartender sometimes. They may even wear a couple other hats as well.  Not only that, but also in an effort to cut cost on labor, some of the key players are rotated to work in another one of the owner/investors businesses.

Every time that I've seen this happen, I know that the days are numbered for this business.  What happens very often, is that those key employees will usually remain loyal to the end.  They know in their gut what is coming, but because they were given an opportunity by the owner, they don't want to abandon them just because business is "a little slow".  The reality, however, 90% of the time, is that the loyal employee is the one who will be abandoned very soon when he comes to work one day and the doors are closed.

7. No Response to Customer Complaints

This Sign again happens when there is little or no leadership present and the one manager that is still present, working and wearing so many hats, doesn't have the time to respond to all the customer complaints. Especially the ones online. If a customer complains to said manager, he (the manager) will make an effort to engage the customer and make things right but if the customer is unsatisfied with the outcome, the most he can do is say "I'll let the owner know". And if any of the other Signs we've mentioned exist, the customer probably knows that the owner is not going to do a thing about it.

8.  No Energy in the Place

I know this is sort of an intangible sign, but I'm quite sure you know what I'm talking about. This is whether there are people in the place or not. It just exudes a lifelessness.  There is no warm feeling in the air. There's no buzz or excitement like there is when you walk into a place that is "happening".  Where is that energy that comes from people who love and enjoy what they do and are lead by management who are equally excited about the business.  No one wants to spend time and money in a ghost town.

9.  The Appearance of a Consultant (Fixer)

 Another sign that a business is in trouble, is when suddenly a consultant appears. Usually this happens unbeknownst to the staff or even some of the management. Somebody new just shows up one day and starts observing. But unlike on the show The Profit, where Marcus introduces himself and tells the team why he's there-(to attempt to find the problems, provide solutions and save the business) in many cases, the consultant that's been brought on by the owner, remains kind of incognito.  Nobody on the team knows exactly who he is, or why he's there and the owner isn't even around more often during this time.

I know that there are many consultants who are very adept at what they do and are able to turn around failing businesses.  The sad fact is though, that most of the time, they are only brought in when the business is on it's last legs, it's death bed.  And only a miracle will effect a turn of events. It's kind of like the person with an incurable illness who when it's nearly too late, decides to try alternative healing/medicine.  It might work but the window of opportunity may be irrevocably closed.

10.  A Sudden Flurry of Random Scheduled Events/Activities

This sign is not as obvious as some of the others mentioned here.  However, this happens very, very often just before a business is about to fold. The outside observer may see this as great marketing, and it could be, but most of the time this is a last ditch effort to try something, anything to draw people in.  After never having any type of special themed nights, or entertainment etc., the business all of a sudden has a calendar out of the blue of random events. First there's going to be a Salsa night next Wednesday, okay but there's nothing Latin about this restaurant. Next, they're offering cooking classes on Saturday evenings.  Monday is going to be stand-up comedy.  Thursday is Wine and Painting.  Not that any of these events can't be great but what I've seen happen is they just put together a calendar of these events and think it's going to bring business.  No Marketing, other than the flier on the counter or in the window of the business.  And to top it off, when they do have one of these events, the owner is not even present themselves.

11.  Out of Stock/No Inventory

I don't think this one really needs much explanation.  Unless all the other businesses in the area are also out of said product- Jameson Whiskey, Godiva Liquer etc. this sign tells the story of one or two likely scenarios; product is not being ordered because of lack of funds/ product is not being ordered because they've not been paying their vendors.  I've even seen a couple places try to pass off low end product as premium and charge the premium price.  If you see this sign, chances are the days are numbered.  Now of course, I'm not talking about if the place is out of just a couple items. We know that happens occasionally. But if there are select, choice, featured items on the menu that they are always out of-beware. This may be your last chance to dine there.

12.   Rumors of Closing

 Again, this sign is self-explanatory.  If rumors are circulating it could be because others have seen the signs. And the next sign that you'll see is: CLOSED

One of those businesses that I mentioned actually told their staff that they were closing for a few weeks to remodel, and that the original owner was then going to buy the business back from the (at that time) current owner. How sad.  When I saw the sign that read "We Are Closed for Remodeling"  I knew what it really meant.

I know I titled this 7 Signs but I prefer to deliver more than I promise that's why I gave you 12. I know there's many more than the ones mentioned here. 

Happy February Everyone! I hope you are all sticking to your goals that you made one short month ago. If you've gotten off track, I encourage you to regroup, recommit, refocus and get back on track.  I know you can do it. Let's make this year, 2016 incredibly successful.

Thank you for Reading!  I am very grateful for all my Soupfly Readers from around the world. If you found this post interesting or helpful, I would so appreciate if you would share on Social Media.  I invite you to leave your comments at the bottom. Maybe there are other signs that you'd like to share with us.  

Cheers!

Elevating Service and Hospitality,

Christoff J. Weihman

ASPIRE Enterprises

Las Vegas, NV

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