How to determine if a business is on the brink and needs anti-crisis measures

Contents:

• Financial indicators are not growing
• The business has no USP
• The business ignores trends
• The team does not want to develop
• The owner does not know how to delegate tasks
• The main signs of problems in business in 4 points

Business consultant and former director of strategy at IKEA Russia Elena Filippova discussed warning signs to look out for.

Serious problems may be hidden behind the outward appearance of a business. It's important to identify these problems early, before they develop into a crisis. This is especially important before scaling, as unsuccessful steps can lead to a failure to achieve the expected results. Taking steps to analyze and diagnose the current situation will help avoid negative consequences and ensure sustainable business development.

In this article for Skillbox Media's "Business" editorial team, we discuss five key signs that indicate serious problems in a business. These signs can help you identify crisis situations in time and take the necessary measures to resolve them.

• financial indicators are not growing;
• the business does not have a unique selling proposition;
• the business is ignoring trends;
• the team is unwilling to develop;
• the owner does not know how to delegate tasks.

Financial indicators are not growing

The request to scale a business often arises among owners when operational processes have stabilized and ambitions become more pronounced. However, external confidence does not always correspond to internal indicators. If the company's revenue is declining and sales volume has been falling for several months, instead of developing, the business may face a crisis. It is important to analyze key metrics and identify problems before deciding to scale. Effective resource management and strategic planning will not only help avoid a crisis but also lay the foundation for successful growth.

The owner of a company with a turnover of approximately 5 billion rubles sought to identify new growth opportunities. The initiative came from the owner, who demonstrated significant involvement and a willingness to invest resources in business development. This underscores the importance of management's active participation in strategic planning and identifying ways to expand the company.

The financial forecast indicates that the business is heading toward losses. Development in the current direction could negatively impact the company, so the owner needed to take anti-crisis measures. This includes portfolio optimization, cutting non-core areas, and a partial asset sale. Effective anti-crisis strategies will help the company maintain stability and adapt to changing market conditions.

The business lacks a unique selling proposition

The lack of a unique selling proposition (USP) is one of the key signs of problems in business. If a company is unable to clearly articulate what it offers its customers and how it stands out from the competition, it risks losing its market position. Although a business may continue to function thanks to inertia, maintaining sales volume and a team, over time it may lose sustainability and opportunities for further growth. This emphasizes the importance of developing and implementing a unique proposition that will help attract and retain customers, as well as increase the company's competitiveness.

The lack of a unique selling proposition (USP) poses a serious threat to companies operating in highly competitive markets, such as HR outsourcing, distribution, and small-scale food production. In a highly competitive environment, a business without a clear USP risks losing its customer base. Customers can easily switch to competitors that offer clear positioning, convenient service, or understandable products. Establishing a strong USP is key to ensuring the sustainability and success of a business in a dynamic marketplace.

The lack of a clear unique selling proposition (USP) is a common problem for traditional medium-sized businesses that developed in the 2000s. In today's environment, this state of affairs is no longer effective. Without a clearly formulated unique selling proposition (USP), it is impossible to build a successful strategy or achieve a competitive advantage. A unique selling proposition (USP) allows a business to stand out from the competition and attract the attention of its target audience, which is critical for success in the market.

The most critical situation occurs when there is a simultaneous decline in financial performance and the absence of a unique selling proposition (USP). In a crisis, the likelihood of saving such a business decreases significantly. An effective USP is a key element that allows a company to stand out from the competition and attract its target audience. Without a clear strategy and an understanding of its competitive advantages, a business becomes vulnerable, which in conditions of economic instability can lead to its complete collapse.

Business Ignores Trends

One of the main reasons why businesses face difficulties is an insufficient response to changes in the industry. Companies that fail to monitor key trends, especially in dynamic sectors, risk losing their competitive edge. It's important to actively monitor market changes and adapt your strategy to stay ahead of the competition. This not only helps you maintain your position but also opens up new opportunities for growth and development.

A large IT company with annual revenues of up to 10 billion rubles, a strong team, and a stable market position faced challenges when attempting to reach the next level of development. The main problem was resistance from the business owner, who categorically refused to implement artificial intelligence into the product, despite customer requests. This decision limited the company's ability to attract new customers and expand its market, undermining its competitiveness in a rapidly changing technological landscape. With growing demand for innovative solutions, the lack of artificial intelligence in the product could negatively impact the company's future and its ability to adapt to the demands of the times.

In the IT sector, artificial intelligence has become an integral part of business processes. It facilitates task automation, improves customer service, and helps reduce costs. Without the implementation of such technologies, products quickly lose relevance and appeal to consumers. As a result, companies that ignore AI solutions begin to lose ground to competitors and their market position.

Even mature and stable companies are forced to change. In 2017, IKEA experienced a loss of 5-10% of its profits annually. The main reason was changing consumer preferences: shoppers increasingly chose online services and stores located closer to home, foregoing trips to hypermarkets outside the city. To address this problem, IKEA adapted its business model by opening stores in urban areas. This step allowed the company to restore growth and regain lost market share.

The Team Is Unwilling to Develop

Even with a sound strategy and stable financial performance, a business can stagnate if the team is unprepared for change. The most vulnerable are often senior managers and key executives. Their intrinsic motivation, willingness to adapt, and embrace innovation directly impact the company's ability to grow and reach new heights. Therefore, it is important not only to develop a strategy, but also to invest in the training and development of management to ensure the dynamic movement of the business forward.

A striking example is a family company, A distribution company that has been successfully operating for over 20 years. A friendly atmosphere has developed within the company, where employees interact like family and celebrate holidays together. Despite this, any attempts to implement changes to work processes are met with strong resistance. External consultants are perceived as a threat, and their recommendations are seen as an intrusion into the established order. In such an environment, even minor changes become complex and time-consuming. This case highlights the importance of flexibility and openness to innovation for successful business development.

Development is a key factor in success for both individuals and businesses. Without a drive for growth, experimentation, and the implementation of new approaches, companies risk stagnating. A lack of internal energy and desire for change can lead to stagnation and, ultimately, a loss of competitiveness in the market. To remain relevant, organizations must constantly adapt and seek new opportunities for improvement.

In startups, teams actively generate ideas, discuss them, and test hypotheses, which fosters internal dynamics and growth. In a mature business, this energy can be maintained by maintaining a culture of change within the company. Thus, having a strategy becomes important, but the team's readiness to implement it is no less significant. Creating an environment conducive to innovation and adaptation is key to successful business development in a constantly changing market.

The owner does not know how to delegate tasks

A common problem in business management is the owner's inability to delegate tasks. Business owners often take on all functions: conducting negotiations, participating in pitches, developing the product, and being involved in all key processes. This approach makes the company dependent on one person, which significantly increases business risks. Effective delegation of tasks allows you to distribute responsibility, increase productivity, and create a more resilient organizational structure. It also opens up opportunities for growth and development, allowing the owner to focus on the strategic aspects of the business.

In 2022, the owner of a large logistics company faced market changes and decided to refocus his business by creating an IT product based on his previous experience. However, he found it difficult to delegate some functions to his team, and he continued to handle many tasks himself. This negatively impacted the development of the new business, as the lack of effective delegation of responsibilities hindered process optimization. It is important to understand that the successful implementation of an IT product requires not only technical knowledge but also the ability to organize a team. Delegating tasks will allow the company to focus on strategic development and improving product quality, which, in turn, will increase the company's competitiveness in the market.

A business's dependence on a single person creates significant risks for the company. The effectiveness of the entire organization is closely linked to the owner's personal resources. As long as the owner is active and involved, the business continues to function, but if their activity decreases, all processes can grind to a halt. In such a system, the team lacks the opportunity to show initiative, which negatively impacts trust and, consequently, business development. To achieve sustainable growth, it is important to build a team capable of making decisions independently and acting independently of a single person. This will minimize risks and ensure the long-term stability of the company.

If delegating tasks is difficult, it is recommended to contact an external mentor, consultant, or coach. This will allow you to rethink the role of the business owner and begin to form a system in which the organization functions as a self-sufficient structure. Training and support from professionals will help improve management skills and optimize processes, which will ultimately lead to increased business efficiency.

The Main Trouble Signs in Business in 4 Points

• Scaling up against the backdrop of declining revenue is a dangerous undertaking. If profits are declining, it is better to focus on stabilization: cutting costs, preserving key assets, and bringing order to the business.
• If a company cannot clearly explain why it is needed by the client and how it is better than its competitors, this is an alarming sign. At the first sign of external change, customers will switch to those who are more understandable and convenient.
• Markets and needs change rapidly. If a company doesn't adapt—if it doesn't implement current technologies or revise its product—it will lose ground.
• When everything revolves around the owner, the business depends on their personal resources. And if the team is passive and unprepared for change, this is the path to stagnation. To develop, it is important to trust, delegate tasks, and maintain a culture of change within the company.