#159 RECAST - 5 Red Flags to Look Out For in Business
In the last two episodes, we've been talking about risk in business: what it is and how to reduce it. So this week we are recasting a previous episode where I talk about 5 red flags to look out for in business. This was a popular episode and certainly worth a revisit. I'm sure you will get a lot of value out of this one.
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Over the past 20 years in my career as a lawyer, I’ve had the honour of supporting small business owners. One thing I have said time and time again is that prevention is better than cure because most of what I saw in my years working in litigation and dispute resolution could have been avoided.
In this episode, I’m sharing 5 red flags to look out for in business which alert us to the fact that something is not right in business. These are telltale signs of things going wrong from my years of working with small business owners and if you can catch them early enough, you’ll be able to steer your business in the right direction and avoid disaster.
As I share these red flags, my goal is to help you identify areas where your business might be struggling and actionable steps you can take in your business now to avoid going down the path that you don't want to go down.
Two common areas where I see warning signs popping up relate to cash flow and client satisfaction. If you have clients consistently delaying payments, asking for refunds, becoming disgruntled and complaining about workflow, these are all telltale signs that something is not right. Your business shouldn’t be operating this way and I share how these issues can be rectified by asking yourself questions, reviewing your internal processes and systems and getting your legal documents in order.
The other area that is all too common is when business owners are overwhelmed. If you are wearing all the hats and doing all the things in your business, your business is not sustainable. I share how this issue also reflects back to the need for the right systems and processes to support your business in a way that also supports you.
Carefully tailored legal documents and the right systems and processes in place will help you avoid these common pitfalls and set your business up for success.
I hope this episode leaves you feeling supported and helps to highlight any areas of your business where you might need help. Don’t leave things until it's too late because the sooner you address these red flags, the better.
Full Transcript:
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[00:00:00] Tracey: Hello everyone. Welcome back to another episode of the Rise Up in Business podcast. Thank you for joining me for another episode of the podcast. If you've been listening to me for a while, you'll know that I talk a lot about the preventative things that business owners can be doing to avoid ending up in situations where they need to call a business lawyer like myself to help them out of.
So my ethos is very much educating and empowering business owners on all the things they need to do and I talk about prevention being better than cure and because it's so important. What I wanna talk about today are the five most common red flags I see supporting small business owners because when things start going wrong, it doesn't come out of the blue.
There are telltale signs, and I've had the benefit, I suppose, of experience in supporting small business owners for more than 20 years. I started practicing law, as you know, more than 20 years ago, and for the first 12 years of my career, I worked in litigation and dispute resolution, and that's when things had gotten so far down the line that they'd gotten so bad that people were in court or in mediation or arbitration, but whatever they were in dispute such that they needed legal support.
My business is centered around helping business owners avoid that. So we don't need to get to that. We don't want to get. And I've shared on this platform and my other platforms previously that most of what I saw over those years could have been avoided. That's the sad reality. In today's episode, I'm gonna talk to you about five red flags that I see most [00:02:00] common, and they've been consistent over my career, which alert us to the fact that something's not right in business.
And if we catch those flags early enough, my view is we can steer the ship or steer the business to avoid a catastrophe. So let's dive in. The first two relate to cash flow. So cash flow is the cornerstone of every small business. We all know that we are in business to make money. We're in business to do a lot of other things, but money is important.
The first red flag is when clients are delaying their payments. We've gotta ask ourself why. Often this comes down to processes and systems . Often this comes down to a lack of processes and systems and a lack of legal documents, business Ts and Cs or client service agreements outlining for the client what's expected of them.
when we are seeing, or when we're noticing more and more clients delaying payments in our business, this is a red flag that something's not right and we need to give attention to that. And the second red flag again, which relates to cash flow, is when clients start asking for refunds. So whatever your offering is, whether it's service based or product based, or you are an online course creator, when clients start asking for refunds, we need to sit up and take notice.
One or two here and there. Sure it's all a part of business, but when it's becoming more and more frequent, that's a red flag because that's not supposed to happen. The next two red flags I wanna share relate to client satisfaction levels. So the first is, This is flag number three, complaints about delays.
if your clients are communicating with you and they're dissatisfied or they're becoming disgruntled because of the time it's taking you, that's not supposed to happen. What that means is that there's something gone wrong in your internal processes and systems and your workflow where you're not delivering consistent with the client's expectations.
Clients don't [00:04:00] make a complaint about delays unless they feel that we've missed a deadline as business owners or that we've not done something the way that we should've or in the timeframe that they had expected. So the question becomes, why is that? What's happened? Where are these misaligned expectations arising?
And that's a segue into red flag number four, which is client complaints around the deliverables or the scope of work. So clients then become unhappy or dissatisfied because their expectations aren't met because they thought you were doing something other than what you did. So the deliverables, the scope of work, they thought they were getting something other than what they got.
So I do see this a lot, and this often is attributed to when businesses don't have their client service agreement or their business terms and conditions in place properly or worse, they have something in place which doesn't suit the business because they got it from a template or they copied somebody else's.
It doesn't suit their business, which means it's not managing the expectations of their clients. Those documents may well have worked for somebody else, but it's not working for your business. It's not working for the particular business the client's expectations are not being met.
So they're unclear on what it is that you are doing, what they're getting, what they're not. So once we start fielding lots of client dissatisfaction, lots of client communications where they're complaining about delays, where they're unhappy with what they've got, the scope and the deliverables, we've gotta ask the question, how did this happen? Because it shouldn't happen in business and it's not consistent with setting ourselves up for success in business.
This is one of the many things that I see in business, which can be avoided and you know, I'm all about but these types of expectations can be easily managed with proper processes and systems in place, which are executed by the team. That's really important. And legal documents in place, which form [00:06:00] part of the client journey and set out for the client at the very beginning. What's this journey going to look like? What are you getting? What are you not getting? What do we expect from the client? What are we to be paid? When and how? We set all of that out properly in our legal documents, and we make sure that we know how to use those legal documents and that our processes and systems support what we've said in those legal documents.
And then if we and our team execute in accordance with what we've said we're gonna do, so we do what we say we're going to do, all of a sudden the risk of clients being unhappy about timeframes and delays and the scope of the deliverables falls away because we're positioning ourselves to better manage those right from the outset.
So they are two red flags that I do see a lot, and they can be avoided and they should be avoided. And the fifth red flag, which doesn't relate to the client, but it relates to the business owner, the fifth red flag is overwhelm. when the business owner is wearing all the hats and they find themselves floundering from doing all the things that is a red flag because it doesn't need to be that way, and it's not sustainable, and it most certainly does not set the business up for success.
So when clients come to me, often clients come to me for advice with one thing, and we dive in and realize there's actually a lot more that we need to do together or clients come to me seeking guidance and advice on what it is they need to do. Looking at processes and systems is fundamental, and it's something that I always ask about because it's so important because from there we can start talking about the legal documents and the frameworks and how we issue them and how we invoice and all the things.
But when I see business owners floundering because there is so much on their plate and there is so much to do, it's a red flag because inevitably things start falling through the gaps, and that's where clients' expectations aren't being met. That's where teams aren't being managed. Cash flow isn't being managed and [00:08:00] without cash flow we all know the bother small businesses get in without solid, consistent, reliable cash flow.
So all of these red flags are important because if they are identified early, they can be addressed and dealt with to avoid a business ending up in real difficulty We're heading down a path of destruction. I actually wrote an article, which is on the website, and we'll include the link in the show notes, and it's all about businesses bouncing back from the brink. I've shared my view in there about what businesses can be doing when they get to the point where they need to look at coming back.
But the point of this podcast episode is I would love you to not get there in the first place. So the five red flags that we've talked about in this episode, that if identified early enough can be addressed so that the business doesn't head down the path you don't want it to head down are in relation to cash flow, clients delaying payments is number one. Number two, clients asking for refunds. Number three, client complaints about delays of your service. And number four is client dissatisfaction around deliverables or the scope of work. And number five is business owners in overwhelm and floundering because they're doing all the things.
If any of these things are causing your ears to prick up and you're thinking, gosh, That's happening in my business or we're, we are very close to that happening in my business. This is becoming a problem, please don't suffer in silence. Please don't sit and think it'll be right, it'll turn itself around because chances are it needs to be addressed.
Otherwise, it's not going to be right. You are most welcome to reach out to me and ask the question what it is that we can do together to support your business avoiding going down that wrong path. Because the point of this episode is for me to share with you things that you can identify and steps you can actionably take in your business now to avoid going down the path that we don't want to go down.
We don't wanna leave things until it's too late because the sooner we get onto these [00:10:00] things, the better. So we are talking about cash flow, delaying payments, clients asking for refunds. Unhappy clients complaints about delays, complaints about the scope and the deliverables, and then finally the business owners and that overwhelm and that state of floundering because they're doing all the things.
If any of this resonates, please feel free to reach out. I'm always here to help, and if you have business friends or business colleagues that you think would benefit from this episode, I'd be ever so grateful If you might share this episode, whether you flick them a text with the details of the episode, take a screenshot, however you like to share.
I would be grateful because you'll be helping me with my mission to get this podcast into the ease of more business owners so we can make a difference. Thanks so much for listening. I'll catch you next time.
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