Top 5 Reasons Service Based Businesses Struggle
Having worked with many home-care, cleaning service, doctor’s offices, and home health agencies over the years, some succeeding and looking for a plan for growth and expansion and others struggling to figure out how to make the business work and become profitable. When working with the latter, I have found common themes and trends, some of which we will share today.
5. KEEPING AN “EMPLOYEE” MINDSET
When you have a steady 9 to 5 and work for someone else, regardless of your job, it is easy. You are given a task to accomplish and the resources to complete your task. As a business owner, you have to take a more elevated viewpoint. There are many hats to wear and the decisions fall on your shoulders. Having the wrong mindset will hobble progress and, if not corrected, can cause stagnation and even failure.
4. NOT UNDERSTANDING CASH FLOW
Service-based businesses will succeed or fail depending on their understanding of how cash flows through the business. In private duty home-care, for example, this is important as you will have to properly fund your payroll, many times before you collect on your invoices. When working with Medicaid or Medicare, it could take much longer, sometimes months.
3. NOT PREPARING FOR GROWTH
Service businesses that depend on referrals for growth can potentially see their volume double (or more) without warning. This sounds great from a revenue perspective, but are you ready? Have you been collecting deposits? Are you well-funded enough to handle an increase in your payroll? What about scaling your business up or expanding to keep pace with the growth?
2. POOR MANAGEMENT
As much as we would like to, it is impossible to do it all by yourself. Hiring the right people for the job is important, but more important is understanding how to hold others accountable for what they are supposed to be doing in the first place. Setting accountability standards and not being afraid of making the tough decisions when those standards aren’t being met could mean the difference between success and failure.
1. NOT GETTING HELP
There is an old Cuban expression that, roughly translated, says “No one is born knowing it all” and this is especially true in business. The sooner you realize this, the better off your business (and its profits) will be. Don’t try to be the hero, invest in the professionals that have been there and can help drive your business forward the right way. No one can guarantee you success, but we can guarantee that if you do nothing, then nothing will change. If you want to learn more about how we can help,
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