13 Ways To Spot Your Customer’s Business Failing

Written by Steve Winduss on December 15, 2008 – 12:07 am -

Someone else’s business failing can be bad news for you – if they are a customer. A bad debt of £1,000 can mean having to increase your turnover by perhaps £10,000 to claw back the profit.

So wouldn’t it make sense to spot your customer’s business failing before it’s too late?

There are broad indicators that can help you identify when a customer might be heading for trouble. For instance market conditions might change – a rise in the price of steel, exchange rates, new technology making current products obsolete and so on.

It is also helpful to understand why small businesses fail. However, there are some more specific and immediate indicators that can save you from unwelcome bad debts.

1. Visual check.  Keep a close visual check on all your customers. Regular visits are great for customer relations but also a chance to soak up any visual signals of your customer’s business failing. Signals could be external property looking shabby, less staff with even less work to do, stock and inventory levels looking low, a quiet goods-in bay and most potent of all a ‘sense’ of gloom, a lack of a buzz. Almost tangible. But you have to visit. You can’t sense it over the phone.

2. Falling orders. A bit obvious but the process can be gradual so keep on top of customer trends. (Of course, it might be that you are being phased out in favour of another customer so you ought to know that too.)

3. Rising orders. No that’s not a typo. Watch out for rapidly rising orders. Your order of two widgets per week suddenly goes up to six widgets per week. Your customer is running out of suppliers and is leaning more on you. Avoid the temptation to take the volume, you won’t get paid. Read more »

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