Signals that your business could be in trouble


Running a business is hard work. Regardless of whether you are a start-up, an established business, or even you if you rule the market, maintaining a presence at having success is incredibly difficult...
Running a business is hard work. Regardless of whether you are a start-up, an established business, or even you if you rule the market, maintaining a presence at having success is incredibly difficult. Sometimes everything can seemingly be running smoothly, with a business seemingly being self-sufficient and sustained, when really if you scratch under the surface it could be headed towards trouble. So, what are the key warning signs that everything isn’t so rosy?

You don’t really know how the business is really performing

Although it might seem obvious, sometimes business owners can get so distracted with ongoing projects within the business, they actually lose track of how the business is performing. Naturally, owners and directors need to delegate jobs within the business, but unless you have a knowledge of accurate gross profits and costs, sometimes this information can fly under the radar and you can lose track of how the business is actually performing.

In-depth knowledge of how every aspect of your business runs is crucial to its sustained success. Having a clear idea of what your marketing strategy is and where your work comes in from is key, without it, you can lose track of what you really want the business to achieve and where it’s headed. Knowing the key statistics of the business is key to its success, without that knowledge, it can be hard to keep track of how well it’s really performing.

Constantly on the back foot with cash flow

Cashflow is a critical part of any business. Simply cash is key, without a business would not be able to survive. Maintaining a healthy level of cash flowing through the business is key to survival. If you are always just managing to scrape by, month by month, it could signal the beginning of the end. It could be down to a variety of reasons, but importantly it signals that there is something fundamentally wrong in the business. This could be the way you handle collecting money, poor profitability, or outgoing costs are too expensive.

The more you find the business is on the back foot, the more you will find yourself constantly playing catch-up, which essentially adds extra pressure onto the business. If the business ends up in this position, then explore your profit margins, check stock prices against your sales. Explore your sales and check what measures you have in place to retain and attract new customers are your current processes working. Luckily when it comes to closing a company, an owner will not be held personally liable for its debt. So if a company does end up being too negatively affected by cashflow it would not be a directors responsibility to take those debts upon themselves.

Creditors are on your case

As things get tighter and tighter in business, what tends to follow is more pressure from creditors as they start chasing what they’re owed. This can also lead to much bigger problems, which are a clear indicator of problems within the business. If you have problems paying your suppliers it can lead to inefficient production, or sometimes not even being able to get stuck as you can’t pay creditors. An inability to pay creditors on time can also lead to a bad credit rating. This can affect getting future loan deals and setting up new deals for the business.

Problems such as these normally come through not being able to meet agreed payment terms or having lots of failed deals with creditors. After plenty of red warnings letters, those creditors may even feel it necessary to send bailiffs round. If the business ends up going down this path, it could be a case of needing a pre-pack liquidation or even a company voluntary arrangement 

The revolving door of staff

High staff turnover can sometimes be an indication that the business isn’t heading in the right direction. Typically, replacing staff costs a lot of money, as there is the cost involved in advertising the position, training and an initial settle in the period.

Typically, these are strong indications that there are problems within the business. Although not always fatalPsychology Articles, these can be very negative for the business and could potentially lead it down a liquidation route.

Source: Free Articles from ArticlesFactory.com

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