Not every business endeavour is a straight path to success, and even some of the most successful ventures of all time have had periods where ends barely meet, or the future of the company might be in jeopardy.
Instability in business is a facet of life, and recognising the tell-tale signs is vital to not letting your hard work slip away into nothing.
Don’t worry! Having a spot of bother isn’t the end of the world. The important thing is to keep your head up; stressing out and panicking is only going to lead to rash decisions. If you make the wrong choices when your business is in a precarious situation, you’re going to keep circling the drain, getting more panicked, and committing to wilder ideas. Ultimately, it’ll do you good in the long term to keep calm, collected, and rational.
You’re already here, so luckily for you the first step is already completed: you’ve acknowledged that there might be some problems in your business (or you’re wondering on how to spot those cracks if they do come up) and you’re ready to start doing something about it.
1. You can’t meet your debts
This is the first and most obvious sign that something’s amiss.
Due to some factor, your business isn’t always able to commit to repaying debts as soon as they’re up, and you’ll sometimes have to juggle finances extremely precariously to pay them back at all.
This can be due to two things: lack of funds, or poor forecasting.
If you’re hurting for funds in general, consider scaling back on whatever it is that’s putting you into debt. If rent is too high, the location might not be worth it. If the cost of manufacturing is that exorbitant, you might consider scaling back production instead.
If you’re suffering from poor forecasting, then the answer is simple- plan ahead! Set out the exact progression of money that you’ll need every month, including collecting any outstanding debts you might have (one of the largest reasons that businesses go into debt is when they find it hard to collect their own debts, creating a chain ripple effect).
Find out how Australian Debt Solvers can assist your business with managing its debts here.
2. Cash flow problems
A business that has very little in the way of liquid assets is not a healthy business. There’s no room for error, or for sudden expenditure. If you’re using all your money as you earn it, you need more liquidity. Remember that just because profit is increasing, doesn’t mean that you’re fine spending it all straight away (especially if your product is one that takes a while to bear fruit).
3. Management communication breakdown
Any business that can’t communicate well is destined for failure. If there’s a disconnect between the owner and manager, or management and the workers, then do yourself a favour; put aside your pride, personal stakes in the matter, anything else that might be on the table, and listen.
People can smell something in a business that’s souring, and catching it before it becomes a full-blown turf war resulting in employee walk-offs and internal strife will put a business straight on the path back to success.
4. Failure to recognise problems
Good news on this front. Number four is something that you’re actively taking steps to circumvent.
One of the largest ways to blunder in business is to ignore tell-tale warning signs and blast ahead regardless. On top of this, and relevant even to somebody reading this now, is having enough humility to consider themselves, or ‘core’ parts of the business, as an issue.
For example, your spouse might be a good, kind person, but they might be horrendously unpopular with the staff. It takes a tremendous level of acumen to acknowledge an issue when it revolves around a loved one, and even more to formulate a plan to change things for the better.
5. Empty bluster
Lesson number one in how to alienate all of your business partners: make promises that you can’t keep.
A company that continuously over-promises or under-delivers will incur not only the ire of those people they work with, but a professional reputation akin to lava- don’t touch with a ten foot pole.
If you’re finding yourself unable to reach promised heights, running on steam alone won’t save you. It’s time to face facts and downscale your expectations to something that you know you can actually achieve.
You might lose some face, but at least you’ll have face left to lose.
6. Low customer retention
Unless you’re the sort of business that relies on one-off sales-for-life, not having repeat customers is a stranglehold on profits that you can’t afford to maintain.
Consider looking into precisely what attracts customers to you in the first place, and why they’re running away in droves. Do whatever it takes to find information-as much information as you can possibly find- because it’s the only thing that’ll save your business from this.
7. Funding doesn’t come easily
If you’re consistently pushed back for funding, from banks or other lenders, then it’s time to take a good look at any angles you’ve missed for signs of damage.
Banks check things extremely thoroughly before lending. Failure to check can lead to damaging consequences down the line for everybody involved, and so Australia has some great checks and balances in place to assure everybody can afford the loans they’re receiving.
If you don’t meet these requirements, examine it from the perspective of the bank. Why don’t they have confidence in you?
Once you know that, you can start working to fix it. It’s probably going to be quite a pressing matter.
8. You’re considering perk cuts
This is on the list for a reason, in that it’s a very early indicator that things might be looking a little slim for the months to come.
It’s not always the case that cutting perks is a warning sign, but anyone cutting perks does so for a reason. It’s one thing to not offer a service, but scaling back something that employees have come to expect, and a thing that keeps them in your company, is never going to go over well.
If a business starts thinking of cutting perks, they’re possibly doing so to mask the very startings of a cash flow problem. It starts with no biscuits in the breakroom, and ends up in insolvency. Nip your issues in the bud now rather than later.
9. Bad customer service reputation
Leaving a sour taste in the mouths of customers is going to leave you with no customers. Scour your front-of-house service of any unpleasantness, since if you have any issues there it won’t matter how bad your front end.
Think of it like that Seinfeld episode, “The Soup Nazi”. Unless you have the greatest product of all time, miles and miles in front of any possible competition while also being strongly desirable on its own, you’re going to drive people away by the bulk, and you’re going to continue losing profits.
Remember that your front of house is just as important in efficiency and service as any mechanical procedure. Don’t let it go unmanaged, or you’ll lose your customer base.
10. Lack of passion
Sadly, one of the largest ways that your business is going to fall around you is if you just lose the will to continue running it to the best of your ability. You need a reason to get up in the morning, same as anyone else, and if you can’t get that from your business then it might be time to do something about it.
Take some time off (not if there’s another issue to deal with first!) and rethink your priorities. Sort yourself out, and your company will follow.
More information? To find out more, give us a call on 1300 023 782 or email email@example.com.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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