Running a business can be full of challenges especially during the covid-19 pandemic when lockdowns can be implemented unexpectedly and the economy consequences of this can be severe.

Here is a list of warning signs that could indicate that your business is headed for financial trouble.

Major Clients Have Left Your Organisation

Successful businesses will have multiple customers and clients, and there will be a number of clients who will be a significant importance. Receiving the ongoing support from a specific client can give your business an odd sense of security about the soundness of the revenue coming in, even if one of the major clients has left the business. Even if there is one fewer contract, the business will still have revenue flowing in.

The loss of a significant client in most cases won’t be felt for a month or two, however at some point, eventually unless the business is able to bring in a new high-quality client, or upsell an existing one, there will be a point that the lost revenue will bite into the business’ financial health.

Be careful, however bringing in a new client it means revenue is coming, but there’s still going to be a period of time from when the contract is signed until the revenue from that client starts to boost your business’ cash flow.

Your Business Is Losing Its Best Performers

Generally speaking, businesses don’t like having a huge staff turnover, because every time an employee moves on the businesses loses the skills and talent that they have invested in. As a result of this the organisation has to find new staff to train and develop. This procedure costs both money and time.

If you are concerned about the future of your business, you should be paying close attention to the movements of your best performing employees. Losing a top salesperson will have a huge impact on the revenue of your business in comparison to losing a junior staff member. Losing a staff member who is popular with a large number of your customers could result in the loss of some of your most valuable customers.

If your business is experiencing a high rate of staff turnover, it is important to be able to pinpoint if there is a culture problem in the workplace and try to decipher how your workplace culture can be improved.

You Have Trouble Replacing Outbound Employees

Sometimes when an employee leaves it might be hard to find a suitable candidate to replace them and take on the old employees’ workload. If an employee leaves your organisation and you say to yourself “I can’t justify bringing someone new into the organisation to take on this role” or you can’t find enough money in your budget to replace the old employee, than it is most likely going to mean that the time employee joined your organisation and when they left, their workloads declined, this means there will be less revenue and less opportunities for your organisation.

Sometimes departments become redundant, and in many cases job losses are inevitable to the company, but under-productivity in business units that you are keeping is a sign that your business might not be run efficiently enough, which can have knock-on effects which make it difficult for your business to remain profitable.

You are Struggling to Pay Your Bills on Time

This might seem pretty obvious, but it is incredible to think about how many business owners don’t see this as a huge priority. If you are not paying your company’s bills on time, then there is something wrong with the organisation’s financial situation.

It can be sometimes challenging to understand what is going wrong. Often the problem will be associated with the cashflow of the business. An example of this would be having more expenses than revenue.

There are plenty of other factors that might impact cash flow, however. Inventory is a common one for organisations that sell products. Credit policies are another, if for whatever reason repayments are not made on time.

If your cash flow is not managed properly, and you end up relying on the stars aligning so that you can pay your own bills, it should be a big warning flag that your company is skating on thin ice.

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 07 36086800. 

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)

Post Author: Craig Dangar

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