A struggling business may show overt signs as the situation worsens and comes to an end, but often there are small signs long before this that can point to trouble on the horizon.
1. Are you juggling payments?
An early warning sign for businesses is that there is a disconnection between operative cash flow and available resources. This can be draining or using cash resources or just making payments on time as cash comes in. The ATO is usually the first payment that is missed or payment to the landlord is late.
A business that is looking at cash flow lending or short term credit options generally is also showing signs of stress.
2. Lack of, or unrealistic budgets
If there has been a downturn, we often see business owners insert unrealistic or unobtainable improvements into their cash flow projections to bring things back to normal. Hoping for significant change without necessary improvements or a marketing or promotion campaign .
Revenue increases without change are generally a strong sign that things are not going well, and with no change there is only an expectation of a turn around.
3. Your staff
In understanding a business, a quick chat with staff can tell an amazing story. We recently assisted a business where a five minute conversation with the reception staff told an amazing story, calls had dropped off, the customers had stopped visiting and the owner was onsite less and less.
The owner hadn’t chatted with the reception staff for months and hadn’t realised (or didn’t want to understand) that things were slowing at the coalface. Furthermore, if you find yourself needing to make changes to the business structure it’s important to talk to your staff and keep them in the loop during the process.
4. Stopping marketing or promotion
Both are seen as a discretionary spend and appear to be the first thing that disappears from a struggling business. We often see that business owners will pull in marketing to save money, when this is the time that there needs to be an investment into the business.
5. Missing owners
This is a situation where we see owners starting to struggle and is a good indicator that things are starting to go awry. Mentally it can be tough as your business struggles, but it is a good sign that things are not going well if you are avoiding the office or workplace. Equally, if the owner’s hours are extending, this can be a sign that things are not going well.
Seeing the signs?
Little things can be indicators of things to come and we find that without early intervention, it can be difficult to turn things around once the problems are set. Equally, starting early and making changes can be more effective than waiting until things are advanced and you are fighting multiple battles.
If you’re starting to see the signs, give us a call on 1300 023 782 or email the team at team@cdrta.au