One of the challenges with being a business owner is knowing when to quit. Not just knowing how to separate work and your private life, but also knowing when your business is in a downward spiral and you need to call it quits. While the first situation can certainly have an impact on your life, with friends and family finding themselves an afterthought to your business, the second situation can result in you losing everything, both business and personal assets. With many small businesses operating as sole traders, business debt is the liability of the owner, which means your personal assets can be sold to pay your business debts. With this in mind, here are three warning signs that your business is in trouble.
Your business isn’t making a profit
This seems blindingly obvious, but because new business owners don’t always account for all their costs, a business that appears to be making money through good sales could actually be losing money due to high expenses. Often things like rent, electricity, stationery and office supplies don’t get considered in the cost of doing business, and so while you may be busy these costs may chew your sales up. You need to very carefully consider all of the expenses relating to your business in order to ascertain whether you are actually making money.
You can’t pay your debts on time
In the same way that businesses might not consider all their expenses, they can also fail to consider how long it can take to get money from their customers. If you are paying your suppliers faster than your customers are paying you, you will end up with cash flow problems that will eventually have an impact on your ability to pay those suppliers. If you currently have problems with managing your accounts receivable, this article will help explain some strategies to get things in hand.
You can’t keep your staff
A sure sign of problems in a business is a high staff turnover. It means there is an underlying problem with at least one aspect of your business. It may be a specific issue such as workplace bullying, or a general unhappiness related to poor business performances. Whatever the case, if the people dealing with your customers can’t see a benefit in sticking around, how long before your customers follow suit?
These warning signs don’t automatically mean your business is in trouble, because in each of these cases it is possible to turn things around. Whether it’s accurately costing your business activities, managing your accounts (both payable and receivable) or creating an enjoyable working environment, if you take the time to work out what the problems are, you can almost always work out a suitable solution before it’s too late.
By Jennifer Lowe