A checklist for worried directors
Business owners and directors are probably the most multi-skilled workers in their own companies.
When you consider the wide variety of tasks they have to take on, especially as sole traders or in small and medium sized businesses, it’s quite the list of required competencies.
They will have to master elements of accountancy, HR, IT, marketing, advertising, social media, logistics, selling, transportation, automation and several others depending on their sector.
Many will also have to combine all of these with a full time job within the business too.
So they can be forgiven for not being able to dedicate themselves to longer term strategy and planning if all their attention and bandwidth is dedicated to running their business on a daily basis.
Which is why it can be a shock to them if they discover that the business is actually in financial difficulties.
Indicators of trouble
Here are some of the most reliable indicators and individual signs that a company could be facing an uphill struggle to remain viable but collectively spell trouble:
- Decreased revenue
The main sign. Less money coming in, no matter what the reason, is the first and most important signifier that a business could be running into difficulties.
- Difficulty paying bills
Any business that is having trouble being able to meet its obligations on time is not in a great place. As well as being a worrying symptom, falling into arrears carries with it its own difficulties with late fees, interest penalties or even a decrease in the company credit score making future borrowing harder to obtain and more expensive as a result.
- Increased employee turnover
Staff leave businesses. It’s a fact of life but if it appears to be happening more frequently then it could indicate that they are unhappy with their role or the direction of the company or they don’t see a medium or long term future with the business.
- Rising debts
Business debt is not in itself a bad thing – it depends what it is being incurred for. If a company is taking on more debt just to fund daily activity or to stay afloat then this is another indicator that there isn’t enough revenue being generated to cover expenses.
This could also lead to more serious problems down the road if not dealt with including statutory demands and winding up petitions.
- Falling footfall and customers
Any business that isn’t attracting new customers along with repeat orders from existing clients is facing a big problem. It might be temporary or a more chronic issue but is definitely a negative sign.
- Reduced marketing spend
If business is falling away then it might be linked to a reduced marketing/advertising budget which is usually the first reduction made by companies tightening their belts – despite it being firmly linked to decreases in sales and company/brand awareness.
- Poor quality products/service
This isn’t something that any director wants to admit, nevertheless it can happen for a variety of reasons. A company that’s unable to maintain or improve its range and offering will eventually see a downturn in customer satisfaction and sales. Also be aware of possible reputational damage too – word travels about companies cutting corners, and more quickly than ever thanks to social media and online reviews.
If you recognise one or more of these symptoms happening then it could mean that your business is closer to closure than you might think.
But don’t panic – you still have time to act.
We offer a free initial consultation for any business owner or director that wants to better understand their predicament and more importantly, what they can do about it.
Once they get a better understanding of your firm’s unique situation and circumstances, they will be able to provide a range of options specifically tailored to you and your company.
They will then be able to advise you on next available steps depending what direction you want to take your business.