How to spot a potential business failure

How to spot a potential business failure

It is not as tricky as you may imagine to spot a potentially failing business. There are a number of triggers which always seem to be present when a business collapses. It is not to difficult to conclude that weak management may be part of the key, but how many of us would acknowledge that our failing as have lead in part to the failure of the business, but if you consider for a moment whether you would have changed anything that you did, you must be able to see a few opportunities for a change of direction, which may have lead to a different outcome.

If you can spot any of these defects with your business, you need to take urgent advice on what you can do to turn your business around as if you delay too long it be more difficult to engineer a solution.

In relation to the business itself do you:-

Have a poor cash flow affecting the solvency of your bank account.

Have a problem with customer service or product quality.

Actually have a business plan, whether it be effective or not.

Have threats of legal action, or indeed unsatisfied judgments

Have accounts on stop due to non payment.

In relation to the workings of the company are you:-

Relying too much on the overdrafts, and constantly bumping the ceiling of your limit.

Borrowings to much such that you are failing to meet contractual payments on loan commitments.

Finding it difficult to fund new jobs and hence are turning down new work.

Getting involved in long and expensive legal battles.

Making sure you keep an eye on your customer’s payments and not allowing credit lines to extend in value and time.

Carrying just the amount of stock you need and no more.

Reliant on one or two main customers

Up to date with your VAT and PAYE.

In relation to you as management, are you:-

Too single minded to take advice or constructive critiscism.

Really up to putting in the commitment to turning the business around or doing what is needed.

Financially astute enough to run this business without expert help.

Able to communicate your ideas and requirements clearly enough to your junior staff

It can be hard sometimes to look critically at ones own business, so why not take the opportunity to take some free advice from the Help With debt helpline.