Know the Warning Signs: Five Signs That Your Business May Be Heading for Financial Trouble
Keeping your business afloat is a daily job, one that requires you to be on top of your company’s financials, as well as watching out for any signs that your business is heading for trouble. Spotting any potential problems as early as possible is your best chance of turning things around. Avoid corporate bankruptcy in Southfield by preparing ahead for the future of your business.
The Five Signs
Here are five warning signs that you should watch out for, as the sooner you spot the problem, the sooner you can fix them.
- Your Sales Are Remaining the Same, Or Falling.
This may seem obvious, but it is something to seriously consider. Even if sales remain static, expenses will typically increase, making you less profitable. If sales are remaining stagnant or not increasing you must figure out why. Has the need for the product or service changed? If so, plan how you can better serve your customers.
- Remaining Profitable Is Difficult
A company must be profitable to remain in business. Profitability is determined by subtracting expenses from sales, and if either are changing, so will your profitability. One of the best ways to retain profitability is to control operating expenses,and keep them as low as possible, without sacrificing quality or employee experience.
- Continued Lack of Cash Flow
Lack of cash flow is one of the top reasons businesses fail. One bad quarter can bankrupt a business if not planned for in advance. If you are continually having cash flow problems, you must determine why. Sometimes the timing of income cannot be prevented, and in those cases, you must find another solution.
- High Employee Turnover
If you are frequently losing employees, not only is hiring and training expensive, it’s also a sign that there may be deeper issues. Employees don’t generally leave companies that they are happy working for. If you find your employees are leaving more frequently than usual, find out why. Conduct exit interviews and find out why the employee is leaving. Ask your employee to be honest and take their advice, even if it hurts.
- Repeat Business Is Slowing Down
Repeat customers are the best type of business because they don’t require the energy that is put into acquiring new sales. If you find repeat customers are not staying with your company, or if metrics are showing your business is standing still, you must find out why. Your repeat customers must be retained, so find out why they are leaving.
Staying in business and remaining profitable is not easy. The best way to head off any problems is to identify them as soon as possible. If you have concerns about your business, we would be glad to help. Please contact us today to learn more about how to prevent business or corporate bankruptcy through proper planning.