Businesses have their ups and downs at every stage in their lifetime, even the corporate giants! Don’t think that the end is nearing if you have a few hiccups, however it is worth noting that consistent ‘hiccups’ could develop into serious problems that could lead to your business going under if you let them go on long enough. Learning to spot warning signs within your business can be the difference between keeping it going and it possibly failing.
Here are 4 warning signs to monitor and act on if they are affecting your business.
- Your outgoings outweigh your incomings
It’s pretty obvious that if you’re spending more money than you have coming in, your business is going to suffer at some point. Unless you have reserves to keep you afloat, you could end up in debt. Monitor your incomings and forecast your outgoings from there. Running a business costs money; you could have an office to pay for, staff salaries to pay and if you’re a product based company you will need to pay for supplies. Cut down where you can if you feel you are spending too much money. Rent a smaller office in a cheaper location, monitor your stock count so you don’t overspend; changes like this can add up so always be on top of your cashflow.
- You’re not getting paid
Late payments are one of the biggest concerns for all businesses in the UK today, and in 2015 more payments were paid late than on time. Many businesses struggle with this as they don’t forecast for it. How could you possibly know that your customers are going to pay you late? By checking their company credit report of course. Creditsafe company credit reports offers trade payment data, which is an insight into how your customers pay their bills by real suppliers. You can see their average days beyond terms that they pay their bills, compare this to the industry average and you can even see a trending model that shows if they are getting better or worse at paying their bills. This is useful information to know before you enter into a business agreement with another company. Planning is key and if you know your invoice will be paid late you can forecast this into your cashflow plans.
- You’re paying your own bills late
Remember, you should be checking that your customers can pay you on time, therefore your suppliers will be doing the same. If you continuously pay your bills late it will show on your company credit report and could discourage your suppliers from dealing with you. Not only that, you could risk losing services that you need for your business. Again it’s down to forecasting. Sit down and go through your finances and be realistic with planning. If you don’t pay your bills on time you could be faced with debt collection procedures or even issued with a CCJ. This could also make it harder to secure loans or mortgages for your business, so make paying your bills on time a priority before your other expenditures.
- Developing new business opportunities is becoming harder
Developing new business will never be ‘easy’, but if you have noticed that you’re not getting enough business through the door as you usually do, something may be wrong. A business should try to keep a steady level of new business opportunities; even better if the volume it increases. If your level has dropped, it may be worth revisiting your marketing efforts. Spend time narrowing down your market, revamp your image or try new approaches to targeting possible customers. Our Marketing Data can help you reach the people you need to so you don’t waste time sending campaigns to irrelevant people. Remember, if no new business comes in, your business could be deferred from growing and may struggle to stay afloat so it’s always worth revisiting your marketing efforts every few months if you feel a slip in the ROI. Up-selling your current customers can make a massive increase to your revenue, so don’t forget to nurture and develop your existing customers.
We know that running a business is hard work and monitoring everything that goes on is very time consuming, however ignoring warning signs could mean big trouble for your business. Always try to stay on top of things and steer your business in the right direction.