Unless you’re the victim of a crime or a natural disaster, your business probably won’t fail overnight. In all likelihood, the warning signs of failure will have been there for months, possibly even years. It’s your job as an entrepreneur to recognize the symptoms of a failing business and fix them quickly. If you don’t take corrective action as soon as you see the signs, you’re condemning your business to die a slow and painful death. And as the owner, this can also be damaging to you and your family.
But when you’re working hard to make a success of your business, it can be hard to see the forest for the trees. That’s why we’ve put together this handy guide to the signs that might mean your business is in trouble and the solutions that can help you get your business back on track.
Sign #1: Customers are leaving
Customers are the lifeblood of business. A company that can’t keep its customers happy is a company that is in trouble. Acquiring repeat customers is the key to success, and a business that struggles to do so needs to examine what it is doing and figure out what isn’t working. If your business’s stream of regular customers has dried up, it’s not a good omen. You have to figure out the reason. If you can’t replace them or win them back, you might be forced to close your doors for good.
Solution: Assess your product, your staff, and your competition
Customers could be leaving for any number of reasons. Perhaps they received bad service from your staff. Maybe they don’t need your product or service anymore. It’s even possible that they found a better solution from a competitor. As the business owner, you and your team need to ask yourself the hard questions about all of these factors to identify why customers aren’t coming back. Once you’ve identified the problem, you need to fix it quickly. Fire or retrain staff that are having a negative impact on your business. Improve your product or pivot direction. Look at what your successful competitors are doing and imitate them before trying to reinvent the wheel.
Sign #2: Your customers aren’t paying
For some business, it’s easy to make sure that customers pay. Restaurants and shops don’t let their customers leave before paying the bill. But it’s not the same for contractors or services professionals who often do work on the promise of payment. When that payment doesn’t come in time, it can spell disaster for a business.
Solution: Reduce payment terms and contact debt collection professionals
For some businesses, it may be a simple case of giving your clients too long to make payment. It’s only natural to delay payment as long as possible. Correct this by shortening your payment period to 30 days at the most. If customers aren’t paying at all, however, it may be time to contact debt collection professionals. While they may take a cut of the amount they collect, it’s better to have a percentage of something rather than all of nothing.
Sign #3: You’ve been losing money for several months
Virtually every business has the odd month where they don’t make a profit. It’s perfectly normal and often evens out within a month or two. But warning lights should be flashing if your established business fails to make a profit for several months in a row. A business that can’t generate enough profit may soon struggle to pay its bills, pay its employees, and even pay its owner.
Solution: Raise prices or renegotiate costs
As a business owner, you have two ways to fix this warning sign. The first is to raise your prices. Work out how much additional revenue you need to generate to become profitable and then calculate how much you would have had to have raised last month’s sales by to reach that figure. Consider raising your prices by this amount in a bid to reach profitability. Ideally, demand will not fall substantially, and you will be able to generate enough additional revenue to push you into profitability. But we don’t live in a perfect world. That’s why it may also be a good idea to cut expenses and/or negotiate costs with your suppliers. Get rid of any expense that isn’t essential to the running of the business. For all of the expenses that are essential, reach out to vendors and see if you can negotiate a discount. By explaining your cash flow situation to your vendors, you may be able to convince them that giving you a discount or better terms can be beneficial for them - that way they will get payment from you and additional orders, rather than simply sit with unpaid bills and a stagnating business. Explain the “win-win” that you are proposing!
Sign #4: You’re struggling to pay your bills
If you’re losing money, chances are you are also struggling to pay your debtors. You may be able to ask a vendor to refrain from collecting payment for 30 days, but you won’t have the same luck with banks and other financial lenders. Failure to make lender payments for just a couple of months can lead to a spiral that will drown your business
Solution: Restructure and consolidate your debts
Let’s assume that you are already doing everything you can to generate more revenue. The next step is to look at restructuring and consolidating your current debts. If you have several different debts from different companies, you may find it easier to consolidate these debts into a single, manageable payment. This can often be easier and cheaper than paying off all of the debts individually. Alternatively, if you have enough spare capital, you should consider settling your business debts through a single payment or series of payments. You can also consider coming to a debt settlement agreement, which means you reduce your debts and only pay off a portion of what you currently owe.
If you’re drowning in debt, stop swimming against the current. As leading business debt professionals, Creditors Relief can help you restructure, consolidate, or settle your debts in a way that will help your business get back on track. We’ve helped hundreds of business owners settle millions of dollars in debt and we can do the same for you.
Now that you’re aware of the warning signs, it’s time to take action. Call us today for a free consultation at 877-312-6478 and we can formulate a new budget that your business can stick to. Once it’s in place, we can then look at how we can settle and restructure your outstanding debts.