Financial troubles for your small business typically don’t happen overnight. By paying attention to the following warning signs, you’ll be better prepared to protect your business from serious financial ruin down the road.
Problem #1: You Have an Unbalanced Cash Flow
When the money you’re spending to cover operating costs starts to exceed the amount of revenue your business is generating, your business is slipping into an unbalanced state. To find out exactly how the numbers are adding up (or not), Investopedia writer Ben McClure recommends starting with a thorough review of your business’ cash flow statements.
“If cash flow stays negative over a sustained period, it’s a signal that cash in the bank could be running low, so also keep an eye on changes in the company’s cash position on its balance sheet,” he writes. “Without new capital from equity investors or lenders, a company in this situation can quickly find itself in serious financial trouble.”
Problem #2: You’re Facing Unfavorable Outside Forces
Sometimes the root of your business’ financial troubles isn’t internal. Outside forces such as an unstable economy, consumers’ fickle interests or a crowded marketplace can destabilize your business’ financial health.
To help combat this problem, make sure you have a thorough understanding of your market. Are you taking advantage of all available sales and marketing channels? Do you really know your customer? What else is happening in the industry that you should know? Stay alert to changes so you can keep your competitive edge.
Problem #3: You Have Tunnel Vision
Even if there’s nothing like your product or service on the market, your customers have needs and wants that change over time. What works for you now might need to be tweaked tomorrow or in the future to help your business stay competitive in the marketplace.
In other words, you don’t want your business to become complacent. One example? Blockbuster, the former movie and video game-rental establishment, failed to keep up with the rising digital demand for movies and entertainment. Ultimately, it was forced to close. ‘
Keep abreast of current trends – especially now – and be prepared to pivot to better serve your customers and find an open market. For example, if you’re a Pilates instructor with a studio, you might explore online video sales for your classes.
Problem #4: Your Business Isn’t Buzzworthy
Constant communication with your clients and customers is a sign your business is flourishing. If the talking and listening seems to be dwindling or has completely ceased, it’s a sign that your business may be floundering, according to Rampton.
“Either you’re not actively engaging them or they just don’t have an interest in your products or services anymore,” he writes.
You should also pay attention to what your customers are saying about your business on social media. If they’re not responding to your posts, interacting with your outreach or leaving reviews, it’s time to focus on increasing your social media engagement with a strategic digital plan, notes Rampton.
Problem #5: Your Staff is Jumping Ship
Whether you have two employees or 100, a dedicated team of professionals is crucial to the success of your business. If you’re struggling to fill positions or retain employees, your business is suffering.
“Sometimes employees realize that there’s a problem before you do. Whether it’s as obvious as not getting paid, or subtler like no longer believing in your business or frustration with management, you need to get to the root cause of high employee turnover,” advises Rampton.
Business Support You Can Rely On
By being diligent about your business’ bottom line, staying aware of negative forces that can impact your business’ performance, changing with the times, listening to your customers and investing in your staff, your business has a better chance of staying out of financial trouble.
At Minster Bank, we offer a full suite of financial services to help small businesses in our communities prosper, including:
- • Payroll services
- • Merchant solutions
- • Retirement plans
- • Loans
- • Financial planning
- Learn more about all our small business solutions and services – just click below to get started.