What are the common ways to tell something is wrong in business?
Business owners are typically very busy people who spend many hours a day ensuring their business is running well, and sometimes putting out fires. The day-to-day life of most business owners is hectic, and often when things are hectic people can be tempted to put their heads in the sand regarding the bigger picture.
Business owners often have a gut feeling about how their business is going. That gut feeling can often be correct, but in business gut feelings need to be backed up with material reality and key numbers in the business.
The gut feeling something is wrong in your business will need to be checked against the fact. Review the three common areas below where it will start to show up in your business if something is wrong.
1) You miss sales targets
This is the first sign things are going wrong. You still have cash in the bank, but you notice your sales figures are below your forecast and budget.
Fortunately, if you identify with a clear head there is a problem with your sales, there is often a solution.
Reworking your sales and marketing plan, or potentially reworking your budget, will assist your business getting back in the right direction with its sales.
Often getting your sales figure back up can be as simple as refocusing your time and energy on sales.
2) Your cash-at-bank balance declines
If your sales number has been consistently down and your expenses have stayed the same, you will eventually see your cash-at-bank balance decline.
It will be a linear decline, instead of just a little blip because you have a one-off large bill to pay.
Make sure you are aware of the trajectory of your cash-at-bank balance so you can identify issues before things become too serious.
If you’d like to know more about cash flow check out our article here.
3) You are unable to pay bills
This is where it starts to get more serious. Typically, it will take a while of missing sales targets and obviously the cash-at-bank decline will be ongoing prior to this.
So you might be able to pay your payroll, but then your BAS comes around and you can’t pay it,y ou’re slow paying your suppliers etc.
If you are unable to pay bills in your business, don’t kid yourself. Unfortunately when things do get bad, business owners can stick their heads in the sand.
But often the issues that arise in business have solutions.
An experienced professional can help steer your business back in the right direction.
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