Back to news

7 Signs to Watch for a Business in Trouble

Ruth Duncan discusses the warning signs of a business in trouble. You can find the original article in the newest edition of  Breakthrough Magazine and on LinkedIn (November 15, 2018)

7 Signs to Watch for a Business in Trouble

If you want to avoid becoming one of the 328,000 UK businesses that fail every year*, maintaining a strong grasp of your company’s finances is critical. But running any business can be a rollercoaster ride of ups and downs – so, how do you know a real red flag when you see it? I have compiled my top seven indicators that a company’s financial problems have become serious and is now a business in trouble.

 

1 – The cash flow stops flowing.

The cash flow stops flowing.

“Disruptions to your income can happen very suddenly, or you may notice a steady decrease in sales month on month. Don’t ignore sliding figures; take action to make up the shortfall immediately and avoid an ‘all eggs in one basket’ business model.”

 

2 – HMRC is knocking on the door.

HMRC are knocking on the door.

“If you’re not meeting HMRC’s minimum expectations – such as filing returns on time, meeting payment deadlines and sticking to agreements you’ve made – you need to get professional help.”

 

3 – There’s no light at the end of the debt tunnel.

There’s no light at the end of the debt tunnel.
“Having creditors is a normal, routine element of running a business until your ability to pay them on time is compromised. If you’re falling behind on payment for goods, services or equipment, being refused credit or robbing Peter to pay Paul without making a real dent in your debt, those are red flags that shouldn’t be ignored.”

 

4 – Salaries are giving you sleepless nights.

Salaries are giving you sleepless nights.
“No business can run without people and if you’re unable to meet your payroll obligations, that could escalate the problem in all sorts of devastating ways. Therefore, payroll must be a priority for you.”

 

5 – You can no longer bank on your bank.

You can no longer bank on your bank
“Your bank runs your company’s accounts, so it can see the bigger picture, even if you can’t. When your bank starts refusing loans, wanting to reduce your overdraft or asking for more personal guarantees, it means they’re concerned about the health of your business.”

 

6 – The business is draining your personal resources.

The business is draining your personal resources.
“Running a business does require a lot of personal investment in many ways, but if you’re plundering your personal bank account or putting your home at risk, that’s unsustainable. It’s also a massive warning that you need to turn the tide.”

 

7 – You’re struggling to deal with the stress and pressure.

You’re struggling to deal with the stress and pressure.

“Sleepless nights, anxiety and depression are all entirely natural reactions to a distressing situation, but it cannot be allowed to continue. Seeking expert help to get back on track may not only save your business, it will also help to manage your fears by replacing worry and uncertainty with a solid plan of action.”

 

It’s important to bear in mind that I’ve also seen businesses recover and return to healthy trading, even when the situation has looked dire. Taking the right action at the right time – usually as early as possible – could be the difference between a business surviving or dying.

We can help with:

  • Company Liquidations – solvent and insolvent
  • Company Administration
  • Voluntary Arrangements – Individual and Corporate
  • Bankruptcy
  • Business and Rescue Tools
  • Business in trouble

You don’t know what we can do until you ask us! Contact us for a free initial consultation.

*Office for National Statistics, Business Demography UK 2016

Back to top