Most businesspeople will say they are not – even if they think they are.
Here’s the thing.
You need 3 things to make your business truly successful. And often businesses concentrate on 2 of them and neglect the 3rd. And the 3rd one, if ignored will usually kill a business.
So, what are they
- Customers must Rave about You
- Have Great Marketing
- Understand what the Numbers are Telling You
Don’t believe me?
Well for a few years we had a client that smashed item 1 and item 2.
They operated a few restaurants and if you wanted to visit on a Thursday, Friday or Saturday you had to book 2 weeks in advance. Their Facebook page alone had over 2,000 likes and they had over 700 reviews on Google at a rating of 4.5. This was a good business.
So why did it go into liquidation? Because they did not keep a track of their numbers. We told them something was wrong, but they kept coming back saying the restaurants were super busy.
So how do you know if your business may be in trouble? Issues usually start with cashflow issues. It’s the first danger sign but here are some pointers.
Seeking finance from less reputable sources?
If you cannot get finance and need to go to loan sharks (or the equivalent) then know there are problems.
If lenders are only prepared to loan you money-based or crazy interest rates then know the chances are the business is not as sound as you think it is.
Are creditors calling you or are you finding ways of avoiding payment?
When businesses get in trouble, they avoid making payments to suppliers or make part payments to keep a supplier happy. That is a sign that the business is in trouble.
Are suppliers demanding to be paid in cash?
If a supplier loses trust in your ability to pay, they will revert to cash on delivery. If a supplier has lost trust in you then others will follow.
Are you behind in BAS Payments and super contributions?
The first sign a business has financial troubles is when they are unable to pay their BAS or Superannuation. It basically means you are using money that does not belong to you to run your business.
It usually tells me the business has a spending issue or a cash generation issue. If your business is in a payment plan and you are struggling to keep up with the next BAS you need to seriously consider expenses or come up with a plan to boost income.
Usually, it is not just one of the above that tips you over the line. Usually, it is a combination of them.
But do not despair. There are ways that these obstacles can be overcome. This is what one of my clients said to me recently
‘’I made some stupid decisions and thought that if I ignored the hole I was in it would somehow fix itself. It was not until I opened up, realised I needed to do something and started speaking to people that we got the business back on track.’’
Sticking your head in the sand will never help you. So don’t do it.
If you would like to talk to someone about any of the above call us.