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Warning signs your business is in financial trouble
Mental health support
If financial stress is affecting your mental health and wellbeing, get help from a mental health support service. There’s someone you can talk to 24 hours a day, 7 days a week.
1. Reduced cash flow and profitability
Cash comes in and out of your business. But if you always need more cash than you have, your business may be under financial strain.
Some of the signs your business might have a cash flow problem include:
- a large cash deficit
- regularly late customer payments
- difficulty paying your suppliers
- low profit margins.
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Use a statement to help you check the health of your cash flow.
Set up a cash flow statement
2. Changes in customer behaviour
Falling demand for your products or services can have a huge impact on your customer base and bottom line.
Changes in customer behaviour might include:
- a decrease in sales
- loss of major customers
- more complaints or refund requests.
If you’re experiencing these changes, consider asking customers for feedback. This could include sending a survey or reaching out by phone or email.
3. You're not able to pay debts and bills
Having trouble paying your bills on time could be a sign of financial trouble. Missing payments may suggest that your business does not have enough money to continue running.
If your debts are growing, look for ways to improve your cash flow. Think about:
- using a cash flow statement to forecast your cash flow and know exactly what you owe and when
- selling old or excess stock and inventory
- collecting outstanding payments.
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Find other tips on dealing with debt.
Manage being in debt
4. Losing your staff
Losing staff can indicate that your business is in financial trouble. If you need to replace staff often, you'll spend a lot of time and money training new people.
If staff retention is a problem, protect your bottom line by identifying why it’s happening. Think about:
- using an exit interview to ask staff why they’re leaving your business and how you can improve
- identifying what your ideal candidate looks like before you interview and recruit employees
- rewarding staff for their performance
- offering employees work-life balance options
- giving your staff development and training.
Get your business back on track
It’s important to resolve your business’s financial trouble as soon as possible. Putting it off may cause issues to get worse and result in closing your business.
To help get your business back on track, consider:
- asking a bookkeeper or accountant to help you set up your finances correctly
- keeping your invoices, bank statements and other financial records in a record keeping system
- reviewing and updating your financial records weekly to identify problems early
- getting financial management training
- prioritising your mental health and getting support if you need it.
Get professional advice
If you have concerns about the viability of your business, get professional advice from a:
- tax practitioner
- bookkeeper
- solicitor
- insolvency practitioner
- business adviser.
Getting advice early helps you address financial issues before they become out of control.
Read next
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Find resources to help with your business finances.
Get help with your finances