Financial stress is a source of anxiety for many business owners. By recognising the signs of financial trouble and acting quickly, you'll give your business the best chance at survival.

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.

Reduced cash flow

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.

 A reduced cash flow puts you at risk of not being able to pay your debts or cover your day-to-day operating costs.

Signs you might have a cash flow problem include:

  • not knowing how much money is coming in or going out of the business
  • customers often paying you late, which leaves you without enough cash to cover costs
  • finding it hard to pay your suppliers or pay debts, such as loans or taxes
  • low profit margins.

You can improve your cash flow by using a cash flow statement. This helps you forecast your cash flow and know exactly what you owe and when.

If your debts are growing, you could sell old or excess stock and inventory or collect money owed to you.

Poor profitability

If your business can’t generate enough profits, it may not be able to meet its financial obligations, manage its debts or secure future funding.

If your business experiences a weakened financial position it can increase the risk of defaulting on debts, investment losses and bankruptcy.

Signs of poor profitability include:

  • not being able to pay yourself a salary from the business
  • your costs have increased but profits haven’t
  • you’re relying on borrowed funds to keep the business operating
  • you’re finding it difficult to get new investors or secure loans.

Changes in customer behaviour

Falling demand for your goods 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.

Losing your staff

Losing staff can put stress on your business’s finances. 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, find out why it’s happening and protect your bottom line:

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:

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.

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