Small businesses deal with numerous financial obstacles – be it due to operating in a seasonal industry or because of the piling-up accounts receivables. In this blog, we will discuss some of the signs that will help you identify that your small business is in a bit of a financial pickle.
⦁ Cash-flow issues:
Now, cash-flow issues that occur every now and then are not necessarily indicative of a struggling small business – especially if they are routinely dealing with customers that make late payments. However, lack of cash starts becoming a more routine problem, there might be a more severe underlying issue, such as poor sales, lack of productivity, or high debt.
⦁ Inability to pay taxes:
Depending upon where they are situated and the regulations of that particular region, a business will pay several kinds of taxes across the year. A business that consistently fails to meet these obligations might find itself buried in penalties and even facing criminal investigations.
⦁ Increasing customer complaints:
If a business is surrounded with financial problems, the managers might try to compensate by using lower quality raw materials or offering poorer services. As a result, customers – even loyal ones – might start to become dissatisfied with the business and its offerings. A negative customer experience also has an adverse impact on the workers who might then stop respecting the business as well, which simply adds to the problem.
⦁ Deteriorating or aging assets:
Every business requires assets that allow it to effectively produce and sell goods and services. Examples of assets include storefronts, business vehicles, and other equipment. If a business starts using poor quality assets or skimping on maintenance, it will negatively affect how customers perceive that business. Moreover, such practices can also reduce efficiency in the production process.
⦁ Failure to pay wages:
Insufficient money to pay salaries and wages is often seen as the ‘final nail in the coffin’ for any small business. When employees are not being paid timely and fully, they will start distrusting the business and will perform their jobs with complete dedication (if they even continue to show up for work).
Final Word:
This blog discussed some of the signs that can show you that your small business is not financially sound. The earlier you identify the signs, the more you can do to steady the ship and recover.
