Running a small business is similar to the highs and lows of a cross-country journey. Success is never a straight line up but a series of slowdowns, dangerous curves, and wrong directions. What small business solution can you apply to get back on track?
The journey of navigating your small business will be filled with signs and landmarks. Ignore the signs, and your business can fail. Learn the danger signs of your small business entering a difficult period and maneuver back onto the road of success.
Danger Signs Your Business Is off the Tracks
- The Money Curve: If you pay attention to the signs, the need to corner the money curve for your business will become apparent. Finding money takes time. Miss the sign and raising cash too late will jolt your business off course. Have solid financials and regular reviews to forecast any cash needs.
- Watch for Falling Sales: Decreasing sales and eroding profit margins can be a sure sign of trouble ahead. Determine if the culprit is external or internal to your small business.
- Steep Borrowing Grade: Borrowing more money to make credit payments or meet business obligations is a clear indicator that a storm is looming. Rising debt-to-asset ratios can be a warning. Apply the small business solution of consolidating your debts and reducing borrowing costs.
- Tax Yield: Delaying tax payments can appear to be a savior for a troubled small business. A growing tax burden can get out of control. Do not fall into the tax arrears trap.
- Past Due Crossing: Has your business entered the crossing of late payments to companies and suppliers? Past due invoices are a danger sign you are off track. Look at hard options, such as layoffs or owner compensation cuts.
Seeing the signs of business trouble is half the battle. If you ignore the signs, it is often too late to use any small business solution mid-course. If the signs show you are heading for a rough spot consider the following small business solutions:
Small Business Solution to Get Back on Track
- Get Professional Help: During times of trouble, it is best to bring in your trusted team of advisors. Learn from the insight and experiences of others.
- Tell the Truth: Keep trusted partners, suppliers and bankers in the loop. Show your key players your level of commitment and responsibility by asking for their help in solving this bump.
- Boost Cash Reserves. Look at ways to increase cash collections and build up cash quickly. Consider liquid non-performing assets.
- Cut costs. Eliminate all unnecessary expenses and creatively reduce costs everywhere.
- Build a Recovery Plan. Take a hard look at your business and put together a plan to turn-around your business.
Operating a successful business requires the ability to see the road ahead. Many businesses fail or go bankrupt simply because the signs were ignored. Take the time to learn the small business solution to avoid the danger signs that can ground your company. The journey will go much straighter in the end.
Edited by Alyssa Gregory.