5 Signs Your Business Is In Distress

As a business owner, you encounter many challenges.

That's normal, and it's part of being a business owner.

However, if there are too many challenges, it's likely because your business is in distress. And, that of course, is a huge problem.

Throughout this article, we're going to take a look at 5 ways to identify that your business is in distress.

1. Cashflow Problems

One of the most important signs is cashflow problems.

It's normal for every business to go through a period where the cash is limited. However, if you are continuously finding that cash flow is a problem, then your business might be in distress.

Unless a business is well-funded with a clear strategy, it should not continuously spend more than it earns.

From this sign also often follows high-interest payments as they are the last resort. 

2. Staff Issues

Something that is often overlooked but can also signify distress is staff issues.

An example of this would be if your business is constantly having to replace staff in certain positions, it may be a sign that the business is in distress.

You may also notice that certain parts of your business are dealing with a lot of unplanned restructuring. This shows a lack of clarity within that department and that there are more issues.

The responsibilities of each employee should also be clear. If they aren't this is quite a significant problem that should be dealt with through team meetings.

3. Customers Aren't Returning, Or...

One way to realize that your business is in distress is to check out the customers.

If they aren't returning, they're not happy with the product or service. This suggests that there are further issues as you aren't able to please your customers like you would wish to.

Sometimes, this can also be linked to our previous point of staffing issues. Although, it may also be a problem in the costs of the production.

It may be worth asking responsible employees if they have run into any issues which are causing the trouble in the product or service.

But sometimes, it's not that the customers aren't returning...

The customers you have could also be the issue. If your business is holding onto customers which cost more than they pay, it's also a sign that your business is in distress.

Whether it's for retention, relationships, or any other reasons, you should not hold onto these customers.

4. Defaulting On Bills

Defaulting on bills is also a common sign that a business is in distress.

However, the important metric here would be frequency. Everyone can forget a payment, that's normal. 

But, if the frequency is higher, and it becomes a regular thing then that's an issue.

This can also often cause deeper issues, as partners can end partnerships which can also lead to a bad reputation. If your business has been defaulting on bills, you should work to find a solution ASAP.

5. Falling Margins

Sales are great, but if the margins aren't right, your business will struggle. 

If costs are high, and the income or prices are too low, your business cannot sustain its position. 

In this case, it's crucial that you don't just go cutting things you need. Instead, you should clearly think everything through, and consider your other options as well such as a price increase. 

Similar to #1, this also often leads business owners to look for external help such as loans which also carry more risk.

If your current position is not working and the profit margins are wrong, more funding will not fix the issue.

If you are looking to get your business back on the right track, contact us to see how we can help you create a successful turnaround strategy.

Does your business need help?

We offer customized solutions for your business. We believe in the No Sweat Intro so no matter what the problem, we always offer a complimentary assessment and evaluation.