Signs your business needs a health check

From time to time, even the most successful businesses encounter some bumps in the road. However, if those issues seem particularly persistent, that's usually an indicator that there's something more serious afoot.

There are a number of warning signs that a business could be struggling more seriously than it seems at first glance, so it's important to nip those problems in the bud.

The following five issues should be taken as a sign you need to reevaluate where your business stands:

1) Falling behind on bills

Cashflow is perhaps the strongest indicator of how well your company is doing on the whole. While one or two late payments every few months might not be a big issue, it's a major warning sign of deeper issues when you find yourself constantly unable to pay your vendors or financial institutions on time.

If you find yourself regularly asking for extensions on your payment deadlines, it might be time to take a closer look at the factors leading to those situations.

2) Difficulty collecting from customers

Typically, you will only be falling behind on your own payments if you find that the companies or organisations you do business with are doing the same to you. One or two missed deadlines here and there may not be a big deal, but if the problem persists, it's an indicator that you might need to take a harder line when dealing with those entities going forward.

business-woman-using-calculator-to-calculate_websize-2 Make sure clients meet payment deadlines.

3) New business on the decline

The ability to attract new customers or clients on a consistent basis is fundamental for any business. If you find yourself struggling in this regard over a period of a few months or more, it's a good idea to look into why. Perhaps your offerings aren't keeping up with those of your competitors, or someone else has come into the market with a new approach that carries a novelty factor.

While you can likely get away with a quarter or two - or even a year - of low rates of engagement with new customers, longer-term issues here should raise red flags.

4) Little improvement in the bottom line

As a business owner, you likely set both short- and long-term goals for growing your operations or reach within your market. If you find yourself falling short in either regard, it's vital to assess whether rising costs or flattening revenues - or a combination of the two - are holding you back. Once you have that basic information, you can take a deeper dive into the reasons for those shortcomings and get a clear picture of areas for improvement going forward.

Computer_Websize-1 Keep a close eye on your bottom line.

5) Significant staff turnover

One thing many business owners may not think about is just how much it takes to replace someone who leaves the company, in terms of both dollars and productivity. Suppose a long-tenured staffer leaves your company - for any reason. It will take potentially weeks or more to conduct a hiring process, then possibly even more time until that new hire gets up to speed. Now suppose you find yourself going through those issues multiple times per year.

Even if you have a relatively large staff to begin with, turnover may be hurting you more than you realize. If you find this happening regularly, it's important to investigate why that's happening and what you can do to continually attract and retain talent successfully.

When you're more aware of the potential stumbling blocks your business faces and the classic warning signs that accompany them, you're also more prepared to tackle those issues head-on. Working with the business advisory experts at Ulton on everyday and more specialized situations that arise as your company grows and evolves, will help keep you firmly on a path to success.

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Written by Christine Guy

21 Mar 2024

Advisory & Consulting

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