October 16, 2012 by debthelpau
Being declared bankrupt is never easy – no matter if you are a business or an individual. The key to avoiding the stress involved, however, is by spotting the early warning signs and avoiding them altogether. A downward spiral does not have to mean the end of your business, if you know how to turn things around. Here are the top five signs that your business is heading to bankruptcy:
1. YOU CAN’T AFFORD TO PAY YOUR STAFF.
This includes paying their wages, their staff tax and contributing to their superannuation. All of these are compulsory, and you must pay them for each of the individuals that you employ.
If you are struggling to cover all of your staffing costs, you should consider reducing the number of people that you employ. Analyse which areas of your business could survive without so many staff, and think about letting people go. Consolidating departments into one in order to reduce staff numbers may be another option. You may even find that there are areas that you don’t need at all.
2. YOU CAN’T AFFORD TO PAY YOUR SUPPLIERS.
Without goods to sell on, you probably won’t have much of a business, so if you find that you are unable to pay the suppliers, you may wish to look into how you could reduce your costs. Perhaps change suppliers to a cheaper one, or downsize who much you purchase from them.
3. YOU CAN’T AFFORD TO PAY THE RENT.
If you are struggling to pay the rent for your business, it may be ideal to consider downsizing to a smaller property or one that is generally cheaper. Even if this means going back to basics and working from your garage or garden shed, surely that is better – and having a business – than being declared bankrupt?
4. YOU HAVE PUT TOO MUCH ATTENTION INTO ONE CLIENT.
A lot of company’s spend a great deal of time and energy in one amazing client, that brings them good and reliable custom for many years. But then, that customer disappears and the company is forced to find other clients and that isn’t always so easy. In the long run, it is always wide to spread your business out and keep lots of clients happy. Consider broadening the scope of your business, if possible to attract more customers.
5. OUTGOINGS ARE HIGHER THAN YOUR INCOMINGS.
Not being able to even break-even is a surefire sign that you are struggling, and the absolute nail to suggest that you need to re-analyse how you distribute the financial side of your business.
Maybe you should downsize, focusing on only specific areas, with the intention of reintroducing others once business picks up again. Consider what your business strengths are, and what is potentially letting it down.