Apparently, an exhausted business account is the most visible sign your business is in dire straits. Still, cash shortage is usually a mere symptom and not the underlying cause of a firm’s failure.
This article will help you understand several signs denoting that your business is or will soon be in very deep trouble.
- Profitability Issues This might seem too obvious, but in a market where access to borrowed capital is not so difficult, it may easily go unnoticed. An unprofitable business is by default at risk.
- Margins Begin to Slip (Gross or Net) Margins are profits divided by sales. A gross profit margin depicts a firm’s capacity to manage its basic costs. Net profit margin (net profit divided by sales) and frequently is much more significant than revenues, for it indicates how profitable the firm will be during its growth.
- Your Sales Drop or are Stagnant There is a basic rule in Business Management: a business will either grow or fail – there is no in-between. Sales are meant to pay for costs, and not having enough of them to do that is just the beginning of your problems. On the other hand, sales that are not necessarily dropping but are stagnant indicate a measure of dissatisfaction from your customers – and that is the heart of the issue and the best barometer for market/customer acceptance (far better than revenue itself).
- Sales Growth Rate Drops Try to keep your eyes open for that one. Even if sales are up, you must watch your growth rate carefully. Is your sales percent change higher than last year? If it is not, it could indicate an ominous financial future for your business.
Keep also in mind that it is normal for businesses that grow bigger to see their sales rate decline, for it is easier for them to “multiply” sales when their annual revenue was no more than €1,000.00 than when it got €100,000.00. Nevertheless, it is imperative to monitor your growth rate carefully.
- Profits are Fine – Yet Cash Flow is Problematic It might seem like a contradiction, but it is happening – sadly, quite often. The key to solving this is hiring a skilled, experienced accountant, capable of guaranteeing your business liquidity.
- Market Acceptance Metrics are Flat-Lining Every firm wishing to have a future in this economy and the modern-day market should monitor metrics that will managers assess the customer’s “loyalty.” There are several metrics that could be used in this direction, such as
- Renewals,
- Repeat business,
- Yelp ratings.
If you see them dropping, your financials will not keep good for long.
- Increasing Employee Turnovers True, all industries have their own challenges and distinctive employee retention rates, but a noticeable increase in employee turnover are never a good sign. Do not be misled by key staff changes, just focus on general employee retention changes.
- Quality Drop Obviously, you are not the most objective person to evaluate your service’s or products’ quality, and that is why you need metrics to do it for you. On the other hand, this evaluation process should be monitored internally, by the firm itself, not just by outsiders.
If you discover that quality is dropping, try to learn why, and do it quickly, for your customers or clients will also notice it and will inevitably turn elsewhere to get what they want.
- Your Workspace is a Mess An untidy office, a messy desk or a chaotic workspace is not just indicative of your character, but also of a growing lack or organization and interest about the quality of your work and devotion to your business. This principle applies to both managers and employees. Always remember our motto in PHS: “Clients will not respect a company until employees respect it first.”
Conclusion
Diagnosing a financial problem in your business is never a joyous experience. Still, it is the first step to wisdom, the strike every once in a while we all need to keep things on track. If you think your business needs help, not just to survive, but grow, contact us. Staying at the forefront of economic developments in Cyprus has helped us deeply understand your needs and enables us to provide the consistent assistance and prudent consulting that will boost your firm’s productivity and further development.
If you want to work with professionals who provide exceptional quality standards of services in Cyprus, the simplest way is to fill in this contact form.
We will analyze your case and advice you on:
- What company structure suits you best,
- What is the best Tax solution(s) for your business,
- What Banking and cash flows arrangements available.
We will take you through a step by step process from A to Z in creating the perfect business in Cyprus.
Can’t wait any longer? Fill in the form and submit your inquiries make your first step and we will deal with the rest.
Become even more successful by working with accountants you can count on and be among the thousands that already did.
If you want to work with professionals who provide exceptional quality standards of services in Cyprus, the simplest way is to fill in the contact form below.
We will take you through a step by step process from A to Z in creating the perfect business structure in Cyprus.
Can’t wait any longer? Become even more successful by working with accountants you can count on and be among the thousands business that already did.