Here are some warning signs that signal if your business is in trouble. If you see any of these, it’s time to make some immediate changes in the way you spend. Read more.
Running a successful business requires a lot of things going right. From having the vision and mission clear in your head to hiring the right people to ensure you get there; it has to be a balance of everything.
An essential part of this mix is managing your resources right and ensuring that you never run out of them. Among all this, the most important resource, of course, takes the first spot in the list. What’s that? Money! Nothing can go right if you keep running out of money all the time (especially if you have a business to run).
After all, that’s the real fuel for your business, isn’t it? You need it to buy office supplies, pay your employees, pay the bills and what not!
Additional Reading: Difference Between A Current And Savings Account
Now imagine a situation where you are in the middle of a new project. Something really big, something you always wanted for your company. But, suddenly, you run out of cash! How will that make you feel? Shattered and frustrated to say the least.
This is precisely why you need to be aware of the warning signs. Yes, there are signs that can let you know about the future of your business in advance. All you need to do is observe (and of course manage your money better).
To assist you better, we have a list of warning signs you must keep a lookout for. We don’t want to see you making losses. Here’s what you need to keep a track of:
Expense Tracking? Who Does That?
If that’s your attitude towards keeping a track of your expenses (both personal and business), you immediately need to change it. As the head of the company, it’s your primary responsibility to keep a track of the exact cash inflow. You can’t simply leave it up to the accounts department.
Just because you’re the boss doesn’t mean that you get to ignore stuff. On the contrary, it means that you need to be extra careful with every minute detail of the company. And money matters top the list.
What should you track? Everything from the payroll to the utility bills. You need to ensure that no expense goes missing from the list. Why do you need to do this? Keeping a track of all your expenses is the only way to find out whether your company is actually growing or has become stagnant. To minimise the chances of a financial disaster, you must know your exact financial position at all times. This is something you just can’t take lightly.
The solution: You need to start somewhere. Begin by building a record of the past six months at least. It’ll make things clear for you. Budgeting is the key to a financially successful company. Once you develop the habit of keeping money records, you’ll notice the difference. If you want to take your business to new heights, you can’t be clueless about your spending habits (both personal and business).
Additional Reading: How To Economise Your Business Expenses
Debt Here, Debt There. Debt, Debt Everywhere.
Debt can never be good. No matter how small or big it is or what type it is. It could be a small loan you took from a friend, Credit Card debt, or some other loan. Don’t let yourself drown in debt unnecessarily. Credit Cards are essential.
They can help you in multiple ways. They give you the opportunity to build some good credit that can help you in future. With the right plastic buddy in your wallet, you get to enjoy a wide range of benefits like shopping rebates, cashbacks, discounted air tickets and more.
So, yeah! We get the excitement and the reason for keeping so many cards in your wallet. But all those exciting benefits won’t make any sense if you don’t pay your bills on time. The interest rates are high and knowingly or unknowingly, they can damage your budget.
But, hey! We don’t mean to scare you. Having a separate business Credit Card is good. You just need to be cautious enough to keep your Credit Card debt under control. One pending payment, no matter how small, can wreck your monthly budget.
The solution: The solution is simple. If you’re drowning in Credit Card debt, the first thing you need to do is pay it off. And this should be done on priority. Small beginnings can make a huge impact. Even if you don’t have some free cash to pay off the entire debt all at once, go small. Start paying that debt off in small amounts.
Additional Reading: How To Kill Credit Card Debt In 2018
You Love Juggling Bills
Making late payments has become a habit for you. You have so many bills to pay that you’re just confused. As a result, you keep mixing things up and that makes you lose the track of those bills. Since they’re either lying under your mattress or lost in the trash somewhere, you don’t pay them unless you get some serious threats.
If this sounds like your current situation, there could be a couple of reasons behind it. Either you’re just so careless that bills are just one of those things you keep forgetting, or your bank account is so empty that you don’t have money to make these payments.
The solution: You’re lucky that there’s a provision to automate these bill payments. Once that’s done, most of your worries will be sorted. Since this money goes directly from your bank account and you don’t have to put in any effort towards making these payments, there’s no question of your carelessness/laziness ruining things.
If it’s a laziness/carelessness issue, this solution can help you. But in case it’s the other problem where you actually don’t have money to pay back, you need to make some quick changes in the way you spend. That might involve a lot of budgeting, saving and changing your spending habits. It’s all about self-control and better management.
Additional Reading: The Dos And Don’ts Of Budgeting
Your Negotiation Skills Are Non-Existent
Being a business owner requires a lot of skill. Being able to negotiate well and crack some good deals needs to be a part of your skillset. When you’re talking to the vendors or looking at any kind of transactions, you need to negotiate better. Just because you think you can’t bargain or don’t mind paying the extra money doesn’t mean that you shouldn’t try to crack a good deal. You don’t want to overpay, do you?
The solution: Don’t settle for whatever they offer you. Always try your best to crack a better deal. Ask for reduced rates. Remember that you have nothing to lose. What’s the worst that can happen? The vendor will just refuse your offer and you won’t get the stuff at a discounted price.
But think how great it’d be if they agree to your offer. You’ll get to save more. Don’t rely only on one vendor. It’s always better to have backups. Try looking for a couple of more and keep them handy. Why face their tantrums for no reasons? If you still think that you’re incapable of negotiating well, ask your friends/relatives for help. Some people are quite good at bargaining. We’re sure you also have those bargaining experts in your life. Don’t you?
Additional Reading: 6 Lazy Habits To Build Your Savings
You Spend On Irrelevant Things
It’s good to look at what your competitors are doing and trying to be better. But you don’t need to copy them. Workwise, okay. We get it. Your work has to be better than theirs. But when it comes to other things like getting a bigger and swankier office, ordering the latest gadgets and spending unnecessarily on useless things, you can take a step back.
It might be slightly frustrating to see your competitor in a better office space than yours, but that’s not something that should bother you. If it does, you should aim at taking your business to another level so that you have extra cash to spend on these things. But if you’re already struggling with other expenses (which are the more crucial ones), there’s no point overspending on useless things.
A swankier office doesn’t necessarily mean a better company. Think about it. There are so many better ways to prove that you’re better than your competitors. Expanding your business, for instance. Try focusing on those things (the more crucial ones).
The solution: It’s good trying to impress people with a swanky office and handmade furniture, but you also need to stay within limits. Opt for better options like getting used furniture instead of buying the latest ones. There’s a fine line between needs and wants. Be sure you know the difference and act accordingly.
Payroll Is A Trouble For You
Payroll is one of the most important expenses you need to think about. Not being able to pay your employees is one of biggest signs of financial trouble. They might love their job and not complain much even if this keeps happening regularly.
But after a point, this might just get you into legal trouble. Apart from that, you are also spoiling the reputation of your company. Nobody ever forgets a bad job or a bad boss. If you don’t pay your employees on time, you’re the worst boss ever. You don’t want to be that, do you?
The solution: You need to treat payroll as priority. This is something you just can’t take lightly. Even if that means cutting down the other expenses a bit, you must do it. Since you’re the boss, there might be chances that to get the payroll in order, you’ll have to forgo your own salary.
As a leader, you’ll have to face the brunt. Also, if you know that your company is suffering money-wise, you must start taking steps to improve the situation before it starts to affect the payroll. Look for financing options, try to identify the causes of the problem and see if you need to modify the business plan. If nothing seems to be working, take some expert’s help. Financial advisors can help you get through this bad phase. Just explain your situation and they’ll find the solution for you.
Error 404: Emergency Fund Doesn’t Exist
No matter what the situation is, you always need to keep some money aside for emergencies. In case you don’t already have a fund for emergency situations, your future might be in trouble. Anything could go wrong at any point. You’re running a business, after all.
In case something happens, you’ll have to apply for loans and then wait for them to get approved. You might not always have the liberty of time. Not starting an emergency fund now could mean a lot of trouble later.
The solution: Even if you have to start small, start building an emergency fund. You could start by opening a Recurring Deposit and once you deposit enough money in it, you can turn it into a Fixed Deposit too.
Automate your savings so that you don’t have to worry about manually transferring money here and there. Opt for the auto-debit option and most of your worries will be taken care of. Ensure that you save at least some part of your profits. It might look small now, but these small amounts can make a significant difference later.
Additional Reading: How To Put Together An Emergency Fund
If you see any of the above-mentioned signs, it might be time to panic. But don’t panic too much. Just take the right steps to avoid a huge financial loss later.
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