10 Signs Your Business May Be In Trouble

Here you can download our Ten Signs Your Business May Be In Trouble booklet. An example of the useful information you can find in the booklet is featured below.

 

Introduction

Every year thousands of businesses and companies cease trading due to insolvency. It is undoubtedly true that some of these businesses could have been saved by taking the right advice at an earlier stage. Even if there is no alternative to insolvency, acting at an earlier stage can reduce the overall level of business liabilities and reduce the risk of personal claims against the business owner later on.

It can be difficult when running a business to spot the early signs of trouble. Set out below is a list of signs and pointers which may indicate that there is a problem. Whilst each one on its own may seem innocuous, the more of them that apply to your business, the greater your need to consider whether your business is at danger of insolvency.

1. Supplier Problems

Are you taking longer and longer to pay your suppliers? Suppliers will quickly lose confidence in your business if you don’t pay them on time or you continually ask them for credit. Are your suppliers putting your orders on hold, or asking for deposits before delivering materials to you, or demanding cash on delivery? If so, then it will become increasingly hard to run your business and generate the turnover needed to turn things around.

2. Extending Your Overdraft

Are you in danger of reaching (or exceeding) your current overdraft limit? Unless there is an obvious “one off” explanation for this, a steadily worsening overdraft position can be indicative of general trading difficulties. Whilst banks may agree an increase in limits, this isn’t always the case and even where they do, they often require additional personal security from you and charge higher rates of interest. You need to ask yourself whether you are simply ignoring the underlying problem (or delaying the inevitable) by seeking an extension of your overdraft or whether it really is a solution to your current situation. Do remember that there are other forms of finance available to business other than the traditional overdraft facility and often these are far more appropriate.

3. Problems Obtaining Finance And Credit

If your existing financiers are refusing to lend you further funds, asking for more security, or reducing the amount of credit available to you, it might be a sign of your business being in trouble. Equally, if you are finding it difficult to obtain new finance elsewhere or find yourself funding your business with the assistance of credit cards, this too is often a sign that you need professional advice.

4. Creditor Pressure

Creditors can put pressure on a business in a number of ways, including by sending “final demand” letters, threatening to issue legal proceedings or by serving statutory demands or winding up petitions. Have you had court judgments registered against your business? If so, then it is likely that you will be visited by enforcement officers or bailiffs to recover goods. The longer these situations are ignored the more limited your options may become in terms of a strategy to help your business.

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5. Crown Debts

6. Rental Arrears

7. Incomplete Books And Records

8. Using Personal Funds For Business Needs

9. Increasingly High Level Of Debtors

10. Sleepless Nights

If you believe your business is experiencing one or more of the above issues, or if you have any other business concerns that you would like to discuss please do not hesitate to contact us.

Do remember, these signs do not automatically mean that your business cannot survive. often, with the right advice a business can be restructured and put on a much sounder footing. We act for many business owners who have reached the stage of simply not being able to “see the wood for the trees”. We can help you step back, take stock and make the right decision for you.

Should you require any further assistance at all with these matters, then please contact one of our corporate specialists on 020 7841 0390 and we will be happy to discuss this with you.