Jul 8

Early Warning Signs for Small Business owners

What are the Early Warning Signs that Your Business is in Trouble and What Steps Should be taken to stop the Bleeding?

The above statement what are the Early Warning Signs that your business is in trouble seems to be an obvious statement. Most business owner’s Especially Small ones believe the moment sales decrease and the cash balance is below a set number they are in trouble. However, an owner should be monitoring a series of benchmarks.

Small Business Owners - Early Warning Signs

Early Warning Signs for Business Owners

It is important that the owner looks at his balance sheet first. If you add your cash and accounts receivable and the total is less than your accounts payable balance an alarm should go off. Why did this happen has sales been flat or decreased or if you are an inventory based business did you buy too much inventory.

The next step would be to take the sum of your cash, accounts rec and inventory and compare the total to the sum of your accounts payable and debt. If the total of your accounts payable and bank debt is higher, you are in trouble.

If you have performed these tests and you are in trouble you must take action. First off all avoid borrowing more money to finance the business this one is the most important early warning sign for the small business owner. Do not use your personal credit cards to finance the business. This will only put you further in the hole.

If you find yourself in trouble contact a professional debt reduction company. Business Advisory Center settles past due payables, collection cases, lawsuits, judgments, loans, leases in default out of court. We have been providing debt relief since 1997.

Most cases settle for between 22% and 50% of the amount due with payment terms-usually 3 to 12 months.

  • Rita Frey

    How will a successful negotiated settlement affect my “credit” down the line? Will my credit be ruined???

    • Robert Schoenberg

      The majority of the time clients who are negotating a debt settlment have poor credit and a settlement will improve their credit score over the long run. The credit ranking is made up of three factors: 1)payment history 2) current credit exposure 3)current income
      A short term hiccup in settling a debt may in the long run help your credit as you will be owing less money. If the debt is a business debt, the settlement may or may not appear on your credit report depending on your creditors reporting policy. The most important thing to evlaute is it more important to have a good credit score or be in a position where you will be financial solvent. I normally advise my clients that improving your financial position is more valuable then a great credit score. Of course, we should try to balance both