I’ve noticed common challenges with businesses, that more often than not, ultimately lead to poor performance and financial distress.
Understanding these challenges is the first step towards avoiding them, allowing your business not just to survive – but to thrive in today’s competitive landscape…
📊 Poor Strategic Input – Which can lead to low quality decision-making. Sometimes this is because the owners do not have the bandwidth to work ON the business. Other times, it’s because outside expertise is desperately needed to provide high quality strategic inputs in specifc areas of the business – everything from marketing and sales expertise, to technical know-how, finance and funding, through to business acquistions.
📊 Bad Cash Flow Management – Cash flow is the lifeblood of any business. A lack of effective cash flow management is one of the biggest reasons why businesses find themselves in financial distress. Whether that is from trying to grow too quickly or simply having poor cash flow controls in place. Yet there are a number of tools and financial engineering techniques which can make life a lot easier for business owners.
📊 High Levels Of Business Debt – While carrying some debt is a normal part of doing business, excessive debt can become unserviceable and quickly lead to financial distress. It’s essential to be laser-focused in managing your liabilities and avoid over-leveraging your business in the first place.
📊 Market Developments – From rapid changes with technology to shifting consumer preferences, changes in the marketplace can pose a significant challenge to small businesses. Remaining agile and differentiating yourself from the competition is critical.
📊 No Serious Exit Strategy – Many business owners focus solely on growth, neglecting to plan for the future. An exit strategy isn’t a plan to quit; it’s a plan to succeed. It provides a roadmap for the future, maximising the value of your business and ensuring it thrives even when you’re no longer around.
So, what can you do if your business is facing financial distress? Or better still, how can you prevent these issues from arising in the first place?