21/05/2026
In many business failures, a collapse can look sudden from the outside. But the underlying problems usually begin months or even years earlier and businesses that avoid crisis are those that spot financial instability early and act on it quickly.
So what are some of the early warning signs you need to know about for your business?
💰Cash Flow: A key reason for business failure is running out of cash, not lack of profitability. The key is to understand why the cash is being used up. It might be slow customer payments, unprofitable work, rising overheads or something else.
💰Borrowing and debt levels: While borrowing to grow the business is normal, borrowing to survive usually points to deeper issues
👤People: Having too many senior people and not enough productive employees erodes profit. On the other hand, having too few experienced leaders can lead to a lack of control and poor decision-making
📈Benchmark overheads as a percentage of income and monitor these percentages to establish a pattern of what is normal for your business
🚩Financial instability rarely appears on its own. You might notice other red flags, such as increase in staff turnover, a rise in complaints or service failures, changes in sales patterns or key suppliers tightening their credit terms
If you would like help setting up Key Performance Indicators (KPIs) or interpreting their trends, benchmarking your results against similar businesses, or identifying potential issues, please do get in touch.
We would be happy to help you understand what the numbers mean and work with you to make clear, practical changes that keep your business on a stable footing.
📧: [email protected]
