Businesses don’t go bust overnight
When I talk to people who have lost a business or are going through tough times.
So tough they fear they could go under
So many of them will site a particular situation or milestone that was the thing that caused it.
“The bank withdrew my overdraft, I relied on it”
“I was refused a business loan that I thought was a sure thing”
“ I lost a few good clients due to the recession”
“ We were expecting to land a big deal and it didn’t happen or it is still happening”
“We did get a big deal, but it broke us trying to service it”
I could go on and on
It is not impossible for one big thing to push your business over the edge, it is just less likely. The big thing tends to be the straw that finally broke the camel’s back.
The reality is that most businesses hit financial difficulty due to a slow painful death like a scene from a Quentin Tarrantino movie, as opposed to a Jackie Chan or Bruce Lee quick deadly from out of nowhere Kung Fu blow.
Kung Fu style you die quick, but if you oldies like me remembers Reservoir Dogs or even Pulp Fiction, the poor victim is often tortured or messed with psychologically before they meet their end.
When they are eventually finished off, the obvious cause of death would be what was done to them last, the gun shot, the stab wound, whatever. But they were so wounded by then, despite probably fighting to stay alive that the damage had already been done.
So if we step away from my violent example and put that in a business context. By the time a company or sole trader closes their doors; there have usually been a catalogue of problems, some big but many small that seem almost routine but are the result of:
– Serial inefficiencies,
– Constant fire fighting
– The owner being distracted from the important in favour of the attractive
– An obsession with lack of cash but with little concrete knowledge of exactly why
All too often it is when the liquidators or administrators are called in that the person gets a real snapshot of their true position and factual reasons as opposed to assumptions as to why they have arrived at this place.
And guess what: the majority had accountants.
Getting accurate data once a year is not enough.
It is the equivalent of driving on the highway with your lights off and only turning them on when you hit trouble.
If you think of the lights as information, as long as they are on and pointing you in the right direction you can see where you are headed and gauge likely trouble spots. While changes can be slight detours business decisions often need to be total changes of direction to get to where you want to be and you can only do this with trustworthy info.
Keep your business out of the dark; don’t wait until you hit something to find out where you are headed.
I am Georgette Rowland of the Financial Gym saying thank you for your time.
I would love to know your experiences so please leave your thoughts and comments below and I would appreciate it if you could like the video also.
Too many businesses go under so let’s work together to get the number down. Please share this with anyone who you believe could benefit.
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Have a great day Georgette