Signs of a pending organisation failure.
Negative cash flow is a sure sign of a pending business failure.
One of the biggest mistakes in sales is focusing on making buyers understand what you do rather than on the buyer’s problems, frustration, wants and needs, and organisation and community.
There must be sufficient cash reserves to carry on day-to-day operations, whether during a sales downturn or a crisis. Cash flows need to be managed; otherwise, they have a bad habit of drying up when you need them most.
A cash flow problem is usually only a symptom of another problem in the business. Here are some examples of what to look for:
- Poor profit margins.
- There are too many specials being offered.
- Too many overdue debtors
- Inventory is out of control.
- Overspending on capital equipment.
- Poor control of expenses.
- Not enough sales to cover the overheads.
If any single term can define what makes or breaks a business, it must surely be ‘cash flow’. Despite having the best product, the most excellent service, the best people, and the most significant investors, you are heading for a business failure if you have a terrible cash flow constraint.
A sobering thought before you dive into the Knowledge Base. When the owner or a key person in a small business dies, the company dies more often than not. What are you doing about your management and business succession? Both are critical risk factors. When someone dies, things will happen beyond your control, but at least you can minimise the impact.
Quotable Quotes.
“While failures might hurt, not learning from them will hurt you more”. Peter Sergeant
“To succeed in life, you need three things: A backbone, a wishbone and a funny bone”. Reba McEntire