6 Warning Signs That Your Business is Heading for Financial Stress

Posted on 21st March 2017 in Cash Flow

Written by Freya Hughes

Concern over financial control is enough to make even the savviest business owner sweat. Your accountant returns your taxes only for it to look nothing like the one you submitted, why does the P&L look so different? Are these figures ‘normal’? Stresses over money coming in and out have always been one of the most important, and horrible, elements of an SME director’s day. But how can you combat this before it gets out of control? In this blog, we explore how to spot the warning signs.

When times get tough, even the most basic of actions can have a huge impact. Consider your cash flow as similar to water – with it, we flourish, but without we’d all be drained. Your balance sheet is your best friend (or water bottle, if you like) in this respect so you can’t take your eyes off it. To continue this metaphor, if cash is your water, your clients are your tap – and it’s one you don’t ever want to turn off. 

Stress takes its toll on the best of us but it can have a negative impact on anything from staff care to a reduced quality of your product. In turn, this can make cash flow struggles even more serious.

Similarly, interest building on loans and repayments may not be on the top of your priority list but that will ultimately increase financial pressure and result in higher outgoings. We’re a fortunate bunch, though, as FUTRLI is here to help combat the warning signs of cash flow wobbles. Here are 6 key points which indicate that your business is heading for financial stress.

1. You always feel like you are firefighting

It may seem obvious, but not being organised is a surefire way of letting things slip through the net. Checking finances daily in FUTRLI allows you to keep track of how you’re performing against your targets.

Using add ons can automate long-winded procedures such as logging receipts – simply take a photo on your smartphone and upload it directly to Xero or Intuit. Try our favourites, Receipt Bank, Expensify and Entryless and see how much time you can save. Less faffing about equates to smoother operation (great), and a better night’s sleep (even better!).

2. Your best employees head for the hills and you’re shifting through a mountain of CVs

Your most talented creatives, managers and support staff are dropping like flies. You thought you’d made it seem as if things were ticking over nicely, but your employees are clearly more intuitive than that.

When your best people go, it’s time to look at why. Is it because they know there’s trouble afoot? Have you tried recruiting new talent? Sites and apps such as RecruitLoop and LinkedIn Recruiter are great places to start, but it’s even better to hang onto the good ones.

3. You’re taking uncalculated risks

Without using real-time comparisons of data you really don’t know exactly where you stand. Risk-taking becomes dangerous: imagine employing new staff to increase sales, but they don’t make any, can you afford to gamble on this?

Playing with what-if scenarios allows you to make decisions when you’ve adequately explored your options. Use it as a security blanket – you wouldn’t skydive without a parachute so make your business decisions as safe as you can too.

4. Out of sight, out of mind

It’s in your best interest to check in with your staff – it’s like when you’re minding children…if it gets too quiet that isn’t necessarily a good thing! Time is of the essence in the working week. While you’re busy managing staff, winning contracts and generating more business, what is your team doing? Are they hitting their targets? Are they working on the right objectives? How is the team environment?

5. Lack of communication

Communication is key. You and your managers are working towards the same goal, which needs to be remembered from both sides. FUTRLI allows you to add an unlimited amount of team members and employs granular permission settings so you can control what data is shared – don’t worry, we’re not advising you share visibility of your bank account with your team.

Keeping a constant dialogue is so important and this can also be achieved using FUTRLI to keep everyone looking at the same numbers and focused on the same goal.

When we spoke to John Ryder, MD of Hive.HR, he told us that his staff love FUTRLI’s transparency: “FUTRLI acts as the lens through which the whole team can view and connect with the strategic narrative of the business.” You can read the case study here.

6. You’ve stopped laughing

It’s not always fun and games, we know, but the reason you started (and subsequently nurtured) your business is because you enjoyed it, right? If the worry of day-to-day proceedings has overtaken your zest for achievement and success, it might be time to look inwards at things as a whole and see how you can improve things. Once you do, it’s likely your cash flow will pick up too.

Of course, there are other things to watch out for. Not taking risks can also be the demise of a business, you should be thinking the next opportunity to diversify and monetise other areas weekly. Developing your business strategy frequently is a great way to create your own safety net and keep your mind open to what might be around the corner – and how to act on it.

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