Very few companies explode like a super-nova the warning
signs are usually visible for some time ahead.
The following is a basic check list which should help to
determine whether the problems are of a temporary nature or have more serious
implications for the future of the company:
The most important element in any business is maintaining a
healthy cash flow. It is imperative that a strict control is maintained on all
outstanding invoiced amounts.
The value of an efficient credit control system cannot be
over emphasised.
Do not focus on generating sales with little margin in the
belief that over time things will improve. Being the “cheapest supplier” will
not provide an automatic route to more satisfactory profits in the long term.
It is often better to keep your powder dry.
If you are constantly in danger of breaching your credit arrangements
with the banks or suppliers this is a clear indication that the company is not
trading satisfactorily.
As conditions deteriorate more and more time is spent
focussing on the problems and not enough on to how to position the business for
the future.
Particularly for owners of SME’s it is not easy to take the
necessary remedial actions and very often this is where an outsider can be of
assistance in repositioning the business before it is too late.
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