You may be experiencing great business breakthroughs, but that doesn’t necessarily mean profits are. Check out a few other indicators to determine if your business is financially healthy.
The following symptoms could indicate problems:
- HIGH EXPENSES-You have moved into impressive offices, bought a luxury car or in other ways are emulating established big business. Or, equally problematic, your payables are growing faster than your receivables.
- LOW EXPENSES- You are not reinvesting in your business. You are ignoring the need for newer equipment, marketing programmes or professional services.
- MARKETING INVENTORY-You are buying or making more goods than you’re selling (including services)
- LIMITED CLIENTELE-One or two customers account(s) for the bulk of your business.
- Excess Liabilities-The sum total of all your debts payable in the next year is greater than what you own plus what is due you(receivables).
- Escalating receivables- If your receivables are climbing monthly owing to growth in sales, great. Suppose they are rising as a result of slow-paying or delinquent customers, not so great.
- TAX DEFICIENCY-You have not set aside funds to pay estimated quarterly taxes.(If you are on tax holiday as a start-up business, set a fraction of profits for future tax payment)
- STATIC PRICING –You have not raised prices to market levels or to allow for rising costs; worse yet, you’ve lowered prices to maintain sales volumes.
- LACK OF SYSTEMS- You operate without a business plan, budget or bookkeeping system or not following the laid down business plans.
As you peruse the raised issues that may be applicable to you and your business, one or two of the above need not arouse concern, but multiple symptoms may mean you need to revamp or rejig operations. You may consider contacting a business consultant or an accounting firm.