Last week we covered the first 6 warning signs of financial trouble. This week, we continue with more subtle but equally dangerous signs in business financial warning signs. Your business might be bleeding cash unnecessarily. Recognizing these indicators from business financial warning signs part 2 can save you.
7. You’re Trying to Keep Up With the Competition
Your competitor has a swanky new office and the latest gadgets. That doesn’t mean their business is better—it might mean they’ve dumped all their funding into expensive material things instead of improving their actual business.
Smart alternative: While your front-end needs to look professional to impress customers, avoid overspending on private areas. You can be just as productive with a $200 desk as a $5,000 mahogany one.
8. You Overinvest in Technology
Yes, you need computers and internet access to operate in the 21st century. No, you don’t need brand-new devices every year or the latest iGadget as soon as it launches.
Smart approach: Use technology until it no longer serves your business needs, not until something newer appears on the market. This is crucial for avoiding business financial warning signs.
9. You Don’t Have an Emergency Fund
Just like personal finances, businesses need emergency funds for unexpected expenses. What happens if:
- Your delivery trucks break down simultaneously?
- Your computer server crashes?
- Key equipment needs immediate replacement?
Without an emergency fund, you’re forced into desperate measures like high-interest loans when crisis strikes.
10. Your Finances Are Disorganized
Bookkeeping often falls to the bottom of priority lists for small companies, but disorganization costs you money through:
- Missed tax deductions
- Late payment penalties
- Difficulty securing funding
- Stress during tax season
Organized books make everything from daily operations to investor presentations smoother, as outlined in part 2 of business financial warning signs.
11. You Make Poor Hiring/Outsourcing Decisions
Payroll is typically your biggest expense, so hiring mistakes are costly:
- Hiring the wrong people means constant retraining
- Full-time hires for part-time needs wastes resources
- Not hiring experts when needed costs more in mistakes
💡 Smart Hiring Tip
For specialized tasks like bookkeeping, consider part-time professionals instead of full-time hires. A business accountant can help maximize deductions and organize records without the cost of a full-time salary, which is emphasized in the business financial warning signs part 2.
The Bottom Line: Balance Inflows and Outflows
The profit equation has two sides: money coming in and money going out. As we work through the final quarter, it’s the perfect time to examine where your money is going and plug any unnecessary cash leaks in line with business financial warning signs part 2.
Combined with last week’s 6 warning signs, you now have a comprehensive checklist to identify and address financial bleeding in your business.
“A wealthy person is simply someone who has learned how to make money when they’re not working.” – Robert Kiyosaki
Missed Part 1? Read the first 6 warning signs here to get the complete picture of your business’s financial health.
Recognizing these signs in your business? Schedule a financial review with us to identify leaks and create a sustainable spending plan!
