Businesses never go bad overnight—there are always warning signs. So, what to do if you are seeing red flags every way you turn?
Less than three months of readily available cash?
“Maintaining a buffer of cash [emergency funds] is most important,” says Smart Advice financial planner Peter Horsfield. “If you are financially stressed, this will most likely affect how you react to others, your decision making process, personal health and your wellbeing. Knowing you have at least three months of cash reserves to cover your personal/business expenses allows you to ride out the ebb and flow of business seasons.”
“If you’re not paying yourself a salary then you need to seriously ask yourself what immediate actions need to be initiated,” Horsfield suggests. “Managing income and expenses is the life blood of business. However, as the owner, you are taking on all the risk. It is essential you pay yourself first. If this means you have to relocate to a smaller and lower cost premises, this should be considered. Keeping your business expense and income ratios well balanced also adds to the resale value of your business.”
Read more at http://vetpracticemag.com.au/red-flags/