What are the signs of business failure?


When a business fails there are early warning signs to look out for that can help you deal with the matter before it becomes too damaging. Lack of cash often the first indication, and this may materialise as an inability to pay the bills on time.

It’s important to spot these signs as early as possible so you can take aversive action and avoid insolvency. You may be able to renegotiate your debt repayments, for example, or secure a form of alternative finance to support the business in the long-term.

What are the signs of business failure?

Lack of cash

If you’re struggling to pay suppliers or other regular expenses, it’s a strong indication that the business is in financial distress. A problem with cash flows is typically the first sign, but it’s advisable to take a broader view of your business to understand the full impact.

Constantly ‘firefighting’ issues

When it feels like you’re dealing with more problems than you can handle day-to-day, rather than working on growing the company, it’s a strong sign that the business is failing.

Your customers are paying late

Late payments are a common cause of business failure as they prevent you from operating to full capacity. You may have to pay your own suppliers before receiving payment from customers, and if these incoming payments are late it compromises your finances even more.

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