Home service trade businesses fail for many different reasons—and often, there are warning signs present early on.
It’s important for business owners to be alert to these red flags. If you identify them early, it’s possible to make the necessary course corrections and keep your business from going under; in fact, by partnering with the right accountant, you can actually turn your struggling business into a major profit generator!
But, if these warning signs are ignored, your business could find itself in deeper and deeper financial peril.
Warning Signs That Your Business is Failing
So what are these warning signs, exactly? Eight of the most common indicators that your home service trade business is in a bad place include:
- You (or your spouse) are working on jobs for free. If you’re working for no pay, there’s a job cost that’s not being met—plain and simple. And this could be something as simple as delivering materials or supplies to a job site. All job costs need to be accounted for!
- You’re not taking a regular salary. Ultimately, you started your business to make money—and if you’re not paying yourself, that’s a major warning sign that something’s wrong with the business. A successful business pays its employees, and that includes you!
- You cut your sales prices just to get a job. This could point to many underlying issues, including a lack of proper marketing. Ultimately, cutting prices means you’re missing out on revenues. You cannot grow or even sustain your company without revenues.
- You can’t keep up with credit card debt. When your business is financially healthy, it’s able to chip away at old credit card debt each month. An inability to do so points to some deeper problems with your business.
- You’re only making partial payments on the bills that are due. Or, you’re not paying your bills at all. Again, healthy companies can pay what they owe. If you allow debts and unpaid bills to mount, that’s a problem that’s only going to grow.
- You’re paying old bills with money from new jobs. Is your business essentially surviving paycheck-to-paycheck? In other words, are you desperate to get paid so that you can settle outstanding debts? If that’s the shape your company is in, then it’s probably not setting aside any profits or savings, which means it’s not growing. If anything, it’s sinking.
- You’re not paying your employees on time. It goes without saying that, if you don’t pay your employees promptly and fully, you’re going to have some major personnel issues on your hands. Plus, it won’t be long before word gets out that your company is in a bad place financially—which could destroy the brand you’ve built for yourself.
- Your checks bounce. The ultimate sign that your business is failing? You can’t be sure that the checks you write are going to clear. If your business reaches this stage, it may be too late to save it.
These warning signs are all pretty dire—but for the most part, if you identify them early and take the right action, you can not only right the ship, but turn your money-gobbling business into a real profit generator.
It all starts with seeking the right assistance. Contractor in Charge can help. Our accountants and Profit First professionals can look at your books, identify where you’re going wrong, and provide you with an action plan to make your business successful. If you’re seeing any of these warning signs, you can’t afford to delay. Contact us now and set up a free consultation!