Learn how to avoid the pitfalls of operating a business.
Businesses operating in Bermuda continue to face a challenging environment. Businesses are operating in a sluggish economy, which means that generating the cash to invest is difficult, and are having to constantly assess and adapt to the changing habits and demographics of their customers. Business owners and managers who perform regular ‘health checks’ on their business in order to identify deficiencies may avoid potential pitfalls.
‘Health checks’ can help uncover areas for improvement. Questions to ask include:
The sooner warning signs are identified, the more time business owners and managers have to employ corrective action or implement the necessary steps to fix any issue. While every business is unique, there are some general warning signs, which can be grouped into four categories: (1) Financial Statements, (2) Cash Flows, (3) Creditor Relationships or (4) Other.
Financial Statement Warning Signs
Cash Flow Warning Signs
Creditor Relationship Warning Signs
Other Warning Signs
Identifying the warning signs in a timely manner may allow the business to remediate its issues while that remains within the control of the business. Failing to take corrective action in light of the warning signs identified may lead to long term problems which may include the business losing its ability to trade to its maximum potential, the deterioration of business relationships and personal reputation and the creation of undesirable perception amongst staff and customers.
Business owners, rightly having a strong emotional connection to their business, often find it difficult to look objectively at the root causes of issues. It is important to remain dispassionate and logical when identifying warning signs and formulating a plan to take the business forward.
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