7 early warning signs that your business may be struggling

7 EARLY WARNING SIGNS THAT YOUR BUSINESS MAY BE STRUGGLING

June 10, 2025

BACKGROUND

Financial trouble doesn’t usually hit all at once—it builds over time.

The good news?

If you know what to look for, you can catch the warning signs early and take steps to turn things around. Here are seven red flags that may indicate your business is facing financial difficulties.

SO WHAT ARE THE SIGNS ??

1. Consistently Low or Negative Cash Flow

Cash flow is the heartbeat of your business.

If you’re constantly struggling to cover expenses or relying on credit to stay afloat, it’s a sign that your income isn’t keeping up with your outgoings.

What to do NOW: Review your cash flow weekly and monthly, identify where those additional costs are or where cash is leaking or not coming in!

Consider putting in place a 13 Week cashflow forecast to identify where the problem areas are likely to be in the coming weeks!

2. Mounting Debt or Reliance on an Overdraft

Using credit occasionally is normal, but if your business is regularly maxing out credit cards, using it’s overdrafts, or accessing loan finance just to survive – then this is a serious warning sign.

What to do NOW: Speak to your Business advisor or accountant about reviewing and improving your cashflow (see above again) and re organising your debts to cheaper/more manageable long term debt. (urgently).

The sooner you start the sooner you will have clarity AND the ability to get on with your business.

3. Delayed Payments to Suppliers or Staff

If you’re falling behind on paying suppliers, rent, or employee’s salaries then it’s not just a financial issue—it can also damage your reputation and result in an exodus of your GOOD employees.

What to do NOW: Prioritise employees and also communicate openly with creditors.

Transparency can often buy you time and goodwill to pay amounts due over a longer period.

4. Declining Sales or Customer Retention

A drop in sales or repeat business, or even the loss of a KEY client can quickly lead to financial and cash issues. This may be due to market changes, increased competition or customer dissatisfaction with your services.

What to do NOW: Reassess your marketing strategy, restore the relationship with the Finance team to get accurate and up to date analysis, re energise your marketing efforts to obtain new business.

Also look at simple customer service ‘WINs’ and gather feedback to understand what’s changed and can be fixed.

5. Inaccurate or Delayed Financial Records

If you don’t have a clear picture of your financial position, you can’t make informed decisions.

And also poor record-keeping often masks deeper issues within the business . . .

What to do NOW: Get a grip on your financials to ensure that the basics are being handled correctly, but also that the RIGHT level of information can be provided to you (quickly), so that you can make better, quicker business decisions.

6. High Staff Turnover or Low Morale

Financial stress often trickles down to your team.

If employees are leaving or morale is low, it could be a sign of instability, uncertainty or a lack of clear leadership.

What to do NOW: Communicate openly with your team and involve them in problem-solving. A motivated team can help drive recovery.

7. Avoiding Financial Conversations or Planning

If you find yourself avoiding financial reports, ignoring bills, or putting off meetings with your accountant, it may be a sign of financial anxiety—or denial.

What to do NOW: Face the numbers head-on. The sooner you understand the problem, the sooner you can fix it.


FINAL THOUGHTS

Every business faces challenges, but ignoring the signs can turn a small issue into a crisis.

If you’ve noticed one or more of these warning signs, then don’t panic— they could just be temporary BUT you don’t know yet – SO act.

Seek professional advice, review your finances, and create a recovery plan.

Do you feel that you could use some help to assess or resolve any of the negative warning signs above? With early support and ACTION – many of these can be turned around for your business . . .