Danger Signals to look for and monitor in a small business
=> Accounts payable or receivable over
90 days old.
=> Decreasing profit or contribution margins.
=> Reduction in working capital, or not being
able to pay down credit line once a year
to zero.
=> Using short-term capital for long term
needs.
=> Decreasing employee communications
and morale.
=> Instant cash shortages.
=> Broken chains of command, unclear
lines of authority.
=> A high break even point, or increasing fixed costs.
=> Lack of internal cost controls.
=> Information flow deficiencies between departments
and management.
=> Increasing bad debts and bank overdrafts.
=> Payroll liabilities increasing.
=> Stagnant or flat, or consistently declining sales.
=> Several continuous periods of losses.
=> Constant difficulty in meeting payroll.
=> Increased customer complaints.
=> Owners extending credit to the firm.
=> Not knowing or tracking your key financial ratios.
=> Cost overruns increasing in frequency.
=> Increasing management overhead and/or disputes.
=> Increasing employee turnover, absenteeism, or idle time.
=> Slow inventory returns.
=> Lack of management planning, management by exception.
=> Lack of a marketing program, marketing wrong products in the
wrong markets.
