Tips to Prevent Your Business From Failing

While the statistic ‘9 out of 10 businesses fail within the first year’ has been all but busted by business experts, similar statistics show terrible predictions of what’s to come for start-ups across the world.


According to a study by Ormsby Street, small business survival rates are as high as 91 percent in the first year of trading. However, four in ten of these companies will never reach the five-year milestone. Therefore, it’s important to address any issues that may be a hindrance to your business in the first five years of your business.




Ruta Gabalis, director of AeroBlue – a business consultancy company from Essex, shares her advice on how business’ can avoid business failure in the coming years:


1. Manage your business cash flow efficiently.


Often, business owners are too focused on increasing the profitability of their business and forget about their cash flow.

For some entrepreneurs, they choose to start a business in the industry they are specialised in such as engineering or IT, but usually lack the knowledge of how to run a business – mainly, the business side of things. With time and experience, business owners tend to improve their business skills; however, business finance knowledge remains at a minimal level. Unfortunately, this means business finance is often left to an accountant.

Gabalis says:


“The only person who is truly invested in the company and knows the business operations inside out is the business owner. The business owners who are comfortable with business finance have an advantage of spotting early signs of cash flow decline and prevent the company going into financial difficulties”.



2. Step away and look at the business from another perspective.


For many, setting up a brand new business is an exciting and challenging feat. Unsurprisingly, many business owners get wrapped up in the running of the business and forget to step back and view the company from a shareholder’s point of view.


“If you can view your business as a “product” and manage it at the same time, you have a greater chance of succeeding as you will focus on what makes your business grow!”



3. Maintain communication with suppliers.


Unfortunately, cash flow challenges are part and parcel of running a business. However, it’s how you manage the situation which deems whether it will be the death of your business.


With 18 years experience in corporate accounting, Ruta has witnessed businesses cutting all communication with their suppliers when they run into cash flow problems. For many, they avoid talking to suppliers because the calls are awkward and uncomfortable but Ruta argues that “refusing to communicate escalates the spiral downwards!”


With the suppliers in the dark about what is happening with your business, they may put your account on hold or even apply to court where they can recover the money. This could lead your companies credit score to decline and in turn, reduce your chances of securing finance for opening accounts with other suppliers.



4. Avoid cash flow problems with good credit control.


Excellent credit control is vital for every company but particularly important for small to medium enterprises (SME). After all, late payments and uncollected invoices can be a considerable problem for SMEs in the UK, affecting your cash flow and the overall performance of your company.


Some business owners struggle to ask a client for money, under the belief that the client will stop using them. However, this is never the case!


After all, your clients are also business people, and they understand that without cash, a business will fail. Business consultant, Ruta Gabalis says:


“There’s nothing personal in asking the client to put you at the top of their payment list!”



5. Don’t be afraid to ask for help.


Imagine a red light appears on your car’s dashboard, and it seems to be a problem with the engine. You realise you cannot fix it yourself so, you take your car to the garage and let the specialist identify the problem. After taking a look at your vehicle, they notice the problem and can propose a solution.


Seeking help when your business is struggling is no different. In fact, just like your car, finding the right support early can save your company from breaking down. Therefore, if business owners start to see their cash flow KPIs going into the red, you need to find a specialist who can address the problem – the sooner you seek help, the quicker the problem can be fixed and the less it will cost your business.


For more information about Ruta Gabalis and her tips for avoiding business failure, check out

Author: Editor

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