Page 13 - How To Avoid Going Bust In Business

Straws In The Wind

OK, the business is up and running but there seem to be “issues”.

So here are the sorts of straws in the wind that should alert you to trouble ahead:

You have to keep borrowing money - from a bank, your family, your friends.
As the hole gets deeper and the lenders more wary, you start borrowing from
high-interest lenders.

You are constantly exceeding your overdraft and getting payments bounced.

There is never enough money to meet all the bills.

You are buying more and more on credit because you don’t have enough
cash. Even worse, you are buying it on credit cards. Sorry, but no, you can’t
use your Visa to pay your MasterCard.

You have to change suppliers because your present supplier has stopped
credit.

Demands for payment start arriving from credit collection agencies.

You pay your suppliers later and later each billing cycle.

You are unable to meet tax payments, retirement fund contributions, and
other statutory liabilities.

You are putting off “doing the paperwork”. As a result you have no clear idea
of the condition of the business. Sometimes you don’t do the paperwork
because you don’t want to know how bad things are.

How To Avoid Getting Into Financial Hot Water

In The First Place

If you are in business and you learn nothing else from this book, this alone will be
worth mint gold to you.

There are two tests you can easily do that quickly tell you whether you are in deep
doo-doo:

1: The cash test

2: The balance sheet test

One Simple, Sure-fire Test To Avoid Financial Ruin

I said I would give you a sure-fire way to avoid going broke.