Below are a few examples of situations you can compare yourself with to determine whether or not your business is in trouble.
The following are seven red flags for business.
Red Flag 1 – Stagnancy in Revenue Growth
You may discover that many new customers are generating revenue for your business during the early stages of its development.
The growth of this market segment may stagnate for a while, despite your successes in previous years.
Initially, you may remain in that position for a brief time, but you will have to develop a strategy to attract new customers and increase revenue.
There may be several reasons that prevent you from focusing more on the future. You may commit too much time in a week to managing your current workload, which tires you and leaves you with less time to find new clients.
In addition, growth is similar to climbing a ladder; if you wish to reach greater heights, you must continue to do so.
Especially when it comes to revenues, staying in one place is wrong and would cause you to lose future income because everything around you is experiencing an increase due to inflation.
The operation costs of your business will always increase despite everything.
In particular, operating costs such as staff costs, utilities, and rent would increase.
It is also essential to keep employees satisfied with their salaries because they will not be satisfied with stagnant monthly wages that are not commensurate with their work experience.
Using this scenario, it is clear how detrimental a non-growing business can be to its future and your retained profits.
Red Flag 2 – Diminishing Control in the Shareholdings of the Company
To expand and pay employees and suppliers on time, businesses need a good operating profit to come in.
Profits from retained earnings are re-invested in the business to enhance the business’s technical aspects to increase efficiency, productivity, or marketing and business development.
Therefore, the organisation finds itself in a stalemate position where it neither generates adequate operating cashflows nor obtains external funds from banks to reinvest in its operations.
If you find yourself in this situation, there may not be many options available to you.
You may consider getting funding from angel investors, and you may be required to distribute some of your company’s ordinary shares in return.
The downside is that you may lose a certain percentage of shares, and outsiders may begin to influence the company’s operations.
Red Flag 3 – Bad surprises from the technical infrastructure
When you do not have sufficient funds to develop the technical infrastructure, you convince yourself to use the existing one and attempt to accomplish those tasks that require improved equipment.
Eventually, it will become apparent to you that you will not be able to attain them; consequently, you will lose an advantage over your competitors.
Red Flag 4 – Absence of ethical behavior by employees
How often do you think about your staff? Are you observing whether they are satisfied and happy with their work or whether they are unsatisfied and feeling insecure?
Do they have sufficient infrastructure to carry out the assigned work? Unfortunately, most companies do not seem to care that employees are the face of their organisation.
Therefore, when they complain about their work, it sends out a very negative message.
It is an outrageous situation for a company and will seriously damage the company’s public image.
If you were to approach a company for your project and some of its employees provide you with negative feedback about themselves, would you still choose them?
Imagine how valuable employee satisfaction is for a company’s future success.
So, you need to provide them with a wholehearted value for their presence in your organisation.
Red Flag 5 – Unresolved tax matters
Nobody who runs a business wants to avoid paying taxes because we all know it is not feasible. There will be legal repercussions that will follow, after all. That’s not just a red flag, it’s also a black mark on your business record.
The problem is, it is an inadvertent error that develops into a thorny problem without anyone’s conscious knowledge.
By failing to pay company taxes, the amount due will only increase.
IRAS, the tax authority in Singapore, is one of the most powerful in the government. The problem is that they possess extensive legal rights that can jeopardize your business by requesting immediate payments or worse, threatening you with legal action. The majority of business owners engage corporate tax services in order to hear the advice of Singapore tax experts.
Generally, income tax rules are set up to make it more costly if you fail to file your tax dues and do not pay them at the same time as you will be subject to penalties in addition to interest charges.
The scenario of tax payment may also become a nightmare when you hold the power to make decisions regarding the financial aspects of your company.
Moreover, if something goes wrong with your company’s tax payments financial decisions, the income tax department may target your personal assets.
When you see that you are near this condition, pay special attention to how it is resolved as sometimes the whole thing is viewed as a fraud against the state, which can result in a near collapse position or worse, lose the credibility of your clients, which could ultimately result in adverse results.
Speak to our tax service team and understand the Singapore Tax laws.
Red Flag 6 – Big client imbalance
Serving the key customers who play a major role in your business seems quite appropriate.
It may have been advised against it, but it isn’t easy to live by that advice, especially if you are involved in something that you seldom encounter.
In the event that you place most of your growth opportunities in the hands of a few clients, just because they are large in business, you should keep an eye on market conditions and how they are handling them.
You should always take care not to give away your fate of growth and development to others for a number of reasons, because if they go out of business or decide to end or cease association with you, it could pose a significant threat to your future business.
Therefore, be aware of those who can make or break your company.
Having been in this position, it would be prudent to seek out new moderate clients and establish a balance among your clients.
Red Flag 7 – Technological tensions
To the present day, it is well understood that technology can accomplish a great deal more than a normal human being in terms of primary tasks.
With the advent of enterprise resource planning (ERP) software, many organisations have become more automated.
The introduction of computers has rendered a significant amount of human labor obsolete.
Keeping up with technology is a good thing, but not in every respect. In a business setting, where you have a broad range of clients, it may be necessary for you to work on their projects with equipment more expensive and more advanced than yours. If you cannot afford the cost of such new infrastructure for the sake of a few clients, you may lose their business.
Therefore, if you find yourself unable to meet increasingly sophisticated technological demands from clients, you will either have to decide whether to provide these services as a result of your company’s financial strength or to cease dealing with such clients.
A payroll services company, for example, regularly updates its payroll software and ensures compliance with local human resource regulations.
Finally, a few words
These are just a few of the red flags that can be harmful to your business.
If you recognize any of the situations mentioned above in your business, be sure that you take the necessary steps to remedy the problem before it gets any worse.
If you require assistance or would like to learn more about annual compilation services in Singapore, please send your enquiry via Contact Form. Our team will contact you to discuss and understand your needs.