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5 Signs That Your Small Business is Heading Towards Bankruptcy

While running your small business, you might go through a lot of ups and downs – but there are some ominous signs that indicate that your business is in trouble. Here are 5 bankruptcy signs to watch out for.

Ignoring them might soon take you out of business fast. Here are some bankruptcy signs that indicate that all is not well.

1. Good Sales but No Spare Cash

You might be having good sales, but if your gross margin has dropped dramatically, then you might find yourself in a tight position every time you need to make a payment.

Review your profit margins immediately. A reduced cash flow is the first indication that your cash pipeline is drying up.

2. Sales Figures Going South

A major indicator of impending bankruptcy is your sales forecast. Compare your sales figures on a monthly or weekly basis. If you notice a continuous downward trend, then realize that you need to take immediate action to stop the slide.

3. Unpaid Loans

If you are unable to pay back your loans and have ended up taking new loans in order to pay the old ones you are in trouble.

Soon, the interest burden will be too much for your small business to bear, a clear bankruptcy sign.

4. Consistent Late Payments

If you are unable to make payments to your suppliers and the time gap seems to be increasing, then it is time to pull your socks up and check out the reason for those delays.

5. Suppliers Avoiding You

You might find that word about your financial predicament has spread around. Once you find that both old and new suppliers are making excuses in order to avoid supplying materials to you, then you should realize that this problem need to be addressed urgently.

So keep an eye on your finances, loan repayments and your profit margins in order to avoid bankruptcy. Take appropriate action as soon as you notice any problems or these bankruptcy signs.

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