Will Humphreys identifies five signs a business is failing: payroll eating too much revenue, no consistent marketing, the owner ignoring strategy, the CEO underpaid relative to the business, and blind trust in finance staff without oversight.
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So how do you know when your company is headed towards bankruptcy early on? So oftentimes, as leaders and entrepreneurs, we are taken by surprise by our company's lack of profitability before it's too late. In this video, I'm going to share with you the top five signs that your business is headed towards bankruptcy early on. With number one being a surprise in almost every single case. Guys, welcome to the profitable pt. I My name is Will Humphries here helping you increase your income, impact and freedom. And I can tell you from personal painful experience, I'm laughing because it's easier than crying that as I almost went bankrupt a number of times in my own company, it occurred because of the reasons on the board behind me. Now, gratefully, I learned a lot. Number one, I get to share this with you so that you don't have to go through those same painful lessons. But number two, those lessons propelled me to success. I was able to grow a multilocational company with dozens of employees. I was able to exit that successfully. I've opened other companies and they're all doing very well. And I attribute a lot of that success to the painful lessons I've learned behind me. But let's not have you go through that same pain. Let's have you go right into it from a place of already knowing. So kicking it off with number five. It's important for you to know the percentage of payroll to your income. If that's a new term, don't let that like gloss you over. Ultimately, you just need to know how much of your money that comes in your income goes towards your payroll. In physical therapy, that's an easy number. That's about 50%. 50% of what we collect and what comes in should go towards our payroll and benefits. So whatever your industry is, remember to understand that number because it's the easiest way to keep track of your biggest expense. Losing sight of that statistic quickly turns your company unprofitable and things can get out of control. Number four, zero marketing or little marketing and sales. So business owners typically do marketing and sales cyclically. We don't have anything in terms of business. We freak out, we go out and market and sale, we get busier and then we stop. That sends an inconsistent message to our customer base and ultimately can lead to them not buying into us at all and not coming. So then when we later market and sale and we don't get results, we were surprised. Why it didn't work? Well, it's because our customers are confused. So it's important to Be consistent in our sales and marketing efforts as we grow our company. Number three, we don't have any time spent working on our company. So working on our company is vital. And we oftentimes feel guilty as leaders and entrepreneurs that we're spending time not producing the service or product with our teams. We almost feel guilty putting ourselves in an office and just working on the company. And how silly is that to feel guilty about making everyone's life easier? So as we spend time doing that, it's a important to remember the value, the essential value of you being set apart from the day to day and working on your company. One of the key things you'll figure out are what your metrics are, what are the numbers that you need to put in place, because without those numbers, your company will not grow or survive and guaranteed over time will head towards bankruptcy. Number two, your personal pay is a sign of whether or not you're being successful or not. And rarely is it because you're overpaying yourself. Even though that could be the case most of the time in business, we do have those periods where we don't pay ourselves as much or very little because we're getting things started or we're going through a rough patch. But when we consistently underpay our position relative to our employees, that is a huge sign that we aren't in a profitable mindset. And over time, one of two things happen. Either the business fails because we've overpaid our team while underpaying ourselves, or we just burn out because we are completely out of balance, professionally and personally. So your pay is an indicator of how well your business is doing. If you honor your role as a CEO and you're paying yourself within a normal range of that amount, you are honoring what the business needs. But the number one reason, and the number one sign that indicates that our company is headed towards bankruptcy is blind trust. Our financial leaders in our company. Now remember I said blind trust. It's really important to trust every employee. And obviously we hire these individuals to take care of a business, the part of a business that we weren't really like great at to begin with. But when we blindly trust in healthcare, our billing and collecting teams, or an outsourced service, or we blindly trust a cfo, a part time or a full time cfo, every time I've almost gone bankrupt, it came from not knowing the 20% of finance that I needed to know to manage those positions. If you don't know that, don't worry. I will be covering that in future videos. But it is essential to remember that if we have blind trust with anyone over finance, it's only a matter of time before something goes on in their personal world and we end up paying for it both with money and possibly the livelihood of our business. So guys, what did I miss? What are some of the signs that you've noticed in your businesses that lead towards bankruptcy? Please put those in the comment below. Guys, thank you so much for watching this video. Please click like and subscribe. 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