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If there is one thing that all businesses would give anything to avoid, it would have to be bad debts. Debt never signifies good news for a company, and the liquidation and the bankruptcy of a company is almost always due to too much debt that can’t be repaid. Not getting into a state of business insolvency is quite easy in concept; the only thing you would do is to avoid having debts. The problem with this simple concept is that it is easier said than done, as thousands of companies can attest to.

Dealing with business debt isn’t easy, because it also means dealing strictly with your loyal customers. Late payments from customers and clients make up almost 25% of all business insolvency’s. To sort this out, you may opt to stop depending on the payments from invoices of customers and clients that don’t always pay on time. Though they are loyal and some of them could be your major clients, late payments put your own business finances under stress, and this can put your company at a greater risk of insolvency.

Nobody wants debt, but business debt is part and parcel of regular business life. If you want to avoid incurring too much debt, make realistic forecasts with regards to your cash flow. If you want to avoid being late paying your own creditors, always assume that your clients will pay you at the latest possible time. This way you can end up with a margin when they pay on time. Never rely on a single client alone because when you do so, you would have a problem when if that lone client encounters financial problems themselves. Your business depends on your clients, and having as many clients as possible should be your goal.

The secret to recovery from debt is for a business to acknowledge when there is a problem early on. Debts are a normal part of business life, but having long-standing debts could make your business situation worse. Of course, you would have to pay your suppliers and financiers, but make sure that they know if you are experiencing a temporary issue that could result in a late payment to them. When they understand that it isn’t entirely your fault and the situation is temporary, they are a lot more likely to be understanding and cut you some slack. Dialogue with your creditors is key when there is a difficulty.

When you’re in business, it doesn’t matter if you’re self-employed, or working for a huge organization. The only thing that matters is your success. You can’t buy success, or wait around for someone else to plunk it down on you. And of course, no amount of flattery can lead you up the ladder of success. It’s a known fact – you have to work for success. And here the most important tip for your success in business, which you can use to become more successful in your chosen line of work:

Make Your Work, Your Passion

Find out which aspects of your work triggers your passion, because having this passion will motivate you to go on, even when you face difficult times.

Now there are a few people who work for money. Money is an important part of your life, I understand. Some might even say money can motivate you to work harder. But without your passion, you simply can’t go on with just the prospect of earning more money. Your passion can ignite your drive to work better, thus leading you to more success.

Having said that, there are still some people who are doing their jobs, only because they’re qualified but not really passionate about what they do. I mean, think about the number of times you’ve heard about someone popular who’s doing something completely opposite to their educational qualifications.

Take Tom Cruise for example. He actually enrolled in a Franciscan seminary to study for priesthood at the age of 14. But fortunately for all Tom Cruise fans, he found his passion in acting, and the rest is history.

Yes, Tom Cruise found his passion quite early in his life. I understand some people can take longer to find their passion. But the fact remains, you can only be successful at something you are passionate about.

If you’re not satisfied with your line of work, or feel you are destined for something different, it’s never too late to find your passion. An experienced image consultant can work wit you to help you discover hidden talents, uncover your passion, and help you on your way to success.

Try it! After all, what do you have to lose? In fact, you’ll be able to understand yourself much better, once you figure out what makes you happy in your professional life.

With the economy faltering, customers hesitating and suppliers balking, every company worries about sustaining profits. In the face of these market forces, companies can rarely sell their way to higher profits. Although executives and employees can’t do much about the external forces, they can have a major impact internally.

Faced with shrinking profits, companies invariably try to cut costs by reducing staff, paying suppliers more slowly or “cheating” the customer by using inferior quality materials. These quality shortcuts can cripple and even kill a company in the long run.

Earnings shortfalls make everyone look for a quick fix. They settle for cheap tricks that damage the company’s reputation instead of focusing on ways to simplify, streamline and optimize the business to cut costs, boost profits and retain customers.

There is a better way that doesn’t take forever or cost a fortune.

1. Simplify
Every work area collects out-of-date equipment and materials. Keeping that junk around costs money and clutters the workspace. To trim costs and boost profits, start by going through every nook and cranny and throwing out everything that isn’t related to the current way work is done. Once the clutter is gone, it’s easier to streamline the workflow.

Then, organize and label the materials and equipment into consistent locations. It’s not unusual for work materials to be spread all over a workplace, making it difficult to find what is needed, when it is needed.

2. Streamline
The next step is to streamline the business by removing barriers and redesigning the work to minimize resistance and delays in the workflow. All businesses suffer from Lazy Product Syndrome (LPS). While employees work on the product or service for perhaps three minutes out of every hour, the product sits idle for the other 57 minutes (the 3-57 Rule). That’s why the elapsed time from order to delivery can take weeks instead of hours; hours instead of minutes; or minutes instead of seconds.

Take this test: Follow a customer’s order from start to delivery and notice just how little time is actually spent working the order. Notice how much time it spends in an inbox or an outbox or a queue somewhere. Notice how much time it spends waiting on the next step in its journey. The order spends 95 percent of its time waiting for something to happen.

The following is a list of the top causes of business insolvency, but in order for you to really understand these causes, first we need an understanding of what business insolvency means.

When a business is said to be insolvent, it means that it no longer has the capacity to repay its debts to its creditors in due time.

Business insolvency can result in receivership (A receiver is appointed by a court to act as a temporary director of an insolvent company to try rescue it from its debts), liquidation (the only option left if the company has no way to pay its debts but to liquidate itself), or total bankruptcy.

There can be varying reasons why companies become insolvent. And these reasons could either revolve around internal or external issues. Internal issues are is usually far easier to resolve, as they are within the company’s control. External factors, unfortunately, are usually out of the control of the company. The two top causes of business insolvency are as follows: lack of capital or funds to keep the business operating and poor financial management. Now let us examine each major factor.

Lack of capital or funds to keep the business operating

When a company doesn’t have a clear business plan with well-defined capital management, this can cause major issues. It is important to have a skilled, focused financial director in the company. They are responsible for ensuring the company is on course realise a good profit to sustain its operations.

Poor financial management

This factor is directly related to the first one above. This includes initiating a planned approach to spending and borrowing throughout the entire company, and ensuring checks are in place to ensure the company stays on course, and within budget in every department. When targets are not met, adjustments must be swiftly made to keep the company in line. In essence, your business requires a clear business plan and good cash flow management.

However, the causes of business insolvency are not only limited to these internal issues. There are also external factors that can adversely impact the business. Customers, business competitors, and constraints laid down by the government are only some of the external factors that are beyond the company’s immediate control.