What to do when your business is in trouble is a question no one wants to ask — but many business owners eventually do. Whether it’s falling revenue, late payments piling up, or that gut feeling that things are spinning out of control, the pressure gets real — fast.
The truth? You’re not alone. Thousands of Kiwi businesses hit rough patches every year. The key difference is how you respond. Ignoring the signs won’t make them go away. But taking calm, focused action can mean the difference between shutting the doors… or turning things around.
In this article, we’ll walk you through seven practical steps to assess where you’re at, make smart moves fast, and either rescue your business — or exit cleanly if that’s the right call. You’ll also find a helpful checklist and mental health tips, because you matter just as much as your business does.
Let’s take it one step at a time. You’ve got this.
How to know if your business is in trouble
Before you fix anything, you need to know what’s really going on. A lot of businesses wait too long before facing the facts. Here are some of the most common warning signs:
Declining sales and profits
If your income has been slowly dropping over several months, or margins are tightening, that’s a sign something’s off.
- Compare your current sales to the same period last year.
- Look at product or service profitability.
You can also dig into trends with tools like accounting ratios to see how your costs are tracking over time.
Example: A local café in Wellington noticed that even though foot traffic remained steady, their weekly profit was shrinking. After reviewing their numbers, they realised the cost of ingredients had gone up 20% and they hadn’t adjusted prices in over a year.
Cash flow problems and overdue bills
Struggling to pay bills, wages, or IRD on time? Cash flow is the lifeblood of your business. If it’s running dry, you need to act now.
- Are customers paying late?
- Are suppliers chasing you?
This is the moment to open your profit & loss and cash flow report, even if it’s uncomfortable.
Stress, burnout, and avoidance
You keep putting things off. Emails go unanswered. You dread checking your bank account. This emotional toll is real — and often the earliest red flag.
Don’t panic: assess your situation objectively
Start with a clear head. Even if it feels overwhelming, getting the full picture will help you make smarter decisions.
Pull up your financial reports
- Download your bank transactions, loan balances, and overdue bills.
- Use Xero or your spreadsheet to list where the money’s going.
It might be rough, but clarity is better than assumptions.
Write down what’s working and what’s not
- What’s still selling?
- What areas feel most under control?
Knowing your strengths will help you decide if the business can be saved or needs to change shape.
Ask yourself: can this be turned around?
Be honest. Not all businesses can or should be rescued. But many can.
Example: A Hamilton-based graphic designer saw a 50% drop in freelance projects. But rather than quitting, she pivoted to offering Canva templates and online workshops, turning things around in three months.
Talk to your accountant early
This is not the time to hide. Your accountant isn’t just a tax agent — they’re a problem solver.
Review cash flow, margins, and debt
They can help you:
- Forecast future cash gaps
- Spot unnecessary expenses
- Check your margin on products/services
Explore forecasting and breakeven points
Running a business without a breakeven target is like driving without a speedo. Work together to get a rough target.
Consider short-term restructuring options
Maybe you need to change your structure, sell assets, or pause operations temporarily. You might even benefit from the investment boost if you’re still in a position to invest.
Cut costs fast, but smart
Don’t just hack away at your expenses. You want to be strategic so you don’t cripple your business.
Eliminate non-essential spending
- Subscriptions you don’t use?
- Ad campaigns with zero ROI?
Cut them.
Negotiate with suppliers and landlords
They’d usually rather work with you than lose you. Ask for:
- Temporary reductions
- Deferred payments
Some landlords will say yes — especially if they’d struggle to replace you.
You might find this article useful: can I increase rent for tenants?
Consider staffing options
Reducing hours, offering unpaid leave, or hiring contractors instead of employees may ease short-term strain.
TABLE: Quick wins to cut costs
| Area | Example action | Savings potential |
|---|---|---|
| Software & tools | Cancel unused subscriptions | Moderate |
| Rent | Negotiate short-term reduction | High |
| Staff | Shift to part-time or freelance | High |
| Marketing | Pause low-performing campaigns | Moderate |
| Inventory | Sell excess or slow-moving stock | Low to moderate |
Example: A boutique store in Dunedin saved $1,200/month by renegotiating rent, switching to part-time weekend staff, and cancelling a $300/month social media scheduler.
Talk to your creditors before they talk to you
Silence is the worst strategy. Reaching out shows you’re taking things seriously.
IRD, banks, and suppliers
- Be upfront
- Keep records of every conversation or email
The IRD may offer instalment plans. Suppliers often prefer payment plans over debt collection.
Stay calm and professional
Even if you’re under pressure, keep things factual. Avoid overpromising.
IMAGE: Business owner on phone explaining late payment
Explore funding or a business rescue plan
Sometimes a little breathing room is all you need to turn things around.
Apply for working capital
Overdrafts, short-term loans or a small cash injection could help you survive a dip. Your accountant can suggest options.
Consolidate or refinance debt
Combining loans may reduce repayments and interest. This works well if you’ve had multiple loans pile up.
Consider a partner or investor
If your business is still valuable, bringing in support may be better than going it alone.
Example: A Christchurch mobile mechanic brought on a silent investor to help him expand his van fleet after nearly closing due to rising fuel and maintenance costs.
Make a decision: fix, pivot or exit
Not every business is meant to continue. That’s not failure — that’s clarity.
Can you restructure into something leaner?
- Smaller team?
- Narrower focus?
- Lower overheads?
Is there a different audience or offer that could work?
Pivoting doesn’t always mean starting over — it means adapting.
Time to exit?
If it’s time to close, do it properly. Our guide on bankruptcy walks you through the process.
Take care of your mental health
Running a struggling business can feel like carrying a backpack full of bricks.
Talk to someone
Whether it’s your accountant, a mate, or a mentor — don’t go silent.
You are not your business
Your identity, worth, and future go beyond your revenue numbers.
Learn from it
Plenty of successful entrepreneurs failed before they succeeded. The goal is to walk away wiser — and not broken.
External link: Mental Health Foundation – Business Loss Support
Bonus: business crisis recovery checklist
A quick list of small actions that make a big difference:
- ✅ Downloaded your P&L and cash flow
- ✅ Talked to your accountant
- ✅ Cut 3 non-essential expenses
- ✅ Contacted IRD or main creditors
- ✅ Listed 3 options: fix, pivot, or exit
Conclusion
If your business is in trouble, the worst thing you can do is freeze. Take a deep breath and face the facts — because clarity gives you options. Whether you’re restructuring, pivoting, or closing the doors, there’s always a way forward.
Start with the numbers. Get help from an accountant. Have the tough conversations. And most importantly, protect your well-being in the process. A rough patch doesn’t define you — how you handle it does.
If you’re unsure where to begin, contact us for help. We’ll connect you with someone who understands your situation and can guide you through your next steps.
FAQ about what to do when your business is in trouble
What are the first signs my business is failing?
Some early signs include declining revenue, poor cash flow, mounting debt, and emotional burnout. Reviewing your financials regularly is key.
Should I tell my staff my business is in trouble?
Yes, but carefully. Be honest without causing panic. Clear communication helps maintain trust and may inspire teamwork to get through it.
Can I get financial help to save my business?
Yes. Options may include short-term loans, government assistance, or tax relief. Talk to your accountant about what applies to your situation.
Is closing a business a failure?
Not at all. Sometimes closing is the smartest and most responsible decision. Many successful entrepreneurs have closed businesses before starting new ones.
When should I talk to an accountant?
Immediately. The sooner you get financial clarity, the more options you’ll have. Accountants can help with cash flow, debt planning, and restructuring strategies.