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9 signs your employer may be going out of business – and what you should do

If your employee perks are cut, it may be a sign that your company may be going out of business, experts say.
If your employee perks are cut, it may be a sign that your company may be going out of business, experts say. Cameravit/Getty Images

It’s never a good feeling when the company you work for lets you go unexpectedly.

Whether it’s because of budget cuts or the company has closed its doors without warning, one can’t help but wonder if there were signs leading up to the event they may have missed. And if given the choice, would they have stayed with the company until the end, or would they have left before the changes occurred?

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“If a company is going through a tough time and people are being let go, it creates a culture of fear within an organization,” Nathan Laurie, president of Jobpostings.ca explains. “People don’t know if they’re going to have their job next week. It’s also a big distraction on productivity because some people are using their time at work to look for other jobs, and it’s hard to stay focused at a job when you don’t know if you’re going to have that job next week.”

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While hindsight is 20/20, being aware of some of the common signs can help you recognize when a company is in trouble. That will not only help you prepare but also give you more time to make decisions about the future of your career.

First – do you notice if projects are slowing down? If that’s the case, or you find that you’re not getting the same volume of work to do, career coach Lee Weisser of Careers By Design says that could a sign.

Another sign is if the rumour mill is active about changes in your department or other departments that no one seems to know much about.

Other things to notice according to Weisser include:

  • If there’s a lot of turnover in the leadership. This creates uncertainty in the organization
  • You hear from a supplier that their bill has not been paid on time
  • Your boss seems secretive and unable to answer your questions about what’s next

That’s not all, though. Laurie also says to look out for these three red flags:

  • If people around you are being let go
  • Do budgets seem to be an issue? For example, are there talks of budget cuts, or a limited budget?
  • Are office supplies at a minimum? Simple office supplies like pens and highlighters always seem to be out and never replenished
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And don’t forget to pay attention to these warning signs as well, Angela Payne, general manager of Monster Canada says.

  • If employee perks are cut. This, she says, can include cuts to benefits, company parties or other outings, or even something smaller like snacks or drinks the company would typically provide to employees
  • Diminishing communication. If you notice the company struggling to communicate certain aspects of the business related to operations, this is a sign. A lack of transparency can indicate the company has something to hide.
  • Morale is low

But what should an employee do should they notice these signs – should they stay until the end, or leave before it’s too late?

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“It’s important for an employee to seek out answers before jumping to conclusions,” Payne points out. “In a situation where you anticipate your company may go under, there is no harm in developing an exit strategy that you can execute once you gain more clarity into the situation.”

Being prepared, she says, can help expedite the job search process should that be needed. Remember, though, that you may also have tenure and therefore be entitled to a package.

Deciding to leave is a tough call to make. Should that be your choice, rather than panic, Weisser says there are things you can do that will prepare you for taking the next steps in your career path.

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“Prepare your accomplishment stories — projects you have taken on (and completed), skills you have used in these projects, and the bottom-line results for the organization,” she says. “These will be important stories to transfer to your resume and talk about in upcoming interviews.”

Keep your LinkedIn profile up to date, as well as your résumé with a summary of the strengths and skills you have used recently that you want to use again in your next role, Weisser adds.

Also, don’t stop networking both in person and online. Be prepared to tell people who you are, what you can do and what you want to do in the future.

And whether or not you decide to stay until the end, Weisser says not to wait until you are forced out of the organization to engage in an active job search.

“It can be very unsettling and stressful to be in an organization that is failing,” she says. “Make plans to leave with your head held high and without burning bridges.”