Overtrading - has it ever happened to you?

Just read this interesting article from Business Link on the topic of overtrading.
Quote: "Overtrading takes place when a business accepts work and tries to complete it, but finds that fulfilment requires greater resources - ie more people, working capital or net assets - than are available. This is often caused by unforeseen events such as when manufacture or delivery take longer than anticipated, resulting in cashflow being impaired."

Has this ever happened to you ... or could it happen to you?  
 

Overtrading is typically associated with retail or manufacture where your growth means that you need a lot more stuff that you buy in advance of selling it. A business often needs some hefty working capital to cope with this. Its one of the reasons that the banks play an important part in the business economy.

However, it very easily (and I think quite commonly) happens in the service sector - not to do with working capital though. Reputation grows .... Take on too much work ..... poor delivery .... reputation shrinks

Sole traders need to recognise this early, and come up with  a strategy - increase prices; limit work accepted; outsource admin tasks; develop a team

So, yes it could happen to me (and to be fair it has in the past)

It happened to me in the summer but I was able to outsource some of the work

Interesting replies guys.

@Carl How did you go about outsourcing? Did you have existing people you could turn to or did you have to find them in a rush and if so how did you vet them?

@Julian, I out sourced mainly to people I got to know through 4N. There are a handful of people on here that have similar services to mine so they werent difficult to find.

Vetting is very difficult without seeing their work but there has to be an element of meet, know and trust.

Hi Julian

I have also built up a network of contacts via 4N (and another networking group) so I know who to turn to or recommend as and when necessary.  They include an SEO consultant, web designers and marketing agencies. 

It has happened to me in terms of work coming in that I've not refused. Luckily I only sleep 4 hours in 24 so plenty of time to catch up. I once worked three days straight. Fortunately it wasn't writing work, 'cos quality would have dropped, but a spare pair of hands would have been useful.

Now I have the spare hands permanently with Matt.

If I get more work than I can comfortably take on, I have a network of people I recommend on to (I literally pass the work to them rather than outsourcing as such and controlling the process).

I did over-promise once and I got the project delivered on time but had to pull a late and an early to do it, and vowed to really work never to end up doing that again! So now I build in more time for jobs than I need!