What Are The Major Reasons For Business To Fail

Major Reasons

Symptoms

Under-managed

• No comprehensive and understandable business plan and strategy;

• Lack of timely decision-making;

• High turnover of capable employees;

• Inadequate or untimely management information;

• Limited knowledge about customers and market conditions;

• Inadequate or unrealistic assessment and projection of cash needs

• Excessive corporate politics ;

• Inadequate delegation of authority.

Over-diversified

·   Lack of clear core business;

·   Operating executives managing more than one business unit;

·   Extensive vertical or horizontal integration;

·   Inadequate time or interest from senior  management;

·   Lack of response to deterioration in performance.

Lack of emphasis on all level of the buying and or spending decisions

·   Inadequate costing and reporting system;

·   Inadequate budgeting;

·   Lack of forecasting and comparison to actual results;

·   Ineffective or non-existent efficient tracking systems and related incentive plans;

·   Backlog build up;

·   Missed delivery schedules

·   Excessive returns;

·   Low bid success rate

·   Production bottlenecks

·   Excessive out-of-stock occurrences or downtime;

·   Excessive rework

·   Lack of a constant pursuit of cost measurement and improvement

Under-capitalized

·   Stretched payments to suppliers;

·   High debt/equity ratio;

·   Excessive debt principal repayments;

·   Use of trade line to make principal payments;

·  Declining availability on credit lines

·  Defaults on lender covenants

{ see article on COMPANIES WHO ARE OVERTRADING }