Warning signs of a Failing business
There are many symptoms of a failing business – and to find the ’cause’ and ‘effect’ is not easy at all. Here is an attempt based on knowing about 2 dozen entrepreneurs – many successful, and a few failed ones. Sadly there is not enough research about these failed guys who had to be supported by their parents, siblings, children, spouses, neighbors…..so we will not really know what caused the failure. Here are the tell tale signals:
1. Shortage of cash: The cash evaporates faster than it comes. The highly paid executives, the ‘strategy’ guys, etc. who have no guts to meet the customer suck off the cash, but in general, there is a cash shortage.
2. Statutory dues are not paid on time, vendor payments are delayed, short term investments are redeemed,….again leading to point no. 1.
3. No word of mouth referrals from existing clients (not sure if this the cause or the effect).
4. No ability to attract talent, flight of existing talent (the overpriced guys have no choice).
5. Alcoholism. Easy to spot. Egoism and Egotism -more difficult to spot (more the cause than the effect).
6. Low sales (cause or effect – I think both)
7. Zero customer interaction (do not be shocked, I was shocked when I saw it for the first time!!)
8. No innovation. Nothing at all.
9. No understanding of costing, cash flow, and pricing.
10. Complete lack of discipline – cleanliness of office, timing, sending proposals on time, follow up – nothing according to a fixed process or schedule.
Anything more? I could not separate the ’cause’ and ‘effect’….will try to do it at a later stage perhaps…..
Mira D
Extremely long lunch hours. People standing around gossiping, laughing.Key people run side businesses of their own. Both these can go into your discipline point.
At the beginning of my working life ages, I worked for one such company which was a sister concern of another successful, then privately owned company.The company I was with was treated as foster child.I struggled with all the sincerity and zeal of a newly minted mba before putting in my papers.
Rajiv Ahuja
Valuable insights.
VK
Looking at the examples of satyam, kingfisher, and now spicejet…a self-aggrandizing leadership is sometimes hard to catch until after it’s too late. It gets harder when you have cheap and easily sold auditors abetting account fudging!