By Deborah Barrie MBA
ACTION International Business Development Coach
Helping You to be Great at Business

So what is business failure? How can you tell when your business is going to fail, and make corrective action? Business failure is the last stage of an organization's life cycle. Organizational decline, leading to failure is characterized by management who has become reactionary. The result is inadequate or nonexistent planning and inefficient decision-making. What I find to be the most common reasons for business to underperform (low productivity, low profits) or fail (bankrupt, cease being) are as follows:

1. Poor cash flow management.

2. Absence of performance monitoring.

3. Lack of understanding or use of performance monitoring information.

4. Poor debtor management. A combination of not paying your debtor on time and not coodinating payments with incoming cash flows.

5. Overborrowing. The company is overleveraged and debt is not being reduced.

6. Over reliance on a few key customers.

7. Poor market research leading to an inaccurate understanding of the target customers wants and needs.

8. Lack of financial skills and planning.

9. Failure to innovate.

10. Poor inventory management.

11. Poor communications throughout the organization.

12. Failure to recognize your own strengths and weaknesses.

13. Trying to go it alone. Trying to do everything yourself and not seeking external help. Whether this external help be as simple as hiring additional staff or going to professional services such as a lawyer, accountant, banker or business coach.

Do you have any of these issues or challenges in your business? Don't panic. However, you need to act quickly to remedy the situation before it is too late.

Copyright © 2003 Deborah Barrie