Ten Real-World Factors pointing to Commercial Failure
Lack of Management & Administration. Take control and responsibility by instituting controls and balances throughout the business and in so doing, oversee the decrease in swindles and internal deception/fraud and prevent embezzlement of funds and/or pilfering of inventory or property.
Incomplete Financial Accounts. Ensuring detailed accounts – weekly & monthly - and a proper and apt record of sales, purchases, in & out cash is vitally important. Keep a record of how much money is on hand and how much is owed in order to keep focus of the big picture of the business. Always maintain accounts up-to-date with relevant details.
Ignoring the Analysis & Message of Financial Accounts. Maintain full control over Receivables & Payables. A company might show signs of a profitable year, yet be short of cash due to disregard for proper systems. An example of disregard for proper systems is failure to manage and supervise debtors and creditors.
Inadequate Working Capital. A business must maintain a financial safety net. Ongoing progress and growth of any business is essential and must, by all means, be supported with a financial ‘shield’. Don’t be misled seeing that a business might be able to survive for a short period with a limited amount of working capital – regrettably, these funds eventually run out.
Neglect at Controlling Overheads. Create a detailed information system that follows every cost, big or small, in each separate business department. The system ought to track actual man-hours used in order that labour overheads may be managed and controlled.
Ignoring the Development & Training of Staff. Staff being pro-actively involved in the running of the business as well as staff development and training promotes a great feeling of ‘belonging’. Set up an environment and atmosphere of team work and care for each other’s departments to generate motivated and incentivised employees.
Poor Customer Relations and Sales. Communicate with customers about their needs and your company shortcomings. The extra attentions and care that your customers experience will raise your company’s image above the competition and have a positive effect on sales.
Lack of Strategic Planning. Create realistic goals that can bring about realistic results. Structure the strategic plan within realistic time parameters. Ensure that you incorporate staff considerations and feedback. Always review every plan very regularly to ensure it is on track.
Review Key Business Conditions. Companies can progress and develop regardless of fiscal conditions if they continuously review the overall picture of the business. Management teams must have better controls over factors that cause companies to fail. The combination of different business conditions must be looked at in macro as the business continues to progress and develop.
Lack of Adequate and Appropriate Insurance. Business owners must business should carry long-term disability insurance. Furthermore, correctly structured life insurance protects business owners and their families from potential financial hardship in the case of any disasters, for example fire, water damage, etc. Stocks, plant & machinery must also be correctly insured.