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Ten Sure Ways to Business Failure
1. Inadequate Working Capital. Failure easily results if net working capital is inadequate to support the level of business, if an adverse legal judgment is predictable, or if certain plants or equipment are in need of immediate replacement or repair.
2. Poor Accounting Records. Account reconciliation is important for accurate record keeping, even in the absence of fraud. Obviously, without reconciliations, management cannot know whether the books and records are accurate. Failure to require monthly reconciliation of accounts leads to a significant problem in the accounting function.
3. Inattention to Controlling Costs. Once a business is started, controlling schedule and cost is the most difficult aspect of the entrepreneur's job.
4. Weak Understanding of Financial Statements. Many owners report that they are weak in understanding financial statements and other financial aspects of the company. A period of formal training to improve this common weak area is an example of the type of training you will need in order to take your company ato the next level.
5. Improper Training of Employees. Improper training of employees results in workers having inadequate job skills that may lead to waste of input resources. Poor training may also create conditions that endanger the health and safety of employees - both trainees and fellow workers. Doubtless a firm's failure to provide any training for the job task (not an unusual occurrence) can generate similar deleterious affects.
6. Failure to Plan far Enough Ahead. If you have the cash flow and plan far enough ahead you can avoid many of the pitfalls of small business.
7. Weak Internal Controls That Invite Theft. Poor internal controls contribute to opportunity and fraud. An employee who can both open a new vendor account and also pay that vendor provides an example of weak internal controls and a good opportunity for fraud.
8. Not Selling Aggressively. These days if you're not out selling you're being outsold. Even worse, you're not even having fun.
9. Carrying Inadequate Insurance. After all, what's the use of building up a company if you risk losing it by carrying inadequate insurance coverage?
10. Failure to Seek Professional Advice. Failure to seek professional advice when experiencing some kind of legal problem is a common error for entrepreneurs and managers
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More articles on running a small business
Protect Your Business in Good Times and in Bad With "Cushions" and "Parachutes"
Business Building Secrets for Small Business Owners
10 Ways to Pick Up Business in a Down Economy
Changing Your Business: Have You Created an Impossible Business?
Ten Steps to Becoming a Successful Entrepreneur
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