Critical Care for Companies :: Emergency Counseling for Businesses
12 Steps: Executive Overview
Step 1: Why Businesses Fail
Step 2: How to Know if Your Business is in Trouble
Step 3: Are You Prepared for the Task
Step 4: Turnaround Leadership
Step 5: Organizing Your Turnaround Team
Step 6: Stop the Bleeding (Cash)
Step 7: Problem  Diagnostics
Step 8: Marketing During the Turnaround
Step 9: Developing the Turnaround Plan
Step 10: Down-Sizing Staff
Step 11: Dealing with Creditors
Step 12: Financing During the Turnaround
Disclaimer-Please Read


Self Audit of Possible Factors Causing Problems in Your Business   

Now that you have some understanding of the reasons businesses fail, I have developed an exercise to work through and which will assist you in shedding more light on your specific business problems. Rate each of these failure factors from 1 to 10. Where scoring an item a "1" indicates it is a non issue for your business and scoring an item a "10" means it is a BIG issue.

Failure Factors Rated on a scale of 1 to 10 (1 being least and 10 being most significant)

_____Failure to focus on a specific market niche (trying to be all things to all people

_____Failure to control cash by carrying too much stock, paying suppliers too promptly and allowing customers too long to pay

_____Failure to control costs ruthlessly

_____Failure to understand your customer's needs

_____Having poor or inaccurate market research

_____Failure to build a team that is compatible and has the skills necessary for finance, operations, sales and marketing

_____Failure to pay taxes when due

_____Failure to grow the business…. merely attempting stability and not growth as an objective 

_____Failure to penetrate new markets

_____Under-capitalization when starting the business

_____Cash flow problems resulting from poor cash management/cash forecasting

_____Non-payment by customers

_____Poor sales & marketing (strategy and/or execution)

_____Poor or unfavorable leasing agreements

_____Loss of financial backing by banks or investors

_____Tougher market conditions then anticipated

_____Poor management practices (delegation-hiring-performance reviews, etc.)

_____Business diversified into new, unknown areas but lacked experience to be successful

_____Key staff left the business, set up a competing organization and took customers with them

_____Senior Staff spending too much money on frivolous purposes thus burning up working capital

_____An overall lack of working capital

_____Bad debts that were not managed properly 

_____Personal extravagance

_____Fraud, theft, or other illegal activity

_____Legal disputes

_____Falling property values

_____Marketing and sales problems

_____A failure to plan ahead, beyond the day-to-day running of the business

_____General rise in costs

_____Bad financial management

_____Extended lines of credit

_____Poor billing practices

_____Poor cost control with too many people responsible for purchasing

_____The business widening its range of suppliers simply to make more credit available

_____Rising inventory levels and static or declining sales

_____Contract disputes

_____The business being overly reliant on one or two main customers

_____Borrowings being increased just to keep the business running

_____The business is unsure how much it owes and how much it is owed

_____Under pricing

_____Poor quality of product or service

_____Bad labor relations

       _____Failure to change and adapt to a changing environment

       _____Under capitalization & over expansion


       _____Overall Poor controls (financial & operations)

       _____Over-dependence on a key employee, customer, supplier

       _____Poor location

       _____Unprofitable pricing (not knowing breakeven point)

       _____Government red tape

       _____Excessive overhead


After scoring your business on each of the failure criteria, take note of any items that received a score of 7 or above. These will be used when we get into the business diagnostics phase of the turnaround program.






Copyright 2005 Critical Care for Companies
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Exodus Design Studios