No two companies are identical, and this also means there are a variety of reasons companies experience difficulty. While the number of variables involved in operating a company are practically endless, let’s take a look at a handful of common reasons businesses can get into trouble.
Lack of Focus
Companies that lack focus can often run into considerable trouble. Not understanding their customers and what they need or want can lead to endless problems. It is vital that companies frequently stop and assess who their customers are and whether or not they are properly servicing customers’ needs.
Many companies experience difficulty because of poor management. Management problems are not one-dimensional, but instead take a variety of forms. Management that isn’t focused, is incompetent, or simply doesn’t care about the business can translate into a business’ premature demise.
Under the umbrella of “management problems” also falls such missteps as poor financial controls, quality control problems, operational issues, and/or not keeping up with technological advancements. Actually, many of the problems on this list of “troublemakers” have at least some management issues at the core.
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Loss of Key Employees or Clients
The loss of a key employee or a key client can spell serious trouble. Of course, no management team can predict every eventuality. However, when there is a loss of a key employee or client and there is no plan for replacement, then management shoulders at least some of the blame. The savviest companies take steps to ensure there are ways to replace the most important employees and clients.
Failure to Compete
More than one business has been buried by the competition, or the failure to see a new wave of competition coming. For example, countless mom and pop video rental stores were bludgeoned by the introduction of Blockbuster Video a generation ago.
While it is true that sometimes market forces are so aligned against a business that survival is almost impossible, that is normally not the case for most businesses on a year-to-year basis. The most effective and competent management can see the competition on the horizon. Or at bare minimum, they have an emergency plan in the event that the competition becomes more intense.
All too often by the time a business realizes that it is in trouble, it is already too late. If the problems can’t be fixed, then it may be time to consider selling the business. But such decisions must be made quickly in order to prevent additional losses.
Optimally, a business is sold while it is doing well. Regardless of whether a business is thriving or experiencing difficulties, a merger and acquisition advisor can be an invaluable ally in helping a business reach its full potential.