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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 _____Diversification _____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.
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Copyright 2005 Critical Care for Companies |