Avoiding the top Five Hidden Company Killers

Having the Success  ‘X’ factor, is often what makes a company stand out from others when it comes to surviving in the long run. It also determines how well, the success and failures that a company might face during its lifetime are bourne. If properly prepared and executed, key success factors can take a company into areas far beyond its competitors. You obviously wouldn’t deliberately put your own company out of business. But you could accidentally sink your firm, warns best-selling author Jack Garson in his latest Huffington Post article.

There are numerous possible causes that can end the dream of an entrepeneur. The most devastating are not enough customers, insufficient revenues, disruptive competitors, a shortage of funds, poor execution of a business plan, uncontrolled expenses and minimal gross margins. In fact, any combination of these difficulties will adversely affect a company’s ability to generate a sustainable profit.

In a caycon article, Akira Hirai offered some help in Identifying & Mitigating the ‘Company Killers’:

“Companies flatline when the cash runs out and total current liabilities (i.e., bills due now) exceed total liquid assets. Risk management is all about identifying and mitigating the uncertainties – especially the company killers – that surround cash flows. “Uncertainty plagues businesses in countless ways, but we can group most company killers into the following categories”:

  • Market Risks
  • Competitive Risks
  • Technology & Operational Risks
  • Financial Risks
  • People Risks
  • Legal & Regulatory Risks
  • Systemic Risks

Jack Garson, an attorney, business writer and author, says that while some “company killers” i.e the risks with both a relatively high likelihood of occurrence and major consequences, are obvious — competition, obsolescence and too much debt —   you still need to keep your eye on five high-priority but hidden threats that could blindside you.

Garson has been a go-to source for reporters at The New York Times, The Washington Post and Bloomberg Businessweek, and has a track record as a successful negotiator of commercial transactions including the purchase and sale of multi-million dollar businesses, the structuring of eight-figure construction contracts, and the sale and leasing of commercial properties throughout the United States.

Here are his insights:

1. Bad Customers

Some customers just aren’t worth the trouble, observes Garson. If you want to make money, especially when times are tough, focus on solid paying customers, not time-sucking clients who don’t pay.

2. Employee Turnover

A lot of businesses call employees their most valuable assets, but some don’t really mean it. Actions speak louder than words, and employees know full well whether their employer’s love is real or fake. When employees quit, the company incurs a host of nasty costs. Garson’s Huffington Post column offers tips for boosting retention.

3. “Supervision? We don’t need no stinkin’ supervision.”

Lululemon’s peekaboo pants. Carnival’s transformation from popular cruise line to late-night-joke punch line. The New England Compounding Center’s contaminated injections. The news is full of quality-control horror stories that can not only damage short-term business but also hold the potential to kill customers — and whole companies, says Garson.

4. Whoops! We Broke the Law

If you like orange jump suits, supervised family visits, and mega-million-fines, go ahead and let sales-driven employees dream up new products, propose them to prospective customers, and only then seek quick, cursory approval from your lawyer. Better to adopt what Garson calls a “culture of compliance,” as well as retaining — and heeding — skilled legal counsel.

5. Crashes: Plan for Disaster

As Garson observes: “Stuff crashes—stock markets, power grids, computers, even meteors. You need to be prepared for unexpected disasters.” If you’re spending big money on incomplete insurance coverage, for example, trusting in inadequate computer back-up, or relying on a sole supplier for a critical product, you will be unable to withstand a disaster. Plan for the worst.

Company killers can sneak up on you and strike like lightning on a sunny day. With the foresight to address problems that aren’t obvious, you can protect your company and prosper.

One response to “Avoiding the top Five Hidden Company Killers”

  1. Supervision is critical in the success of businesses, and in particular, small businesses. All companies have employees who just aren’t doing their job correctly; some are just improperly trained while others are aware and just too lazy to do the job right. Too many times mistakes are made within small businesses that have a long-lasting ripple effect with customers. All it takes is one bad experience for a customer to start looking for better options. It is critical that supervision is thorough, consistent, and the manager is well disciplined. The employees must also be evaluated on a regular basis. Not only will this prevent more mistakes, but it shows employees that management cares about them and their work. It also adds more value to their work, which in turn, adds more value to the final product.

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