Management
Issue No. 4 - February/March 2002
Are you setting yourself up to fail?
Businesses fail for many reasons but as insolvency specialist John Morgan from accounting and business advisory firm Hayes Knight says, there is a pattern. In this report we look to see if your business is setting itself up to fail.
Business failure doesn’t happen overnight. It’s a series of factors that often the business owner fails to recognise or doesn’t want to address. And the problems are not only financial. So let’s take a look at unravelling the business failure process and what the symptoms are.
Normally, there is a sequence to business failure. Generally, management defects lead to mistakes being made, which leads to financial symptoms and problems and, ultimately, to failure.
The defects
Bad management People set up a business for many reasons but in general, it is because they have a particular skill or knowledge in the area. But being good at the job doesn’t necessarily make you good at running a business.
Getting the management mix wrong For many small businesses, the primary focus is on the operational side of the business. This means a focus on what the business is producing be it a product or a service. But there is a lot more to running a good business than just producing a good product. There’s strategic planning to map out where the business is going and how it will get there, financial controls to manage profit and cash flow, administration to keep track of what the company and its personnel are doing, and marketing to ensure that the product targets the right market.
The management mix is easy to get wrong, especially when your skills lie in a particular area. All businesses, whether big or small require a focus on each of these core areas.
Many business owners tend to be technicians, managers or entrepreneurs. The technician is the doer, the manager is the pragmatist, and the entrepreneur is the dreamer. Few have a good grasp on f...
