What’s the deal with companies who can’t keep pace with the changing business environment and end up failed? Is it because they just stand idly by, taking no actions to keep their business afloat?
In reality, many businesses fail to adapt to changing business environments because of inner management issues and become reliant on current strategies that “supposedly” works. Here’s how good companies went bad. Check it out.
Bad corporate governance. We are accustomed to corporate faults hitting newspaper headlines. The top reasons why businesses become entangled in struggles are often complex but have one shared denominator. The issue of governance, either in its lack, unfitness or lack of effectiveness, is always at the heart of this failure.
The chief purpose of corporate governance is to enable effective, business and practical management that delivers long-term achievement of the company. Therefore, ensure that you have a reliable corporate governance in place – and assess it if you feel that the business lacks proper management.
Starting for the wrong reason. Forbes says that more that more than 500,000 businesses start each month – and many are for the wrong reason. You will stand a much better chance to make your venture a success if you start it for the right reasons. These include having a strong grasp of management, passion for what you will do, a positive mindset that will keep you going when others give up as well as a willingness to study the skills required to run a business.
Trying to expand too fast. Many companies have experienced bankruptcy because of the business owner’s reach going beyond what he can manage. A business should only expand only after careful review, researching and analyzing what they need regarding new facilities, systems, and employees. While it may be good to do much of the work early in the life of the business, that won’t be the case after you expand. Just remember to keep it slow and steady- this wins the race.
Poor marketing efforts. Advertising/marketing during good days is necessary, what more when business is bad? There are many companies who go out of business just because the management fails to promote and market. Just the traditional marketing style won’t work in an age where consumers can choose from hundreds of different providers. You need to get your brand and its message seen and heard. Just by creating a website and social media page, you’ll be putting your business ahead of your competitor.
Underestimating the competition. Business, even big ones go out of business because of underestimating the competition. Having a sound business model, plenty of funds and management skills won’t be enough if you disregard your competition. To boost your success, run a competitive analysis as part of your market analysis. Evaluate your competitor’s strengths and weaknesses and utilize strategies to enhance your competitive advantage.
The bottom line
Effective management and leadership skills are vital to business-building success, therefore, lacking either of it can lead to misunderstanding and conflict within your staff, reduced morale, and even productivity.
Try to make skill acquisition a priority to strengthen areas where you know the business is weak. Start by reading books on leadership, joining peer advisory groups or ask assistance from industry experts to know more about good corporate governance. Remember, where you lead your business today will dictate where you will be in the future.