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Jagella
03-03-2009, 04:10 PM
I'm sorry if this subject is a bit negative or pessimistic, but business failure is always an option any business owner should recognize as a possibility. I've created a list of signs that may spell doom for a business although they might still be overcome:


An Impending Recession
Technological Change that Drastically Reduces Demand for a Product
Inability to Adapt to New Manufacturing or Production Processes
A Poorly Conceived Business Idea That Has no Market or Cannot Target Its Market
A Lack of Sufficient Capital for Startup
Inept Management
An Impending Cost that Cannot be Paid and Will Probably Result in Technical Insolvency
Inability to Properly Manage Human Resources
Inability to Compete With Other Businesses in the Same Industry
A Natural Disaster that Has not Been Insured Against


Item 3 may deserve a few comments. Baldwin was one of the most successful locomotive manufacturers. Unfortunately for Baldwin, it was best at producing steam locomotives, and when diesel-electric locomotives started to rapidly replace steam locomotives, Baldwin's factories were simply not efficient enough to produce the new locomotives as well as GM and GE. Baldwin went out of business as a result.

There's a lot more, I'm sure, but I'll leave that up to you.

Jagella

rezzy
03-03-2009, 04:54 PM
I agree with some these items while others are not good indications at all.
I agree with=

Technological Change that Drastically Reduces Demand for a Product
A Poorly Conceived Business Idea That Has no Market or Cannot Target Its Market
Inept Management
An Impending Cost that Cannot be Paid and Will Probably Result in Technical Insolvency
Inability to Properly Manage Human Resources
Inability to Compete With Other Businesses in the Same Industry
A Natural Disaster that Has not Been Insured Against

An Impending Recession
I think this a weak determinate for whether a business will do well. Some businesses will always do well in recessions and can even do better. For instance, Mc Donalds has seen increasing sells as people eat their cheaper foods. Places like Panera and Starbucks are struggling because of their price point and overall marketing.

Inability to Adapt to New Manufacturing or Production Processes
If a business is not able to adapt to a new process, but has a well enough differentiated product they could still maintain loyal customers for a amount of time. For instance, if instead of grinding coffee bean they were pressed, some people may like the richer taste of a ground bean vs the pressed.

There have been many times in history particularly in video formats, where a lesser quality was accepted for an unusual reason. The Vhs vs BetaMax comes to mind.

A Lack of Sufficient Capital for Startup
Maybe this needs a further explanation, but I think not having enough capital is not the end all for a business. The example I am considering is a store. And less reuse the coffee idea. This business cant afford certain equipment to grind or press their beans, so they order pre-pressed and ground beans. Although its less fresh tasting, consumers like the environment or whatever.

I think trying to tye a failing business into a pinpointable list is impossible. There are tale tale signs, a business is not living up to expectations, looking at its balance sheets. Am I way off in my thoughts?

Jagella
03-03-2009, 05:37 PM
An Impending Recession
I think this a weak determinate for whether a business will do well. Some businesses will always do well in recessions and can even do better.

Sure, some businesses may do better in a recession, but as we all know from the example of The Great Depression, economic hard times can ruin businesses.


For instance, Mc Donalds has seen increasing sells as people eat their cheaper foods.

That's an interesting counter example. I must wonder if people consider the costs of the poor health that may result from fast food, but that's another subject.


A Lack of Sufficient Capital for Startup
Maybe this needs a further explanation, but I think not having enough capital is not the end all for a business. The example I am considering is a store. And less reuse the coffee idea. This business cant afford certain equipment to grind or press their beans, so they order pre-pressed and ground beans. Although its less fresh tasting, consumers like the environment or whatever.

Your example doesn't really disprove the need for sufficient start-up capital. It demonstrates that start-up costs can be reduced through clever use of what start-up capital is available.


I think trying to tye a failing business into a pinpointable list is impossible. There are tale tale signs, a business is not living up to expectations, looking at its balance sheets. Am I way off in my thoughts?

Rez, I'm listing signs that a business may fail, not that it must fail.

Jagella

SteveC
03-03-2009, 05:45 PM
It is easy to think of reasons why a business will fail... however a similar list can be made anytime... be it in time of recession or not... businesses fail and a large percentage of start-ups fail... mainly I might add to a lack of capital and an inability to sell...

Perhaps it would be a better idea to make a list of why businesses succeed:

The owners have the drive, the passion and the enthusiasm to succeed.
The owners are willing to learn and adapt to the needs of their business.
A business and marketing plan – this is especially important for start-up businesses.
A product and service that is in demand.
Sufficient capital and a realistic cash flow forecast.
An ability to sell, and if you cannot sell learn to sell, fast as you’ll never have sufficient customers until you do.
A belief in yourself and your business so that as you fail you learn and can pick yourself up and go again and again until you overcome failure and become successful.

orion_joel
03-03-2009, 07:24 PM
The only one that i believe is not something that can be overcome by changing the business or adapting it to circumstances is 6. Inept Management. All of the others can be overcome or worked around to meet a new need, a new process or adapt their model, however inept management is often something that cannot be overcome because it is the inept management that would need to make a change they are incapable of realizing needs to be made.

Blessed
03-03-2009, 09:03 PM
I have several issues with your list Jagella mainly because I think all of those things can be worked through... if the owners of the business have the characteristics on Steve C's list.

Dan Furman
03-03-2009, 09:53 PM
Here are my warning signs for inevitable business failure:

The sun starts to look larger every day, and it's getting much hotter...

Giant wall of water rushing towards you

THE DEAD WALK!

Big mushroom clouds... all over the place

You catch the end of a news bulletin, which says "and they appear to be immune to our weapons"

Any of those, I'd say your business is @#$%. Most else can be overcome. :)

Jagella
03-03-2009, 10:52 PM
The owners have the drive, the passion and the enthusiasm to succeed.

And they need to be able to sustain the drive, the passion and the enthusiasm to succeed through good times and bad times.


A product and service that is in demand.

Which results from the business and marketing plans.


A belief in yourself and your business so that as you fail you learn and can pick yourself up and go again and again until you overcome failure and become successful.

People should think of “failures” as “course corrections.”

Thanks for the input, Steve.

Jagella

Jagella
03-03-2009, 10:58 PM
The only one that i believe is not something that can be overcome by changing the business or adapting it to circumstances is 6. Inept Management. All of the others can be overcome or worked around to meet a new need, a new process or adapt their model, however inept management is often something that cannot be overcome because it is the inept management that would need to make a change they are incapable of realizing needs to be made.

Why not just hire new management if the current management is as capable as Beavis and Butt-head?

http://www.comic-lair.com/beavis_butthead0690.jpg

Yes, they can all be overcome.

Jagella

Jagella
03-03-2009, 11:01 PM
I have several issues with your list Jagella mainly because I think all of those things can be worked through...

Jenn, I am remiss for miscommunicating my point. I never said they cannot be worked through. Just to try to make my point clearer I have edited the opening post to make that possibility less vague.

Jagella

Blessed
03-03-2009, 11:02 PM
I think what we're seeing in the response to this initial post here is that most of us on this forum are entrepreneurs - we have a different mindset than the people who just go work for someone else and come home every night.

Pretty much my brother-in-law and I, who both own our own businesses have a lot the same mindset about those businesses. I do graphic design, he does cabinets and custom kitchens but we both stay busy, we're both successful and we're not rich yet but it could still happen. On the other hand my husband and his sister (my brother-in-laws wife) have a really hard time dealing with the fact that their spouses are self-employed and that means that the income will fluctuate. My husband is always pushing me to take on big clients that will guarantee me at least a certain amount of money each month, and doesn't "get it" that just because I start working for a big client I can't let my smaller clients and new leads go by the wayside in hopes that I'll always get to work for the big client. My sister-in-law is always pushing her husband to work at least part-time for someone else so that they have some reliable income.

In my opinion, my husband and his sister would have a difficult time being successful working for themselves, because they need the security of a predictable income too much.

OK, now we're off topic, but anyway... :D

Jagella
03-04-2009, 12:22 AM
My husband is always pushing me to take on big clients that will guarantee me at least a certain amount of money each month, and doesn't "get it" that just because I start working for a big client I can't let my smaller clients and new leads go by the wayside in hopes that I'll always get to work for the big client.

Yes. Don't put all your eggs in one basket, as they say.

Jagella

Blessed
03-04-2009, 09:00 AM
...My sister-in-law is always pushing her husband to work at least part-time for someone else so that they have some reliable income...

In her defense I should add that they have three kids and she doesn't work so her husband's income is their only income. Before he went full-time for himself he worked at Ford. He was able to go full-time for himself because of the buy-out Ford offered when they did a big lay-off about five years ago. At first he had so much work he couldn't keep up. With the economy and housing market around here work has dropped off. He does still make enough to keep them going and they do have some funds in reserve, but he isn't really making enough to add to that reserve right now. Fortunately, when things got really bad last summer/fall, he was able to start working some for a local cabinet shop he had worked for in the past doing their touch-up, custom work and etc... When they keep him busy full-time it gets to be a problem, but right now they only keep him busy part time and have provided him with a vehicle and a gas card that he can use for all of his cabinet work - so that has helped them out quite a bit.

Dan Furman
03-04-2009, 01:25 PM
but right now they only keep him busy part time and have provided him with a vehicle and a gas card that he can use for all of his cabinet work - so that has helped them out quite a bit.

Just my .02 - This is somewhat dangerous if they depend on this.

I'm not a fan of arrangments like this - I'm of the mindset that either you work for yourself, or you don't. The "half and half" thing is great when times are good, but in bad times, you could find yourself with nothing very quickly, because neither side was really fleshed out / established.

Blessed
03-04-2009, 01:54 PM
Just my .02 - This is somewhat dangerous if they depend on this.

I'm not a fan of arrangments like this - I'm of the mindset that either you work for yourself, or you don't. The "half and half" thing is great when times are good, but in bad times, you could find yourself with nothing very quickly, because neither side was really fleshed out / established.

This is why my BIL isn't a fan of the arrangement either. Last fall/winter his work was really slow because of concerns about the economy, the bailouts, all the layoff happening in our area, etc... He wanted to rely on the money they had set aside for this type of thing - the cabinet company called and needed his expertise on several projects that one of their guys had messed up. When they offered this position he accepted it as a compromise with his wife to keep things happy at home. Now, things are leveling out, people are starting to get their tax refunds and he is getting busy. Since he's basically working two jobs he's gone a lot and his wife gets frustrated with that.

It's something they are still working through and I definitely don't know all the details of their financial situation I just know the surface. I handle all of my BIL's advertising and marketing so we end up talking about business a lot and my SIL and I are close so we end up talking about family frustrations a lot so I hear both sides of the story - but never the complete both sides of the story. The good thing though is that they have a good relationship and I'm sure they'll figure out what they need to do to let the cabinet business expand to its full potential while at the same time maintaining their family time and the financial security they need as a family.

billbenson
03-11-2009, 01:43 PM
As long as we are off subject; there are some people who just can't work for themselves. My wife is one. She has good sales personality and with some guidance could be a great sales person. She's written a hobby web site or two and has great computer skills. I've tried to get her to do something on line, but she just won't do it. I think its a case of not being able to work outside a structured environment.

seema
04-14-2009, 05:19 AM
Its a rule if you want to achieve success you have to watch out details which have to suffer loss. If you have to take alternate plans you have minimum risk. First you have to know that what your risk possibility in business