In today’s world, there are millions of businesses and commercial activities, each with its own unique world of services, employees, and finances. While some businesses thrive, grow, and maintain stability, others decline and lose money until they reach the brink of bankruptcy. What leads businesses to bankruptcy? How does a company fail to achieve growth and compete with other companies? Here is the correct answer and how to correct the company’s course and save it.
Why Businesses Go Bankrupt
The first reason is the CEO and the board of directors in general! Yes, you read that right! The CEO and other managers are responsible for more than 90% of the reasons for the company’s declining growth and bankruptcy. The CEO is the company’s nerve center and is similar to a car engine. If the engine fails, the car will never run.
Second: Poor spending: When any new company is established, a specific budget, capital, and spending plan are set. However, despite this, most of these companies face unforeseen challenges, additional expenses, and changes in the scheduling of plans from time to time. This in turn leads to the deterioration of the company’s condition towards the bottom, and therefore it is possible to reach the brink of closure unless it is saved by pumping additional investment or correcting the course.
Third: Failed plans: Do you know what you are doing? And are you confident that it will succeed? On what basis do you make decisions? The answer to these questions may determine the fate of entire companies. Poor planning and weak strategic vision will inevitably lead any company to a weak position among its competitors, and may subsequently lead to its bankruptcy.
Fourth: Do you have qualified employees? If the CEO of the company is like the engine of a car, then the employees are like the fuel it runs on! Let’s ask another question: Have you ever tried to compare the performance of the employees in your company to the employees of a competing company? Is the quality of the services you provide better than your competitors? Are employees happy with work, or do you notice that they are always complaining? This highlights another important point: the workforce. Of course, the answer is easy and clear, and gives you an idea of what will happen if the employees are not happy with work, or if they are not well qualified to work even!
Fifth: The right market: The company may succeed in providing services or products of very high quality, and succeed in preparing everything necessary to develop the work and market it, and have the right employees to work, but it fails to target the market. This in turn will lead to stagnation in the company and then bankruptcy. It’s like selling Christmas clothes in Saudi Arabia!
How to Avoid Bankruptcy and Restore Growth
The turnaround of any company depends on many factors, starting with the company itself and its current situation, and most importantly the intention of the board of directors to make a real change. In the beginning, you must go back in time a little:
Put a piece of paper and pen in front of you and be ready to answer the following questions:
- Do you have enough to pay employees’ salaries for the next 6 months?
- What is the biggest achievement your company has achieved in the past 6 months, and are you able to repeat that achievement?
- According to your company’s statistics, are you facing bigger problems in the quality of services or products or sales problems?
- Are you facing a sharp shortage of liquidity and financing? How much loss can be tolerated without reaching bankruptcy?
- Are your competitors facing the same problems?
These questions are part of an extended model for a comprehensive assessment of the current situation in your company. This assessment is the basis for rebuilding the company from scratch. After completing it, you can identify the weaknesses and weaknesses in the company and work to fix them. For example, if you are facing liquidity and financing problems, you have multiple options to address this point, such as borrowing from a local bank, starting an investment round after updating the business plan, reducing expenses and managing expenses. You can also lay off some employees and contract with companies that perform the same tasks and focus only on improving sales. In the event that there was a major achievement by the company at some point in the past, you can go back to it, analyze it, and understand it well, and then build around that achievement to repeat and develop it.
In general, any company can be protected from bankruptcy and its course can be corrected through a comprehensive assessment in the beginning, and then updating plans and strategies, and most importantly of all: finding what distinguishes the company from the rest of the competitors and working on it and developing it.
