Currently there are many factors that are the cause of the failure of numerous companies, statistical data shows that the most difficult years in a lucrative society are the first five years, many of them do not reach their first year and only 5% It reaches more than 5 years, this essay will address the main causes that contribute to a business not having the expected success, today there are thousands of companies and very few are those that have dominance in the market. what happens in Mexico? And perhaps that question is not of great importance, but what can be done to prevent companies from going bankrupt? since it is investment that allows social development, and economic stability in the country.
Developing a company is not a simple task, the foundation, the bases and the ideas must be very clear, doing a company is not deciding on careers or just for the idea of generating profit, but following a series of steps that make you walk the company and lead it to discover the true meaning of its creation, some analysts of this type of situation mention very important points that we will address.
1. Create a company for bad reasons
Do you think the only reason to start your own business is to want to make a lot of money?
2. Bad company management
Millions of studies on company bankruptcy state poor management by the owner or manager as one of the most common causes of failure.
3. Insufficient capital
A common fatal mistake for many companies on the way to bankruptcy is having insufficient working capital in the first months of operation.
4. Location, location, location
Location is essential to the success of your business, and considering that a good strategic location will allow a struggling business to survive and prosper.
5. Lack of planning
Anyone who was already responsible for a major event that was successful knows that without careful attention, strategic planning and hard work, they will have no future.
6. Inordinate growth
One of the main causes of company bankruptcy lies in overdevelopment or growth that often occurs when business owners mistake success for speed.
7. No Website
On the other hand, if you have a business today, you absolutely must have a website for your credibility, your marketing, and your way of communicating.
The points exposed above are of great importance and taking them into account when creating a company is very helpful, creating a company with the idea of making money prevents growth, mismanagement of a company will make the company take the wrong path, taking Keep in mind that the personnel in the company is the most important resource, it is necessary to have sufficient working capital to meet needs such as wages and salaries, suppliers, etc.
Likewise, a company must be located at strategic points that are attractive to the public, a good location allows better accessibility to the client, the infrastructure of the company is very important and must be adapted to different lines of business. Having good planning will allow you to see beyond the barriers, the scenarios are important for the changes that can take place.
And as previously mentioned in the text the websites, which I would call advertising, every company must have advertising, this makes it better known, recommended, gives credibility and makes the way of communicating efficient.
Do not forget that the market is changing, just as fashion changes occur, human beings tend to be in constant transformation, and we must never forget that innovating will allow us to develop and be updated to the needs or tastes of the public, this will make it a company on the move and not stagnant.
Inexperience can lead to serious mistakes, 50% of companies fail due to lack of sales, 45% due to financial problems and 5% due to administrative problems, and this happens when sales problems are not dealt with in a timely or adequate manner., and consequently lead to financial problems, financial analyzes are not adequate, leverage, and debt costs are greater than profits, which cause further complication and it is difficult to rescue the company from failure, behold the importance of being up-to-date in terms of the product on offer, innovation, technology, market research, financial analysis, are today very important for success.
Lack of flexibility
“Many businesses fail because their owners don't have enough flexibility to make changes when necessary.
Many entrepreneurs do not take into account the changes that occur in the market or, in any case, do not accept that their business is on the wrong track, and it is necessary to change course. And, what is worse, when they are aware of this, they do not have the capacity to correctly route their company ”(economy)
A company must have a certain degree of flexibility, taking the wrong paths tends to happen in most companies, but making the right changes does not always happen, there are companies that their rigidity does not allow them to see opportunities, resistance to change leads to failure., various factors impede their innovation, such as example, culture, tradition, managers who do not allow flexibility.
The points discussed above are undoubtedly causes of bad results that prevent healthy growth in a company, now we will analyze some of the solutions that we can give to the bad results obtained.
1. Detect the first signs that something is wrong
It is essential to tackle the problem as soon as possible. At the moment when the company begins to have losses, lack of liquidity or decrease in the number of clients, you have to get down to work to discover where the difficulties come from and try to solve them.
Leaving it for later only makes complications grow and when the employer wants to solve them, it may be too late.
2. Accept that society is no longer the same as a few years ago
Society, with its uses and tastes, has changed and it is very likely that the strategies that led a company to success are not working today.
We must abandon these guidelines and follow different ones, detect where the business is, start from what the company does and see how its product can change, what it offers, innovate to meet current market needs.
3. Study what the customer is like today
Nor are the Spaniards as they were before the crisis. Unemployment, income reduction and an uncertain future have caused consumption to drop dramatically. Those who previously bought without fear, today look at each expense with a magnifying glass.
It is necessary to detect what they want, how much they are willing to pay, what they would do without… in order to rethink the business strategy.
4. Accept diverse opinions
At a time when everything is constantly changing, it is very important to let yourself be advised. Business organizations, through meetings and courses, can give very important keys to running a business.
It is also relevant to see how other companies have come back in a precarious situation. Economic newspapers and television news programs often give examples of companies that, with very simple techniques, have been able to reorient their business. In many cases, it is possible to apply these guidelines in-house.
And no less important is the opinion that workers can contribute. They are in daily contact with customers, with the product and know well what the citizen wants and how to improve sales.
5. Dispense with the superficial
Many times the company has infrastructures that it hardly uses, poorly located premises to which very few people go, unnecessary company telephones for employees, poorly distributed work, high per diems for meals, it is a client of a bank that charges many commissions, etc.. If the entrepreneur manages to get rid of the superfluous, it is possible to save money that can be spent on more important things.
6. Develop a new business strategy
With all this information (what are customers like today, what do they ask for, what do they need, etc.), the entrepreneur must develop new strategies, change when necessary…
For this you also have to see the capital that the company has. These modifications do not always have to be profound. Sometimes, just small changes are enough to give a new air to the business. Reaching out to other clients or renovating the establishment if it is facing the public are transformations that can give a new boost to the company.
7. Bet on telework
When the type of business allows, it may be a good idea for employees to do most of their workday from home. Some companies choose to have workers only go to the office a day or two and the rest of the time carry out their functions remotely.
In addition to teleworking, it is usually positive for employees, it saves the company in electricity, heating, transport bonuses and can even be moved to smaller premises. According to some studies, it increases productivity.
8. Shocking offers
Temporary offers can serve to refloat the business.
There are companies on the verge of bankruptcy that have lowered the price of their products a lot, without reducing quality, and have managed not only to weather the storm, but also to increase their sales and create jobs.
9. Be known after the changes made
The new strategy, the offers or the renovation of the premises are useless if people do not know that the company has changed. Through marketing and advertising actions, the public can be informed about news, the drop in prices, the new product on offer…
These promotions do not always have to be too expensive. When the business is at street level, the premises can be used to give this information to the citizen. Radio spots or leaflet distribution are also often effective.
10. Use new technologies and social networks
The Internet is a very useful tool to publicize the business. Nowadays, many people consult the information on the Internet that they used to look for in phone books.
Having an attractive and clear website is very important for any type of business. In addition, being on social networks is a point in favor of companies, which can be promoted almost free of charge ”. (Left, 2012).
Without a doubt, these are very important recommendations to succeed in a company, not forgetting that a good market research is essential, having a business plan that allows us to have a better vision of the changes that occur in society, as well as make a risk prevention analysis and an effective financial analysis that allows development in the company.
