Most business failures are own goals

I’ve spent most of the last 30 years working in and around businesses that are in some form of flux or transition. For 10 of those years I was an employed CEO working within a corporate environment, where I gained a reputation for turnarounds of problem business units. For 5 years I managed troubled SMEs, which took me through a whole new learning curve. And for the last 15 years I’ve been a management consultant or troubleshooter helping under performing businesses get back on top.

I can’t claim to have seen it all; but, I’ve seen many different businesses making many different mistakes; sometimes they’ve recovered from those mistakes and sometimes they haven’t. But there is one thing, of which I’m certain; most business failures are own goals and most could have been avoided if appropriate action had been taken, when the first signs of trouble appeared.

In the coming weeks, I’m going to publish a series of blogs that deal with the types of mistakes that can and do lead to failure. Broadly speaking, they can be put into four categories, namely “Strategic”, “Operational”, “Organisational” and “Leadership”; although, in practice, a business’s demise may well involve more than one of these categories. But before I do that, I want to emphasise, in this blog, the one over-riding factor that contributes to most business failures, and that is the failure to act soon enough.

When a business first starts running into difficulties, there will normally be a range of options available to it. This could include some form of refinancing or external investors; it could include some form of strategic change or capital investment; it could include some form of downsizing or restructuring; it could include changes at board or senior management level; and it could include many other factors besides.

However, as the failure to recognise the problem continues or as the failure to take action is delayed, the number of options open to the business start to reduce. And as the options reduce, so do the chances of recovery or turnaround. Too many businesses fail simply because they leave it too late before they take action.

So why do businesses leave it too late?

I’m sure everyone reading this will have their own views; but in my experience, there are probably three main reasons.

The first is that the business doesn’t realise that it has a problem. This could be the result of management losing focus; it could be due to poor management information within the business; it could be due to a lack of market intelligence; or it could be due to a lack of knowledge of changes within key areas of the external environment.

The second is that there is disagreement amongst directors/shareholders/senior management about the seriousness of the problem or what action to take. This can and does lead to paralysis.

The third is that directors/shareholders/senior management have put a great deal of personal kudos into a particular project or strategy and are simply unwilling to accept that it isn’t working; so they don’t take remedial action until they are forced to, by which time the options available to them have started to disappear.

The frustration for consultants like me is that we are often called in when it’s too late. We’re seen as a last resort rather than part of the ongoing health programme of the business. This probably sounds like a plug for work; and yes it is – unashamedly so. But actually, the best time to call us in is when everything appears to be going well. It’s exactly the same principle as having a personal medical health screen every couple of years or so. Early detection is infinitely better than discovering a condition when it has become acute; and its no different for a business.

Next week I’ll be writing about some of the strategic reasons for business failure; but, if your business ‘s performance has started to dip, particularly in the light of today’s challenging market conditions, bring in help now; don’t leave it too late. And if you’d like to talk to me, call me on 07770 816468 (+44 7770 816468 from outside the UK) or email me at ap.apconsultants@btinternet.com

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3 thoughts on “Most business failures are own goals

  1. That sounds harsh, Anthony, but you do make excellent points in your blog post. However, in my experience, you are leaving out one important circumstance: fear, or the fear which results from being overwhelmed by the gravity and the work.

    • Hi Caroline and thanks for your comment. I agree with you, fear is a very significant factor. But I think it tends to occur later on, as the consequences of strategic/operational failures start to become apparent. I don’t think it’s necessarily a prime casue for business failure; but once it takes a hold, it can make an already bad situation very much worse.

      • Hi Anthony, there are many kinds of fear, and in my experience fear takes over very early on. Fear is a prime reason teams do not plan adequately and do not even think the model through. Fear is the prime reason they do not consult counsel soon enough to avoid real trouble. They are afraid of being wrong, of finding a mess, of finding critical assumptions to be false. From there the situation devolves too often into real white knuckles, finger biting fear.

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