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10 ways to destroy a business

Working in so many turnaround situations every year, we have summarised our views on what can go wrong in business. Of course there are always external factors that are hard to predict, but there are also too many 'own goals' caused by internal factors. Here are our views on things that destroy value and potentially the business.

1. No clear direction. Getting the board, employees, customers and suppliers, and all other stakeholders is essential – there can be no misunderstandings.

2. Not listening. Every companies' employees are its most important asset. They may or may not be performing their roles effectively, but they are always important. They are also probably your more expensive cost.

3. The team don't know what's expected of them. Clearly this is related to "Not Listening" as it's not always obvious what people's roles are, and they might not have been given any clear objectives.

4. Poor relationships between the senior team. Misunderstandings over strategy and expectations leads to disagreements and eventually, mistrust. This is common in distressed companies and I often find myself saying that "you will see the best in some people, but the worst in others".

5. Making things too complex. You would be surprised how issues in a company can become very complex. The simple facts are that everything needs to be boiled down to its component form, and this can only be achieved when you are objective.

6. Missing the basics. Business is about leading your team, making a healthy margin on your sales and managing your costs. Every part of your business should therefore strive to improve these simple ideals.

7. No management review meetings. Having a plan and communicating the plan are one thing, but you need to make sure that you measure your progress.

8. Acting on Bad Advice. Receiving and then acting upon bad advice is unfortunately something that we see quite often. There are only two ways to avoid this 1) listen to your heart and if it feels wrong, don't do it and 2) get a 2nd opinion.

9. Poor Management Accounts Management accounts are sometimes inaccurate and aren't a true reflection of what's really going on in a business (see more).

10. Lack of cash management. Planning your cash flow is essential as there are always gains to be made with good cash management. The process on planning and forecasting identifies these opportunities and helps you to prioritise your cash management (see more).

Further reading,

Top tips for Cash management

Top tips for an Operational Turnaround

HMRC Top tips dealing with Time-To-Pay cash flow arrangements

Common causes of business failure

Key elements of a smart business turnaround

Why a quick fix is not the answer