| If you have ever wondered why businesses fail – here are your answers. Jeff Cornwall, the Director of Belmont University, Nashville, Tennesse cited the following on his blog, The Entrepreneurial Mind. The blog gives some great advice for anyone thinking of buying a business or those already running one. 10. OVER EXPANSION
The need to get there first or to demonstrate revenue growth to anxious investors leads businesses to grow too fast.
9. POOR CAPITAL STRUCTURE
Companies take on too much debt.
8. FAILURE TO CONTROL THE CONTROLLABLE COSTS
Businesses spend the initial cash before it is flowing in at a positive rate.
7. FAILURE TO PREPARE FOR VOLATILITY OF UNCONTROLLABLE COSTS
E.g. Energy, materials, labour or insurance.
6. ADD NEW PRODUCTS OR DIVISIONS THAT DRAG DOWN THE PROFITABLE ONES
5. POOR INTERNAL CONTROLS AND EXECUTION
E.g. Customer services, accounting controls, theft, fraud.
4. POORLY DESIGNED BUSINESS MODEL
3. RELIANCE ON CRITICAL FINANCING THAT DRIES UP
2. FAILURE TO ADAPT TO A CHANGING MARKET
1. MANAGEMENT IN COMPLETE DENIAL
If you cannot be realistic then you are never going to get anywhere.
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