Business disasters: Turning the page

Business people have too often felt the pain, both personal and financial, of a business disaster. The reasons for failures are many and varied, and require a careful analysis to assure the don't recur. The problem then often moves from business analysis to decision paralysis. It can be very difficult to turn the page.

Moving on from disaster can be very problematic for many organizations. Often, the owner or CEO become defensive and decide and prefer to avoid risk. The failure to place the problem in the past, and look to the future, can often be a worse decision than the original crisis. It is important to remember that choosing to retrench, and even to do nothing, is a decision in and of itself. By keeping that fact in mind, moving forward can become an easier transition.

The effects on an organization, following a major disaster, are not always obvious at first glance. Very often, they are subtle and deadly. An examination of some of the effects of a mistake can help a company recover and return to success. Following the assessment of the damage and its causes, the next step is to chart a course for the future. This is not the right time to get scared of making any decisions.



One result of a mistake is a round of finger pointing and blame placement. This is not the correct approach to the problem. Instead of placing blame on a scapegoated employee, there needs to be a renewed emphasis on team building and internal company cooperation.

Sometimes, good decisions just go bad due to to timing, competition, or the industry health in general. Firing or demoting an employee for risk taking sends the wrong message to the rest of the staff. Creating a culture of covering up, keeping heads down, and risk avoidance is a recipe for business failure in the long run. Be sure to let your employees understand that risks are rewarded, and are seen as a step to future profits.

Another costly result is an exodus of good staff people. The round of resume circulations is often seen as result of the disaster. Instead, the employee turnover is a consequence of the blame game. No one wants to remain in an organization where any mistakes result in a one way trip to the company's Siberia. Risk takers should be praised for their creativity, and a series of pilot programs, periodic checkpoints, and research plans be developed to prevent future monetary drains.



A third result is often a concentration of decision making into the hands of the owner, CEO, or senior management. The company becomes more centralized with a deepening sense of two way mistrust and micromanagement. Instead of helping the company move forward, this approach is focussed on the past. A fear of mistakes paralyzes the entire company into inactivity. A steady erosion of market share is the all too frequent next step.

When a disaster strikes a business, it is important to turn the page. If employees understand that risk and mistakes are part of the overall success of the company, they will continue to develop new financial, marketing, production, and distribution plans. Creativity should be encouraged, and tightening the decision making screws won't get the job done.

If a disaster happens, turn the page and write a new chapter of company success instead.

Tags: decision making, business management, creative thinking, overcoming disasters.

Solving business problems: Seeking patterns

When you talk to many business people, they are convinced that the problems associated with their industry are unlike those experienced elsewhere. Not only do they believe their industry is unique in the business world, but their own company is one of a kind as well.

By thinking they are facing challenges met by no other business, they will often resist advice or assistance of any kind. After all, as they say, their industry is different from all the rest. Because of this perception, they fail to see universal business failure patterns, and are often too late in reaching a diagnosis. As a result, some very good companies fail, that could have been rescued and returned to health.

Regardless of the perceived one of a kind industry, many serious business failure causes follow similar patterns. Of course, the task at hand is to find and process those patterns in the first place. What we need for finding patterns in business problems is a usable framework. While a checklist might seem a bit simplistic, many of the challenges facing a troubled business have been experienced by many others, who have gone downhill in the past.



Let's examine some similarities.

While the troubled company may at first appear to be in chaos, there are always similarities with other financially distressed organizations. Most of the patterns can be found in the books. Examine the numbers carefully.

Most business people have no idea about the true cost of their goods and services. Very often, what they perceive to be the cost of doing business, for each individual product or service, is too low. Not all costs, hidden or even very obvious, are included in the pricing structure. Losing money, or only making a tiny profit, on every item sold is not a happy thought. Unfortunately, underestimating the true costs of doing business is a widespread pattern in all industries.




Many business people fail to do the right thing. Very often, instead of looking at the right costs, they focus on the wrong ones. Cutting corners, at the expense of current and future customers, is not a wise idea. Marketing and promotional budgets are often the first casualties of budget cuts and austerity measures. Those same reductions also lower the company's revenues by a much larger amount. Failing to promote and market the organization's products and services can lead to disaster.

Some companies stick too long with a failed product or service, or simply one whose time has passed it by. The hot toy of two Christmas shopping seasons ago is not going to be a winner this year either. Instead, encourage creative thinking, and continued research and development of new products and services. Failing companies very often do not listen to their customers, suppliers, and staff people. Thinking you know it all is usually the first step to business bankruptcy.

Seek out the patterns that affect all companies' revenue and expenses. Find patterns of lost opportunities everywhere. You will probably root out the causes of your own less than optimal company performance.

All it takes is a little pattern recognition.

Tags: business problems, seeking solutions, finding patterns, company failures.