| There are many warning signs which
indicate the point at which companies begin to underperform. Experience has taught
us that the causes of underperformance are not self-correcting and that there are no quick
fixes. Successful companies are distinguished by their ability to recognize and
respond quickly to the warning signs of underperformance. Some of the symptoms and
warning signs include: UNDERPERFORMANCE,
Indicated by:
· Declines in:
· Profitability and cash flow
· Gross margins
-
Market Share
- Customer service
· Continuing Increases in:
· Operating
expenses
· Customer complaints
· Bad debts.
· Resulting in a:
· Loss of
confidence.
· Loss of key employees, and
· Restricted
credit terms, Restricted vendor credit terms,
leading
to:
A TROUBLED COMPANY,
where:
· Profits turn to losses.
·
Cash flow is negative.
·
Number of crises increase.
· Customer
relations
decline.
·
Communications decline.
·
Morale declines.
·
Hope replaces reality.
· Management responds with
superficial cost reductions.
· Management realizes
they
are losing control,
resulting in:
|
A
CRISIS SITUATION, where:
·
Liabilities exceed cash flow.
· There
is a loss of key employees.
·
Suppliers will only ship COD.
·
Key customers are lost.
· Lenders
protect their positions.
·
Unsecured lenders withdraw.
·
Confidence is lost, resulting in
· FAILURE, where the Company
is closed and/or liquidated.
 |
