What are the steps to assess business failure?

Get advice early, and get good advice. Too often we see cases of either 1) management ignoring warning signs because they have a pray to God strategy that things will just get better on their own or 2) management noticing they have a problem but engage advisors way too late in the process by which time it’s often too late to do anything to salvage or turnaround the business or 3) management getting bad advice from sub grade and unqualified advisors largely driven through cost considerations when they would have been better spending a little bit more money to find someone whom can help them get a better outcome.

Start by looking at management and it’s abilities to address issues across all spectrums of the company. Getting financial results months after the fact is but one example of management failure. Or leaving a sales oriented manager in charge when a more skilled manager is needed.

Complacent leadership team is the number 1 sign of a business destined to go south. Loss of focus, loss of passion and lethargy are following factors. Thus it all boils down to the ability and capability of the leadership team. This is why some companies create miracles where as some others create disasters in similar market conditions.

Failure to get financial reports on a timely basis is a key issue. Coupled with either an inability to understand the issues in the financials, or just ignoring hem, until someone, usually a lender, raises an alarm. After that, almost evrything else becomes irrelevant as it will be too late.

Customer complaint is the first symptom . To identify if you picked the unethical customer or you sold him substandard product . If you have integrity no business can fail

It's important to analyze the failure and find the root cause. Most of the businesses, end up treating the symptom, rather than the root cause. It's generally because they do not understand how to get to the root cause of the problem. One of the impactful ways is through systematic questioning, which helps to drill down to fundamental truths, then ground yourself from these fundamental truths and build the solution up from there.

Separating the symptoms from the cause is a good start. Then, I find using a thinking model to help teams find their own answers so much more powerful. Where, when and how the processes or people got off track is important to identify so the remedy can be applied right point is a nuanced solution.

Failures are bound to happen in all organizations no matter how well they are run. The critical success factor should identify such failures as they happen rather wait to find its negative impacts. Once the faults are identified, like the health systems, we need to diagnose the problem immediately using the fishbone diagram. Fishbone diagram is a very effective tool to diagnose the problems fast and efficiently. Once the cause and affect analysis has been done, we need to apply the corrective measures to set the motion in the right path.

A failing company is not the same as an obsolete company, or a company ruined by government intervention. Those are suffering from outside forces. Companies suffering from inside forces are almost always the consequence of bad management, weak managers, or bullying stubborn managers. The classic answer to any attempt to fix it is, "That's the way we've always done it."

If you are the management, you will have a hard time changing the culture without outside help. If you are an employee, you could try to organize a mutiny and force management to change. The goal is to get those in charge to start showing more respect to employees. To appreciate employees more and allow them to do their jobs without fear of public humiliation. The bottom line is; Treat your employees the way you want them to treat the customers - Happy employees = Happy customers!

In the process of measuring the impacts, the management need to focus on the quick fixes needed to get the ball rolling while the long term impacts are measured and evaluated. The Quick Fixes need to be developed using the Quality Management Process that shall give the feedback on the symptoms of failure.

Before making any drastic changes, evaluate the extent of the damage. How has the failure affected your business's finances, reputation, and long-term viability? Quantifying the impact isn't just about crunching numbers. It involves assessing the intangible losses, such as brand equity and customer trust, which are often more challenging to rebuild.

As a startup, if you have the luxury to do an impact analysis, you should be working on saving the contracts or finding the next pivot. the issue you do not want to run into will be legal matters, failing certain capital requirements or failure to pay a debt. Talk to the customers to understand whats the issue then get to work quickly to onboard new ones.

restructuring is the solution if we discover operational inefficiencies or a trend that is obsolescing the product/service. Both points to repurposing/cutting assets including people. if that is the case, communicate as early and clearly as possible to avoid detrimental losses

Do away with committees appointing teams advising committees. A fluent and change orientated decision making process must be followed. The quicker you can adapt, the quicker you will see results.

If you have a viable product or service then fully engaging your employees is the absolute first step to recovery. Even if you sell a commodity, customers will shop where they have the most fun, are shown the most respect and appreciation, and are compelled to tell their friends about their experience at your store. Culture starts at the top. What kind of leader are you?

One of the most important of all the steps is to understanding the symptoms and then developing both the Quick Fixes and the long term overhauls. In most such caases it takes about a month to explore the options at hand in the long term. But what is more critical is to develop the Quick Fixes to get the operations running until a long term fix has been evaluated and ready to get implemented.

Personally, I look at failures like a reverse engineered risk management process. Assess the risks that were identifiable at inception, assess the issues, assess the mitigation measures. Then analyse why some risks were not identified at inception. (No human being is all-knowing) with a focus on those having caused the failure. If the risk have been correctly identified at inception, understand why the mitigation measures did not work.

To minimize the risk of a wrong decision, get the whole management, functional leaders involved to ensure no stone is left covered. do the whole feasibility study and execute quickly. My opinion is that it is easier to restructure departments/assets then people. People should only be cut if there is no way to repurpose or if they have not evolved with the business and their roles.

Now we have done all the preparations after having completed the initial triage and the diagnosis. The triage will have resulted in a Quick Fix to keep the ball rolling until a long term fix has been applied. The Quick Fix has to come out from the inital analysis of the strategic operational goals and its deviation from the norm. Having applied the Quick Fix, the Team will have analysed the problems in light of the long term strategic objectives of the Organization. The options will include the strategic realignment of the processes to continue in the set direction having recovered from the fall. The process of weighing the options shall have designed criterias of evaluation developed from the Strategic Quality Control measures.

Whether it's your team, investors, or suppliers, keep all stakeholders in the loop. Transparency can foster an environment of trust and collaborative problem-solving. The stakeholders are not just spectators but active participants in your business journey. Their insights, however uncomfortable, could offer perspectives that you may have overlooked.

I concur with Wee Leong Tan's perspective that establishing an internal crisis management team under the leadership of a seasoned turnaround consultant is the most advisable course of action.

Missing here is the need to involve legal expertise. Leaving trusted advisors out of the decision making process for a distressed business will almost always compound the problem, not fix it. Management created the distress, or failed to timely address it, so why trust management to fix the distress? Get help.

Up until now, this was not a terrible article. Even though it was written by Artificial Intelligence. But this step, Execute the Plan, is total rhetorical, political nonsense. Apparently, AI needs to hear the sound of its own voice just like many humans do...??

I've been the blue collar tradesman cleaning up messes for a long time , often it's to late or the defensive attitude of those that screwed up stops any meaningful action, at that stage I pack up and leave and I don't go back , silly people in suits tend to screw up anything they touch, it's so repetitive and nobody seems to notice.

Execution is key. Many times finding the problems and even the root cause, may not be enough. Plan and execute the plan in details. Have deadlines, have people accountable. Using the 4DX method can be helpful (Four disciplines of execution book). Follow up routinely and make it a priority.