Causes of Business Failure

Topics: Requirements analysis, Management, Finance Pages: 2 (628 words) Published: August 13, 2007
To ensure the success of any business, several fundamental mechanisms must be addressed. These particular mechanisms are known to effect all businesses be they long established or recently formed. Upstarts are particularly vulnerable to these which are: managerial incompetence or inexperience, neglect, weak control systems, and insufficient capital. Methodology must be designed and implemented to address each of these issues.

Managerial incompetence can be addressed through a comprehensive performance review process. To effect a non-prohibitive and encouraging environment benchmarks for achievement will be documented, considered and reviewed annually and semi-annually. The semi-annual review will be used for guidance and to document the extent to which goals have been achieved. Various aspects of achievement must be considered such as personal and subordinate development, budgetary management, and compliance with policy.

Neglect is, generally speaking, difficult to quantify until sufficient detrimental results cascade to create a problematic environment. To ensure all personnel are afforded adequate notice of expectations the aforementioned comprehensive review will be instituted for all employees.

Control systems are the processes by which procedures and policies are validated and modified if and when found to be lacking. Procedures and policies should be reviewed on a regular basis or when sufficient changes occur in equipment, personnel, or law. Having documented control systems is irrelevant if they do not actually achieve the intended result. Therefore the controls themselves must be tested. This can be done through a process of circumstantial and practical tests with clearly defined and structured goals. If in the event the goals are not actually achieved then the control will be found to be defective and will be modified to include the aspects deemed appropriate to achieve the intended result.

Inexperience is the simplest aspect to guard...

References: 1) Neddermeyer, D. M. (2006, January), Spotting and Preventing Professional Suicide, Retrieved July 23, 2007 from
2) Gamble, R. H. (2004, March). Counting the Benefits of Working Capital Management, Business Finance, p.34 Retrieved July 23, 2007 from
3) Montebello, A. R. (1999), Pitfalls and Best Practices In Performance Management, Retrieved July 23, 2007 from
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