Avoid a Collapse in Your Business

An ESPN article recently discussed the current San Francisco Giant’s skid since the all-star break,  going from the best record,  to now struggling to make the playoffs.  The author went on to compare how a collapse by the current Giants would compare to other epic collapses of the past including the 2014 A’s, 2012 Rangers, 2011 Red Sox, 2011 Braves, 2007 Mets, 1995 Angels, 1978 Red Sox, and the 1969 Cubs(Schoenfield).

Total collapses are not just specific to sports but of businesses as well.  Among the notable businesses  that are no longer with us are names such as Ames, Compaq, E. F. Hutton, Eastern Airlines, Enron, and RCA.  The list could go on and on.  The number of small and mid-size businesses that have started, excelled, and then totally collapsed are too numerous to even fathom.  Business owners can help protect their companies from these collapses by adhering to the following principles:

  • Recognize it can Happen– Regardless of how successful a company currently is, there is no guarantee it will continue. Leaders of companies must stay alert and vigilant knowing customers can change in an instant and competitors are constantly looking to take their customers away.  Owners must never become complacent.
  • Build Cash Reserves– During the very successful years smart, well-run companies will build their cash reserves significantly. The lean times will happen and when they do, deep cash reserves buys a company time to determine options and make the strategic decisions to get back on track and continue to move forward.
  • Maintain Warning Systems– Put in place metrics and key financial measurements that measure the company’s health constantly. These key measurements serve as a constant warning system to a company so as to allow them to react, correct, and adjust quickly to weaknesses in the business.

Do not let a total collapse happen to your company.  Be ready by staying alert, building cash reserves, and maintaining warning systems.

*Schoenfield, David,  (September 15, 2016), ESPN.com:  SweetSpot

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