Three Signs of why a Manufacturing Business Fails

Introduction

Business failure is a common phenomena for any given business person of management of organizations. In the current world, there are new businesses that are established on a daily basis hence ensuring that products are purchased to the customers. The customers are the key influential for the development of the business. In the world, there are numerous reasons that might trigger to the failure of the business. Although the business depends on the businessperson for success, other aspects surrounding the business might lead to the failure of the business. However, the failure of the business should not affect the businessperson since there are various strategies that can be implemented into achieving the business (Attard Communications, Inc 2012).

The business might face challenges that are none avoidable hence making the business activity to collapse. Recovery techniques discovered by the business analysts have been enacted to ensure that businesses are recovered. The businessperson can still rescue a business that is bound to collapse especially if management skills are applied. The departments in the business can also be a major influence towards the failure of the business. The employees and the employers are the key determines of the business since all the roles and duties in the business are maintained by both parties. The management should receive warning and inform other members of the business before the organization collapses (Blanchard 133). Just like any other failure or incident, the business failure also has warnings before the actual collapsing incidence.

The management and the employees of the firm should be in a position to discover the pivot of the failure of the business. Business failure should not be affected with business failure since collapsing of the business is gaining more knowledge in operating the business. In most instances, business analysts and financial consultants base their focus on the success of the business. In the process, they tend to forget that the most important aspect in the business is the failure of the business. The failure of the business is vital in some situation to assist the business entrepreneur in identifying the pit falls of the business (Black Enterprise 51).

After experiencing the failure of the business, the entrepreneur is usually more careful and responsible for the actions taken affecting the business. The entrepreneur should show resilience in managing and running the various operations of the business. It does not matter how many the businessperson fails but the most vital aspect is how the entrepreneur manages the failures. Business failure also assists the entrepreneur to use the possible antecedents in the past business activities to be capable in operating the various business activities (Fitness Business Interviews, 2012).

Without competent managerial skills, the business activity cannot sustain the current challenges that emerge without warning in the organization. Emergencies that occur in the business should be maintained and planned to reduce the effect of the pressure of the business. It might be possible for an emergency to occur in the business but be catered for without affecting the business. In the current world, operating the business needs an all round person (Attard Communications, Inc 2012). Even the entrepreneur that have undergone professional training might face difficulty in maintain the organization. It is appropriate for the owners of the business to attend the latest seminars that are vital in instilling innovative skills in the entrepreneur.

Fig 1. Graph. Illustrating percentage of collapsed companies within 1992-2002

Graphs obtained from the international business statistics bureau, 2002.

According to the graph, the numbers of companies that collapse in a given period continue increasing as the number of years also increases. The number of companies that fail and are never reopened slowly increase with the number of years that the organizations lasts. However, management skills are supposed to be enacted to ensure that the organization is protected from challenges that might contribute to the failure of the business. According to the information displayed in the graphs, in the year, 1992, the number of the organizations was a hundred and most had been established to suit the customer’s demands (Blanchard 121). However, in a span of ten years, the number of the organizations has collapsed and the remaining number of the organization is only twenty-nine percent. However, the collapse of the firms mostly depends on the management skills implemented in running the operations of the business activity. The organization should emulate the other surviving organization to face the misfits that might emerge in the organization.

The impact of the business to the entrepreneur is vast hence might not influence only the businessperson but also the close relations hence consultations should be undertaken. In the process of the collapse of the business, the entrepreneur might face challenges such as financial assistance and loss of self-identity. The entrepreneurs are advices to face the challenges and establish new recovery that are capable of altering the business activity. Accepting the business failures assist the businessperson in solving the numerous challenges that might even appear in future. The experience of facing the collapse of the business also adds general understanding and management skills that assist the business in carrying out specific duties (Black Enterprise 57). In most cases, although the mogul might lack the finance and confidence of commencing another business, it is appropriate for the entrepreneur to renew or start another business. Through the failure experiences achieved, the entrepreneur is capable of attaining more experience of maintaining other surviving businesses.

There are various reasons that attributes to the failure of the business that might lead rectifying of the challenges that face the organization. The entrepreneur is usually offered signs that indicate the collapsing of the organization. The manufacturing department of the company is the most influential part of the firm. The manner in which the products of the organization are manufactured really matters to the customers. For the organization to be capable of becoming competitive in nature, it is appropriate for the organization to produce enticing commodities. Commodities that are manufactured according to the desires of the customers are more competitive since the customers will purchase the products. The more the customer’s purchase the products is the more the industry will earn gains that are more profitable (Lussier and Halabi 105).

The industries that are the everlasting in the competitive advantage are because of the nature of the products. The more the products are manufactured is the more the customers are willing to purchase the commodities. The attributes that the organization offers to the customers concerning the business determines the risks that are exposed to the business. The businessperson should be capable of identifying the signs that are vivid in the business. The more the industry is affected by the challenges is the more the organization reveals the signs of the business failure. It is appropriate for the management team to establish a panel that is capable of looking into affairs concerning the progress of the organization. A stiff management that should analysis the progress of the company should maintain the progress of the organization (Fitness Business Interviews, 2012).

The progress of the organization is vital to both members of the organization who should ensure that the none of the department of the company is corrupted. In the process of discovering the challenges that are faced by the organization, the appropriate and innovative management strategies should be employed. The three signs that affects the manufacturing industries and business most relates to the commodity and the customers. The three chief signs that indicate the failure of the business encompass of the poor management of the organization, insufficient capital that affect the operating of the business and location of both the customers and company.

 

Poor management in the manufacturing business

The most essential area in the organization is the management of the firm and the diverse areas that require the smooth supervision of the management. The management is in total control of all the other sections in the firm. A single poor management sign in the firm affects the manner in which the company operates. It is appropriate for the firm to select a group of specialized management team that will be smooth organizing the firm. The management in the organization is vital since it assists in the planning of the organization. Organizing the various departments in the manufacturing firm is vital in determining the rate of performance of the organization (Attard Communications, Inc 2012).

The management together with the other departments assists the firm in achieving the objective and missions of the firm. The firm might suffer management problems because of the in cooperation of the employees and the employers. The management is in total charge of other departments of the firm. The management in the firm assists the organization in achieving the goals set for the organization. In most firms, the management is vital in gathering the employees in working together in accomplishing specific duties and roles. The desires and the objectives of the firm can only meet by the effectiveness of the organization. The management should also assign available resources that are vital in managing the operations of the firm. The resources that are made available in the organization are vital in ensuring that the firm achieves the firms and objectives. The keys roles of the management in any given firm are the organizing, planning, and leading, controlling, and staffing the already manufactured commodities. In the diverging manufacturing organization sections, the appropriate management strategies should be employed to ensure that the firm achieves the objectives and missions of the firm. Each of the diverse sections of the management will be discussed to ensure that the signs of business failures.

1. Poor planning section of management  

In the planning department, the organization sets the right procedures that ensure the organization is capable of utilizing the appropriate resources in the rightful manner. Planning section of the management ensures that the available resources that set in the organization are capable of completing the available duties and roles. The planning section also ensures that all the available resources and materials in the firm are used in an appropriate manner. To be capable of solving all the organization problems, the management team should plan for every section and department in the organization. Poor planning in the organization can be a sign of failure in the organization if not well handled (Blanchard 153). The management should be capable of noticing poor management methods that might be emerging in the organization.

The poor planning of the organization promotes failure of the firm since the resources assigned in the organization are bound to adhere to the budget of the firm. The number of usage of the commodity usually affects every single resource in the organization. The more wastages done in the organization concerning the planning of the organization makes the organization to suffer for the wrong mistakes committed.  The overstocking also affects the operation of the organization hence contributing to the failure of the organization. Therefore, poor planning in the management section is a sign of business failure. The management should employ new personnel that are qualified to replace poor planning personnel in the organization.

1. Poor organization in the management

Organizing is also one of the chief functions of the management team in the organization that ensures that all the duties and roles assigned and accomplished in a logical and progressive manner. Using organization techniques, the management team becomes competent in ensuring that specialized employees perform each of the duties. Organization is also vital in ensuring that the tasks and roles in the organization are accomplished in a descending order. The most vital operations are carried out first before the other less involving activities. For this reason, poor organizing of the duties and assigned tasks in the organization can be a major sign of business failure. To evade the business failure, the organization should be in a position to identify the poor employees that lack the appropriate organizing skills (Fitness Business Interviews, 2012).

1. Controlling and leading

Controlling and leading is another major function that is performed by the management in any given organization. The organization should be capable controlling the other members of the organization and leading in an efficient manner. Leading the organization, the management uses the appropriate powers to give orders in performing the available functions. The functions that are displayed by the power assigned to each employer identify the manner in which the leadership in the organization is practiced. In the process of identifying, the appropriate controlling and leading strategies should be employed by the employers to be capable of analyzing the capacities of each employee. Poor leadership skills and power sharing in the organization is one of the key warnings that might face the organization. To achieve the objectives and set goals, the business activity should focus on employing qualified personnel with management skills (Black Enterprise 87).

1. Staffing

Staffing involves the appropriate measures that are employed to ensure that the organization roles and duties are performed to the appropriate standards. Staffing involves the managing the structure of the firm to ensure that all the roles assigned is performed by necessary workforce. The staffing in almost all organization involves the selecting, recruitment and proper training of the employees. The human resource manager is usually in charge of the staffing procedure in the organization. Through the appointing the most competent human resource, the organization is capable of solving major problems that face the organization. The organization should also ensure that recruited candidates meet the requirements and qualifications of the organization (Attard Communications, Inc 2012). The employees in the organization should also be trained to ensure that they work to accordance of the employers policies. Therefore, poor staffing in the management sections attributed by incompetent movement is a signal of failure in the organization.

Insufficient Capital

            Lack of the appropriate funds has been denoted as one of the major causes of business failure in numerous organizations. The organization must have enough capital to ensure that all the appropriate roles and duties in the firm are done according to the competence of the management. In the organization capital is the basis of almost all the activities that are undertaken in the business. The appropriate application of capital in various sections of the firm assists in ensuring that the each of the business goals are accomplished in the designed time limits. In the organization, the capital available normally subdivided and used in diverse sections to ensure that all the applications are accomplished (Fitness Business Interviews, 2012).

            The management is involved in assigning each department with the appropriate capital. The most influential aspect that might lead to the sudden collapsing of the organization is lack of enough capital in running the companies. The table below illustrates the means and ranking of the factors of finance that might affect the organization. The factors are arranged in a logical manner in accordance to the manner in which the organization is affected by the financial factors. Although the organization might have large sums of capital, misuse of the available resources eventually leads to the collapse of the firm. The organization might lack enough capital; however, through the proper utilization of the available and readily acquired resources, the firm can still become competitive (Fitness Business Interviews, 2012).   

Table 1. The mean and ranks of the capital factors that contribute to failure of firm

            According to the table, dependency on the bank loans is on of the major causes of business failures that should be avoided by the business. The bank loans are necessary in acquiring the initial capital vital in commencing the business. However, the rates that are charged on the business are vital hence affects the business. This is common especially in occasions where the business is new in the marketplaces. The manufacturing business face the stiff challenge since the products manufactured might not suit the needs and preferences of the customers (Lussier and Halabi 48). The organization that borrows income from the bank should work hard enough to be capable of achieving the vital profitable gains that are appropriate for paying the debts of the bank. The order of the financial aspects affecting the business descents according to the table indicated.

            The capital that is assigned to the various departments should be administered accordance to the influence of the department to the organization. The most crucial department in the organization should be assigned more finance compared to the less involving departments in the organization. The most vital sections of the organization should be provided with the needed materials to ensure that all the people in the organizations perform the duties. The management should be capable of assigning the correct value of capital as compared to the financial status of the firm. The company should not give more capital to segments that are supposed to accomplish tasks that are needed in the future (Black Enterprise 43).

            The most crucial and deadline duties should be accomplished as per the profitable margins that are expected from the projects.  The overuse of the available capital is a major indication of wastage of the available resources. The organization that misuses the available resources is bound to fail. Only needed stock should be purchases and stored for future use. Some organization overstock the stock hence using the available capital that is needed to pay the employees. Overstocking of the available resources is a major hint back to the organization since it can make the organization bankrupt. Another sign of the financial collapse of the firm is the increase of the strikes of the employees. The number of strikes that are undertaken in the organization can affect the performance of the firm. The strikes affect the performance of the organization since there is no available workforce needed to run the organization in a smooth manner. The business activity will lack both the unskilled and skilled labor required in the manufacturing zone (Blanchard 123).    

Location

The location of the business activity affects the manner in which the manufacturing companies operates hence leading to the collapse of the firm. The location of the firm is most relevant in accordance to the customers and the raw materials. The nearer the business is close to the customers the more likely the firm is to make profitable returns. The most profitable organizations are located nearer to the raw materials and easier accessible to the customers. The raw materials are most vital in manufacturing the diverse products that are purchased to the customers. The customers distance to the business is also affected especially if the firm produces perishable commodities that are short lived.

The short span life of the perishable commodity affects the manner in which the commodities are purchased to the customers. Poor location of the business might also lead to the failure of the business. Closeness to the competitor is another danger of the closeness of the business to the customers. Intense competition from other immerging organizations might be a danger to the organization (Attard Communications, Inc 2012). Therefore, stiff completion, far distance from both customers and raw material might be a sign of business failure especially is the business products are poorly supplied to the customers.

Conclusion

Business failure is not a new concepts in the business world hence should not affect the entrepreneur but encourage in future tackling of business related problems.The entrepreneur should focus on the present and future instead of basing the general business failures on the past. It is vital for the entrepreneur to involve business specialists who are capable to give direction in operating of the business. The business should be maintained with proper care and a reliable management that is capable to plan for the future occurrences. Most of the business activities that fail are attributed to the poor planning. Some business activity might collapse and never to be seen in the marketplaces places again. However, other organizations might still face failure but still rejuvenate with new business management skills that assist in the success of the business. It is important for the armature entrepreneurs to learn business management strategies that assist in the managing of the organizations (Lussier and Halabi 111).

Work cited

Attard Communications, Inc. The Seven Pitfalls of Business Failure and How to Avoid Them     Accessed, http://www.businessknowhow.com/startup/business-failure.htm. Retrieved on    19th March, 2012.

Blanchard, Ralph R. Creating Wealth with a Small Business: Strategies, Tactics and Models for             Entrepreneurs. Charleston, S.C: Booksurge Pub, 2009. Print.

Black Enterprise. Warning Signs that Your Business is Failing, Earl G. Graves, Ltd, Vol. 27, No.         4, 1996.

Lussier, R. N. and Halabi, C. E. A. Three-Country Comparison of the Business Success versus             Failure Prediction Model. Journal of Small Business Management, 48: 360–377, 2010.

Fitness Business Interviews. Com Conversation with top fitness entrepreneurs. 2012