The loss of jobs and the flow impact another company collapse has is painful and saddening to read about. But there is a more important question that I hope small business owners learn from the failure of larger companies with a greater public profile – what were the key triggers that lead to the demise of so many businesses?
While so many business failures will be blamed on the global financial crisis or the worldwide slump in product demand, there are still many good businesses with effective management practices in place that are thriving. So the global crises facing all of us have triggered collapses in companies that could no longer survive under the new conditions imposed by financiers and customers.
Rarely can a business say categorically that their failure is due to one single event. Of course, events such as the Victorian Black Saturday fires are an exception. But in general there is a series of management decisions that are made, that under different market and economic conditions are not sustainable.
I hope that small business owners do not attribute these corporate failures as simply the result of global crises that they can do nothing about. But identify the conditions that can increase the risk of failure of their business. More importantly implement action plans to reduce or manage the risk.
These failures are typically a culmination of poor decisions, not one single decision. These decisions have consequences that the business owners either failed to adequately prepare for or simply didn’t think about.
It is the pain that stakeholders will go through that must alert other small business owners to the potential impacts of the many small decisions they make in their business every day.
Planning must not be seen as a nice to have – it is what people do to prevent pain being felt by others that depend on them.