Why business fails (10 reasons)

1) Inadequate capitalization or lack of funds

2) Lack of financial planning and review

3) Over dependence on specific individuals in the business

4) Poor market segmentation and strategy

5) Absence of standardized quality program

6) Lack of management systems

7) Lack of knowledge about the market and competition

8) Lack of vision and purpose by principles

9) Failure to establish or communicate company goals

10) Owners concentrating on the technical rather than strategic work at hand

Business Recovery Plan

1) BUSINESS BACKGROUND - Not everyone who will need to see your recovery plan will be intimately familiar with your business. Be sure to include how your business was formed, what it does (in some detail), who owns it, what your role is in the business. This portion of the plan will, of course, remain constant as you frequently update your plan.

2) CRISIS BACKGROUND - You need to acknowledge exactly what your crisis is and how it developed. If you were in charge when it happened, you need to be honest about your role in your business when the crisis started. This portion of the plan will also remain constant as you update your plan.

3) CASH CONTROL - Every business in crisis has, or will have, a cash crisis. Therefore, it will be necessary for you to take extreme measures to control and maximize cash as it flows through your business. The readers of your recovery plan will want to know how you are going to do this.

4) BUSINESS EQUILIBRIUM - This is very important to turnaround crisis management and is the key section in your business recovery plan. For the business in crisis, this refers to the condition where cash-in equals cash-out. In other words, you need to halt any further decline of your business and stop the cash hemorrhaging. This is the area that requires the most analysis and planning and also the area where the reader of your recovery plan will have the most interest.

5) REORGANIZATION - A real crisis will require a serious reorganization of employees, because you simply cannot survive doing “business as usual.” You have to eliminate those management positions that were in place while the crisis developed. You then need to push responsibility down the organization.

6) FORECAST - In all the prior sections, you told the reader of your recovery plan what you were going to do, and how you were going to do it. Now, you need to explain to them what the effect of all these changes will be. You need to present a forecast of results in the form of short-term financial pro forma.