Crises Management

Typical mistakes which lead to a crisis in a company

  • Insufficient professional, specialist or personal qualifications of the businessman/businesswomen (insufficient commercial knowledge, insufficient management knowledge or insufficient practical experience, missing knowledge about the market, missing substitution rules, leadership weakness, personal characteristics like unreliability, social withdrawal/lack of human contacts, less enthusiasm, alcohol / drug addiction, passion for gambling, expensive hobbies, too costly way of life, strong involvement outside one’s job)
  • Lack of planning and market information
  • Areas of responsibility are too big
  • Tasks are not delegated
  • There is no balance between control and confidence in the management level
  • No sufficient preparation for unforeseen problems
  • Less reality-oriented planning
  • Wrong company concept
  • Mistakes in designing the product resp. service program; only technically aligned company management
  • Wrong business premises
  • Wrong decision when choosing the location
  • Wrong decisions about the technical equipment and securing the raw materials
  • Deficiencies at the time of acquisition
  • Insufficient organisational structure
  • Capacities not utilised or too fast expanded
  • Wrong range of products
  • Overdue rationalisation measures
  • Obsolete production plants/equipment
  • Too high lease/rent expenses
  • Problematic enterprise size
  • At young growing enterprises the organisation has to be changed thereby additional cost occur e.g. due to the demand of qualified MAs
  • Relocation of certain areas of the company
  • Negligent evaluation of the capital requirement
  • Insufficient and wrong financing; not enough own capital
  • Overestimation of the profitability
  • Bad organisation and a wrong marketing policy
  • Non-future oriented marketing
  • Wrong resp. missing cost account and calculation (deficient credit management/supplier credits, late payments or bad debt losses by the customers; not enough customers)
  • Poor accounting
  • Deficiencies in the accounting area
  • Insufficient financial coverage
  • Underestimation of the short-term need for financing and the interest charges
  • Too small liquidity reserve
  • Too high fixed costs
  • Incorrect administration and wrong human resource management
  • Too high costs for wages and salaries
  • High fluctuation of employees
  • Insufficient qualification of the MA
  • Missing cash-flow / liquidity overview
  • E.g. by outsourcing of the accounting department the overview is lost or the overview is incomprehensible
  • Missing overview of customers and the corresponding turnover
  • Out-dated accounting techniques and incomplete vouchers
  • IT/computer use without preparation
  • Disregard of the tax obligations
  • Wrong design of the rent, lease, sales, employment contracts and the partnership agreements
  • Wrong legal form
  • Over- or under-insurance
  • Disregard of the formalities for the foundation
  • Missing or too late consultancy

The 4 most important types of company crises

  1. Companies with massive sales problems
  2. Dependent companies
  3. Companies managed by single persons
  4. Incorrect employees