Facts behind poor business performance
The attainment of every corporate objective should be found in the fulfilment of the mission statement. In the nutshell, this is what clients pay for when a business entity performs well as objectives are accomplished.
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By finding means to achieve high profitability, growth, reputation and market leadership, business entities that strategise to achieve all these objectives do so by following laid down policies and programmes as aligned in their budgets for effective implementation.
But it is unfortunate, however, that more than 50 per cent of all new businesses fail in their first ten years. This is indeed no longer news as sales targets, profit levels, and assets volumes all dwindle even before maturity stages.
In continually seeking for growth implies utilising available resources effectively to produce at a lower cost per unit, thereby selling at an affordable price to earn the needed revenue and or profit. This also means cost reduction becomes a significant factor if an entity is to survive and maintain an enviable share of the market in these days of competitive price wars. Indeed, what has become the corporate directional strategy to be adopted by management has been whether to expand, cut back or continue with activities that had always resulted in the attainment of shareholders’ and stakeholders’ interests.
In the same vein, it has partly been in the area of either delving into current operations within present industry or diversifying into other fields of endeavour. Greatly, it has also hinged on whether to expand and grow locally or internationally through internal advancement or through strategic mergers and acquisitions. But rightly, these grand strategies as in growth, stability and retrenchment (either to reduce scale of operations) have had a general implication on most business performances and growth. They can tell whether management is aware of what to do at any point in time and also show the level of competencies that a particular management and its workforce would be made of.
In modern day business trends, the way in which management organises and coordinates operational activities, nurture capabilities between product lines and business units, as well as employ and deploy resources, either impact positively or negatively on the performances of the business. What management in some circles have failed to recognise are the facts behind that which strangle operations, making businesses dip in form and thereby collapsing them. Management have also not found solutions in this direction and have not been able to come up with answers to deal with all these misfortunes.
It is imperative, however, to figure out what cause these declines and premature deaths of organisations, while finding out the significant paths to chart to safeguard growth and maturity in the lifespan of the firms concerned.
Facts to know
It is always the wish of every management team to jealously protect their reputations, current profit flows and the remuneration packages. In likewise manner, shareholders’ wealth and return on capital employed must all the time be maximised. But some decisions and actions taken have somewhat plunged a lot of outfits plummeting in form and in performances. Such factors, because not well handled, have caused jobs to be lost with attendant challenges in meeting obligations and personal goals.
Audaciously, these are seen in these forms;Improper Records Keeping
It is fascinating yet so sad to note that businesses, both in the private and public sectors woefully keep adequate records of operations. Financial management records, human resource documents, and a lot more notes on the day-to-day running of entities are not adequately kept. This is actually not giving the right picture of the true stands of firms and such is telling on the fortunes of businesses.
Poor Branding
There is a factual realisation that most businesses are not marketing themselves and their products well to be really demanded for by clients. This is hampering financial goals to be met. There is competition out there so target markets must know what you offer and how their needs can be met. They also must have you in mind all the time so as to differentiate you from the rest.
Ineffective Executions
It is good to have the business plan but without the competencies to execute, nothing will be accomplished. Most managers have on their shelves plans, but the calibre of staff employed who are unmanageable, dull, lazy and ill-mannered are all not helping organisations to achieve high productivity.
Poor Monitoring and Evaluations
The business operations are being carried on all the same but without the proper yardsticks to find out if projects are on track. We are all witnessing poor executions of projects these days. Truly, real issues of inadequate monitoring and evaluations. We also know of firms that do not evaluate staff performances. Well, such firms are losing out on targets without sanctions being applied.
Poor Management
There is a problem of inadequate skills, poor delegation and mentoring. There is also the lack of expertise and experience in driving most business entities. This is making firms fizzle out in the market than one would have thought. There is also no succession plan for future leaders and this is hampering proper direction at which some firms are finding themselves these days. There is a saying that “the success or failure rate of any business is directly proportional to the strength and level of the professionalism of the management.”
Inadequate Funding
It is vital to expand and grow to an appreciable level. This is to help gain stability and satisfaction. But it has always been contended that the business goal should be a reasonable return for shareholders’ input so as to let them enjoy their return on capital employed. However, this has not been the picture these days as it is difficult sourcing for credit and other financial inputs. This particular limitations have been the nightmare for management members to exhibit their worth and the full potentials of their outfits.
Not seeking for Advice
Getting to know the significant traits that plunge businesses into traps can really be helpful. This has helped a lot more businesses to scale over the challenges when they roared up. In a national business survey conducted in the UK, in 2010, it was found out that 18 per cent of businesses jumped up better in growth and better in financial management practices than before, when they sought for advice from business support organisations. In Ghana, the story would not have been told of collapsing businesses if entities had sought advice from Empretec and the National Board for Small Scale Industries.
Conclusion
Business growth and performance is a necessity. It is not an option; neither is it a last resort to turn to, in turning the tables right on the balance sheet. To fashion out expected performance due to the damning factors that cramp up on the business’s future, management ought to adopt the right strategies out of the known ones. With these, the most appropriate ones would help management grip on entity’s market share and safeguard its goodwill on the profitability ratios.
However, noting the factors that affect performance and in trying to turn the tide on them, would do a lot good for firms to be on a good stead for all time to come.
Management must, therefore, be on the look out to avoid these while making efforts to grow their businesses and ensuring adequate performances as expected. — GB
The writer is a Lead Consultant/CEO
Eben Consultancy
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Fellow Chartered Economist &
Council Member, ICEG
Email: [email protected]
Website: www.ebenezerashley.com