BusinessBrief.com » 7 ways to ruin a business

7 ways to ruin a business

November 4, 2009 by Jim Giuliano
Posted in: Special Report


sales2

The devil’s in the details, they say. And missing these details can send your business to you-know-where in a handbasket.

The mistakes come from Jay Goltz, writing in the New York Times. He owns five businesses himself and has seen the practical effects of such mistakes:

1. Bad receivables. The biggest troublemaker: the good customers gone bad. Those are folks whose credit you checked when you started doing business and who checked out fine. But they’re going downhill fast — while still promising to pay. Cutting them off is a tough but necessary move.

2. Bad interviewing. Interviewing applicants is an underrated art. Poorly done, it can stick you with a bad employee or a lawsuit.

3. Bad background checks. A clean background check doesn’t guarantee you’re getting a good employee. But doing a less-than-thorough or no background check is an invitation to disaster.

4. Bad insurance. The three biggest mistakes: 1) understating insurance to value; 2) not having employment-practices insurance; 3) not having business-income replacement coverage to replace lost revenue until the company is up and running again.

5. A bad accountant. You pick someone to do your taxes. Fine. Is that same someone qualified to keep tabs on the financial health of your company?

6. Bad controls. Theft and embezzlement  are company-killers. Get an accountant to help you set up prevention systems.

7. Bad company policies. Usually, they’re enacted because they benefit the company. But do they benefit the customers?

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  • http://www.employment-screening-background-check.co.cc J Jay

    Good article. I totally agree with number 2 and number 3. Sometimes the company rushes to get an employee to fill in a position without thoroughly recruit a real good one. I found that myself and I ended up having an unpleasant colleague for one year (until his contract expires – no extension)

  • http://www.brandgineering.biz Carl Hartman

    I say 2&3 are a mixed bag. We do a very thorough job making sure they are qualified, but my attorney informs me that it is illegal to use personal financial information obtained to eliminate candidates. —Today, just about everyone is having financial challenges. Eliminating people with a bankruptcy or other debt is just plain STUPID! — Some of my best workers are people that struggle financially. One person lost their entire savings, which he invested in Enron. Another man, his wife had major health problems that ran up their debt, yet foolish employers rule out hard workers that just fell on bad times. Another, his son has birth defects that cost him almost a million dollars in surgeries. Conversely, I have had employees in the past with clean financial records that were greedy and were the ones stealing us blind. — I did a poll of my fellow CEOs during a recent business networking meeting. Almost 85% percent of them have had personal bankruptcies. By that rule of screening, they couldn’t get hired at their own company.

    Also, it is rare that someone hasn’t been fired from a job. When I was young, I worked a job and had great reviews. My boss retired, his young replacement wanted to bring in his own people and I was canned for bogus reasons. Life sometimes sucks. Background & financial checks don’t tell you the whole story.

    #2 – Make sure you are screening employees for what is important to your business. I review staff personally. HR people have their head stuck somewhere it shouldn’t be and rule out potentially great people. I’m more interested in potential mixed with experience – not the job description. I can train certain things easily, I can’t train potential and ambition.

    #3 – Just make sure they aren’t a convict on the lamb. Don’t rule out potentially great staff over a few blemishes. Make sure your criteria for screening out people is critical to the job. EVERYONE has blemishes on their record. The REAL crooks know how to hide it.

  • http://www.scc-co.com Gerry Poe

    If it was any simpler it would hit you in the head!

    To add another shought – all systems must be integrated and interoprable… Systems can also be no-where…

    Gerry

  • Arnie

    Also:
    Treat customers with respect; give them what they pay for; provide service in a fast, positive, and professional way

  • http://www.telcominsgrp.com Pete

    When all your worried about is the cost of insurance or you have an agent that does not understand business income coverage number 4 is a very real risk.

  • http://www.thezlotnickgroup.com Jan Zlotnick

    All good stuff to consider. All on my list. But I’ve seen plenty of companies fail that do all these things for want of what would be #1 on my list of advice to my client brands: Bad Customer Relationship: because if you value your investment and time in your business venture — if you’re getting real and comprehensive about this Big Idea of yours — you’ll figure out where the money comes from and stops coming from. Customer relationship, digital-to-in-person storytelling, tracks to everything that tracks back to positive or negative cash flow: 1. Marketplace/Consumer Research; 2. Brand Strategy/Positioning; 3. Marketing — a fast-becoming anachronistic term — is all about Relationship): how you tell your story, how you help your customers tell your story to each other. Customer Relationship, ill- or naught-conceived, will kill you outright or down the road. Because Customer Relatioship is the thing that dramatically reveals you in a transparent marketplace and answers these emotional-first questions: “What do I feel about you?” Why are you interesting, or boring, to me?” “Will I remember and try you?” “Can I trust you?” “What do others and my friends and family feel about you?” “Now that I’m a customer, how do you show you care about me?”

  • DavidG

    My company is a skilled nursing facility (SNF). The government holds an ever increasing share of our accounts receivable. The government dictates the rates at which they reimburse us and delay payments for months. The average national daily bed rate is over $200, but the average national Medicaid reimbursement rate is $85. My state is typically 3 months or more behind in its payments to us.

    The AHCA reports that the average SNF’s receivables is 8% Medicare (Federal government), 68% Medicaid (state government) and 24% private pay or other sources (including LTC insurance).

    I totally agree that the #1 way to ruin a business is having bad receivables. Cash flow problems led to the closing of many small pharmacies over the past decade. The health care sector needs less– not more– government intervention.


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