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Home » Key Factors of Business Decline – Entrepreneurship

Key Factors of Business Decline – Entrepreneurship

By Richard Daniels Reading Time: 3 mins
Updated February 2, 2017

What are the key factors to detect business decline? All companies, no matter how big and powerful you can become, for all the achievements you could have made, for everything you have been able to accumulate, regardless of this, all companies are easy prey of the decline.

All the companies and Startups that I know and I know have committed at some point in their business trajectory bugs. Some of them these errors has led them to collapse while others, very few, have managed to overcome seeking new paths to success.

More from Business Study Notes :- Stages of Product Life Cycle

If this is so, if sooner or later we have to face has come to the business decline fateful moments Would not you like to know how to detect when we come to that point? Can you know this …?

Next I’ll give you some clues!

Factors of Business Decline

Jim Collins , one of the greatest gurus of business management, which defines the stages of decline by companies that pass before his disappearance in his work are: ” Companies that fall, and why others survive “.

Each of these phases are in themselves very powerful clues that should alert us to the principle of the decline of a company. The five phases are as follows:

BORN ARROGANCE OF SUCCESS. This phase begins with the arrogance of companies when considering success as an acquired right.
THE UNDISCIPLINED PERSECUTION OF SUCCESS. In this phase companies are characterized by moving away from what led them to success, jumping in areas they do not control.
DISCLAIMER OF RISK AND DANGER. It is a phase of self-deception in which managers minimize their view of risks, and considerably increase the positive data.
DESPERATE SEARCH OF SALVATION. In this case, the company imposes strategic measures urgently improvised and not previously tested.
CAPITULATION: BECOME INSIGNIFICANT OR DIE. State of very low morality in the motivation and passion of some managers make the difference between reborn from the small, or let the company die.
Each of these phases is itself a key indicator that can help us avoid the decline. From the arrogance, through uncontrolled growth, ignorance of the risks or emergency measures unproved , we can help much to ask ourselves if we are in this situation.

What to do if we are in this situation?

We know solve the first problem: detect the decline. This is fine is only the beginning, because once detected the next step is to take the necessary measures and appropriate behaviors to overcome.

For this there are no written rules, but the common sense and the history of those companies that have overcome critical moments of bankruptcy tell us that there are some actions that can help us to overcome those moments:

  1. Make strategic changes based on clear and measurable data, and avoid bold but unproven measures.
  2. Buying one company is seldom the solution to another’s problems.
    Think and reflect calmly before acting.
  3. Surely we should not change everything. You have to think that you are doing well and that you are not doing well. Radical changes are seldom the solution to a company’s problems.
  4. Focus on the execution and excellence of it.
  5. Find a disciplined person for change, from inside or outside, but who understands the business and is capable of separating the good from the bad.

As you can see, it is often common sense our best guide, and it is precisely what we lack in times of crisis. Apply all your knowledge of emotional intelligence , and seeks to be as rational as possible.

Author at Business Study Notes
Richard DanielsAuthor at Business Study Notes

Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
Love my efforts? Don't forget to share this blog.

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