Symptoms of the business crisis
There are many factors inside and outside the company, which can cause difficulties or better criticality, compromising the balance of the economic-financial structure, thus leading to a corporate crisis. These factors, if not identified in time, can threaten the company survival. Often the Property or the Business Management begins to realize the difficulties when the company performance is inadequate or in decline:
- The revenue volume does not grow as costs grow;
- the company does not generate profits or it causes losses;
- the market share decreases;
- the indebtedness increases;
- the liquidity decreases.
And these are the symptoms of a probable corporate crisis, or rather the emerging causes of the crisis itself. Therefore, there are hidden attempts or rather explanations, so much so that the answer becomes: the market is in crisis. In fact, in every sector there are companies that earn and prosper and companies that lose. That’s why it’s important to ask ourselves:
- Is the company engaged in major investments destined to bear its fruits in the future? And if the market changes?
- What happens if the results delay?
- The cost of the personnel is not competitive with that of the emerging countries, but is our Organization efficient to guarantee the evolution and the ongoing change in the market?
- And again, are we sure we have chosen to compete on the price level? How do we guarantee the target price to our target customer?
- The cost of money is very high, and if maybe the excessive weight of financial burden was a consequence and not a cause?
In general, from an operational point of view, the first interventions to be implemented have as their objective the recovery of efficiency in the short term.
They can concern, for example, the re-dimensioning of the structural costs. In fact, a certain aspect that must not be undervalued, concerns the financial equilibrium (debt situation and cash flows). This, to stop the erosion of liquidity and to restore the minimum conditions, essential for the survival of the company and for its continuity.