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When will companies die?


The majority of companies tend to avoid the common challenge of evolution and change, imposed by modern times, time and spatial distances, and the openness of the world. It is best for them to maintain the stability of administrative and functional conditions and stay in the safety zone.

But the current reality is not in any way compatible with the direction of these institutions; their rejection of development and change to satisfy their desire to stabilize and stay on their immediate success, is one of the indicators of the end declaration. The figures show that the average age of companies fell from 67 years in 1920 to one year only in 2017.

Companies do not die overnight, but it takes up to tens of years, and there are many important indicators that predict early death probability, and help these indicators to find out.

These indicators can be broken down into obvious and invisible indicators that many managers may overlook. The first type is the decline in profits achieved by the company compared to the profits of its competitors, which strongly suggests a decline in market share and loss of many customers.

The high fixed costs ratio of the company also indicates a major crisis in its performance, and low profit margin. Fixed costs are a major point in determining pricing policies, following the level of production and sales volume, thus increasing their losses and thus resorting to excessive debt and a vicious cycle of debt, which often ends with the declaration of bankruptcy and commercial death.

Loyal customers… Collar for the survival of companies or motivation to die, the relationship between the company and its customers is one of the most important factors that gives a comprehensive view of its performance and clearly indicates its future, either positively or negatively. Therefore, the decline in customer sales foreshadows their transformation into competitors and a major material loss. This may be due to poor product quality or poor customer service. , Or superior competitors.

This calls for continuous development in performance, relying on more than one supplier of needs, focusing on creativity and innovation instead of engaging with competitors, thus adding new products and continuously improving services to meet customer needs.

The rate of attracting new customers also indirectly predicts the likelihood of a company dying, as any company seeks to profit from new and old customers. Therefore, the lack of new customers confirms a significant defect in performance in terms of the quality of products or services, Marketing Plan.

The performance of the organization is also linked to other factors that also lead to rapid death, such as: a continuous defect in the system and accuracy of technical information on which the operating, production, marketing and other plans depend, which leads to accumulation of stagnant inventory of products and exposure to corruption over time, and thus heavy losses.

The resignation of human competencies as well as the hidden indicators, the escape of qualified elements as a result of administrative conflicts, the absence of a fair system of promotion, or other reasons, threatens to drain the most important resources on which the company depends on its success.

In conclusion, if the company faced one or more of these factors, the first step to recovery is to recognize failure and take responsibility, and then carefully meditate on the problem and accept the challenge to overcome it; a permanent bet on work and innovation, self-closure, denial of error, panic of loss will not work, But hastens to announce the end. These and other indicators apply to large and small companies, public and private enterprises, profitability and public benefit, and all forms of administrative organizations with different concepts

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