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Even good companies can go awry
By Jenny
C. McCune Bankrate.com
 Companies
at either end of the financial spectrum -- those doing extremely
well or extremely poorly -- are most apt to ignore warning signs
and land in hot water.
In the case of the prosperous company, the owner
may get complacent. Everything's going so well that the small-business
owner starts delegating and stops paying attention to details. "People
that don't monitor their business end up in trouble," says Gene
Fairbrother, president of MBA Consulting in Dallas.
Or the business is doing so well that the owner
figures, "I don't need to do any more marketing or advertising.
Customers know where to find me."
Optimism isn't always enough
For companies doing poorly, both owners and employees
often fall into a state of denial. "He keeps on thinking, 'Just
one more month,' or 'Until I get that sale,' or 'If I can just hold
out until the fall, business will pick up,' " Fairbrother says.
"The problem is, being the eternal optimist doesn't always work."
In addition, small businesses need to be vigilant
about what's going on and adapt to changing business conditions,
says Al Napier, professor of management at the Jesse H. Jones Graduate
School of Management at Rice University in Houston. He cites the
Internet and how it put a major bookseller chain out of business.
"They failed to see how it was changing their business and take
appropriate action," Napier says.
Another problem with small-business owners:
They seldom make the time to assess their situation. To avoid getting
into trouble, Fairbrother recommends setting aside an hour or two
a week to go over your finances and spend time talking to your employees
and customers.
"A lot of owners will think that their accountant
will go over the books and warn them of any problems," Fairbrother
says. "Most won't since they're juggling you and other customers.
It's up to you as the business owner to keep track of your financials."
Jenny C. McCune is a contributing
editor based in Montana
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