Crisis: Signs of crisis and actions to be taken to overcome a business crisis



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1. Introduction
2. Reasons for business crises
3. Signs of crisis (crises / alarm signals)
4. Measures in the crisis
5. Actions to prevent crisis
6. Summary / Conclusion

1. Introduction
Nowadays you often hear that the number of the insolvencies is rising. Which reasons ever led to insolvency, it nevertheless, destroys workplaces and values which the companies have built.

Added to the destruction of values and workplaces, personal tragedies of the present owners and employees are also worth to mention. That's why every business owner should recognize crises in their businesses as early as possible, to be able to master them well.

2. Reasons for business crises
The causes for business crises are as varied as companies are operating, nevertheless, causes and business crises could be categorized in different areas. Thus could be subdivided into:

- Industries and Structural Crises
- the absence of competitive products
- Management Mistakes
- problems with the enterprise succession
- missing of strategical and operational business planning
- missing or defective success control or continuing analyses
- defective expense/cost accounting
- average to badly motivated employees
- defective customer contact and complaint treatment
- bad procurement of information and analysis.

Nevertheless, in most cases of business crises it has to be asumed, that not only one of the above mentioned causes has been decisive, but a mix, from some or all mentioned causes led to the crisis. With the foundation of a new business, there are still causes to come to the list from above, which entrepreneurs have to be aware of:

Wrong financing, information deficits, qualification shortages, absence of planning, personnel problems, wrong or missing market knowledge as well as missing management experience. Other factors could also be, mental weakness as well as nebular business idea.

Especially threatened, according to different studies, are enterprises with less than EUR 50,000 of equity, a sales volume/turnover of 0.6 to 1.0 Million EUR as well as with 5 to 50 employees and an business age from 3 to 10 years. However, the actual developments showed that even older and much bigger companies could get into a crisis. However, enterprises of the aforesaid scale have an advantage that should not be underestimated, they are small and flexible.

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