1)The product or service offered to the market become obsolete in time. Not requested any more. Replaced by a better and cheaper . A sewing machine was a must for every family. Housewives were to sew so much things for their family and house furniture. Nowadays ready garments are so cheap and readily available everywhere that this skill of the women especially became obsolete.
General ledger which was used to be a large and long notebook dissapeared with the computerized accounting programs and the data stored at cloud. The producer of such notebooks lost their jobs.
Knitting was also very popular until 21st century but was defeated with intensive factory size production. Moreover selling in the retail market ball of wool is no more possible.
Insisting in producing and try to sell selling such products led you to loose your capital and finally go to bankrupcy.
2)A company may have saleable products in his portfolio but the profit margin must cover at least the expenses of the company. Income and expenses must be always in balance all the time for the continuity of the business and the company. Especially when the company reaches to middle size the turnover may hide the loss for a while. The bankrupcy may not be foreseen very easily. Hence a continous balance sheet check is a must.
The most common mistake that I have experienced and noticed in my life time many companies are living in the past. Most of them have had some very profitable years in the past. Hence managers have continuous expectation of such good years to reoccur. Patienting years after years kill the company .
Avram Aji
19.06.2018
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