Entp 15,Seven Business Crisis

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Entp 15,Seven Business Crisis

  1. 1. Seven Business Crisis
  2. 2. What is Business crisis? <ul><li>Business crisis means creation of such a circumstances in the business which are not according to pre-determined standards. </li></ul><ul><li>These circumstances may results into the winding up of business, if not removed or solved. </li></ul>
  3. 3. List of Business Crisis <ul><ul><li>Starting Crisis </li></ul></ul><ul><ul><li>Cash Crisis </li></ul></ul><ul><ul><li>Delegation Crisis </li></ul></ul><ul><ul><li>Leadership Crisis </li></ul></ul><ul><ul><li>Finance Crisis </li></ul></ul><ul><ul><li>Prosperity Crisis </li></ul></ul><ul><ul><li>Management Succession Crisis </li></ul></ul>
  4. 4. Starting Crisis: Causes <ul><li>Lack of thorough study of market potential </li></ul><ul><li>Lack of all round managerial ability </li></ul><ul><li>Inadequate arrangements for keeping accounts </li></ul><ul><li>Underestimation of required capital </li></ul><ul><li>Ignorance of tax-liabilities </li></ul>
  5. 5. How to beat Starting Crisis? <ul><li>Selection of familiar project </li></ul><ul><li>Making realistic, not over-ambitious plans </li></ul><ul><li>Keeping up-to-date business information </li></ul><ul><li>Encourage participation of investors </li></ul><ul><li>Meeting with tax-consultants </li></ul><ul><li>Estimation of realistic capital investment </li></ul><ul><li>Taking care in selecting machinery </li></ul>
  6. 6. Cash Crisis: Causes <ul><li>Over investment in Fixed assets </li></ul><ul><li>Excessive attention to growth in sales and Profit </li></ul><ul><li>Unable to get bank finance </li></ul><ul><li>Expansion of business without proper planning </li></ul>
  7. 7. How to beat Cash Crisis? <ul><li>Preparation of Cash Budget </li></ul><ul><li>Understand difference between cash and profit </li></ul><ul><li>Monitoring on inventory and receivables </li></ul><ul><li>Appoint good accountant </li></ul><ul><li>Take advice of Banker and Financial Consultants </li></ul>
  8. 8. Delegation Crisis: Causes <ul><li>Inability to delegate responsibility </li></ul><ul><li>Inability to share the decision making </li></ul><ul><li>Negligence to organizational </li></ul><ul><li>pre-requisites </li></ul><ul><li>Psychological reasons </li></ul><ul><li>Lack of time </li></ul>
  9. 9. How to beat Delegation Crisis? <ul><li>Appointment of a really capable, competent and effective person in the company </li></ul><ul><li>Effective supervision on new person </li></ul><ul><li>Counseling from expert consultant </li></ul><ul><li>Giving high remuneration package </li></ul><ul><li>Amalgamation with other company </li></ul>
  10. 10. Leadership Crisis: Causes <ul><li>Single owner/partners unable to manage responsibilities of large firm </li></ul><ul><li>Failure to delegate authority and to develop a management team </li></ul><ul><li>Failure to adopt the managing style of an effective leader </li></ul>
  11. 11. How to beat Leadership Crisis? <ul><li>Be an effective leader </li></ul><ul><li>Build a team of mangers/leaders </li></ul><ul><li>Give them sufficient authority </li></ul><ul><li>Act like a leader than a supervisor </li></ul><ul><li>Constant evaluation of oneself </li></ul><ul><li>Concentrate on business strategy </li></ul><ul><li>Be a good and effective communicator </li></ul>
  12. 12. Financial Crisis: Causes <ul><li>Failure in choosing right source and combination of fund </li></ul><ul><li>Failure to go for a public issue </li></ul><ul><li>Over ambitious and unrealistic expansion plans using surplus fund </li></ul><ul><li>Psychological problems of loosing control </li></ul>
  13. 13. How to beat Financial Crisis? <ul><li>Proper delegation of financial power </li></ul><ul><li>Consult experts and bankers </li></ul><ul><li>Going for public issue as and when required </li></ul><ul><li>Detail evaluation of each source of capital </li></ul><ul><li>Obtain Govt. Assistance </li></ul><ul><li>Leasing option </li></ul>
  14. 14. Prosperity Crisis: Causes <ul><li>Satisfaction with current success </li></ul><ul><li>Failure in coping up with environmental changes </li></ul><ul><li>Decline of market share and profit </li></ul><ul><li>Over-confidence of an entrepreneur </li></ul><ul><li>Un-expected illness or death of entrepreneur </li></ul>
  15. 15. How to beat Prosperity Crisis? <ul><li>Always keeps your eyes and ears open </li></ul><ul><li>Do not relax even in prosperity </li></ul><ul><li>Be aggressive, not passive </li></ul><ul><li>Do not be overconfident </li></ul><ul><li>Entrepreneur always remember that </li></ul><ul><li>“ Success today is no guarantee of success tomorrow” </li></ul>
  16. 16. Management Succession crisis <ul><li>The crisis arises when founder of business dies, and it leads to following three problems: </li></ul><ul><li>Who will be the next? </li></ul><ul><li>Split in voting rights </li></ul><ul><li>Wining loyalty and trust </li></ul>
  17. 17. Causes <ul><li>Tax and legal Issues </li></ul><ul><li>Problems of control </li></ul><ul><li>Problem relating to valuation </li></ul><ul><li>Partnership and ownership rights </li></ul>
  18. 18. How to beat it? <ul><li>Have a clear-cut plan for succession </li></ul><ul><li>Advance action in selecting management successor </li></ul><ul><li>Must have one person with general management skill and few others with special skills </li></ul><ul><li>As a successor it is better to select “team” rather than a single person </li></ul>
  19. 19. How to beat it? <ul><li>Always invite competent person in BoD </li></ul><ul><li>Develop club of like minded people </li></ul><ul><li>Constant interaction with banker and investors and lawyer </li></ul><ul><li>Plan for preparation of will, and transfer of shares </li></ul><ul><li>Brief family about key elements of business </li></ul>

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