Identifying and solving management issues
Every business wants to avoid the problems that can negatively affect success. Problems left unchecked could expose your business to pressures that could result in bankruptcy. These quick checklists help you to identify your problem and suggest short and long term solutions.
What's in this Article?
Every business wants to avoid the problems and risks that can negatively affect success. Problems left unchecked could expose your business to ...more
What you'll find here
The following is a brief index of the major problems that are discussed in this article. Find the sections and topics that interest you – or measure ...more
Underused assets
The return on capital invested in fixed/non-current assets isn't satisfactory because assets aren't being used to their full ...more
Inefficient business practices
In many instances a business' structure grows to include companies, trusts, joint ventures, partnerships some of which may no longer be ...more
Poor cash flow
The business is constantly finding it difficult to make payments when they fall due. IndicatorsCreditors are constantly contacting the company asking ...more
Poor debt collection
As a percentage of working capital, the value of trade debts is too high. This means that the business's cash flow is restricted. ...more
Communication breakdowns
There's been a breakdown in the channels of communications within the business leading to staff and customer disenchantment. IndicatorsStaff are ...more
No control over variable production costs
Variable production costs, such as electricity and raw materials, are increasing per unit produced. IndicatorsIncreasing production costs. The gross ...more
Inadequate customer relations
The business is receiving a large number of complaints and returned goods leading to loss of customers. IndicatorsThe number of returns is ...more
No replacement program for fixed/non-current assets
The purchase of fixed/non-current assets is constantly delayed because of lack of funds, which leads to the continued use of dilapidated and old ...more
Inadequate monitoring of fixed overheads
The ratio of fixed overheads to gross profit is disproportionately high when compared to the industry average or the historical norm for the ...more
Exposure to foreign currency losses
Your business trades with foreign corporations and has loans, contracts or trade agreements in a foreign currency. Therefore, if the exchange rate ...more
Exposure to fraud
The business doesn't have an adequate system of internal controls to minimise its exposure to fraud. IndicatorsThere's inadequate segregation ...more
Inadequate insurance cover
The business hasn't taken out sufficient insurance to cover a major catastrophe. Should a catastrophe occur, the business will be unable to ...more
Unprotected intellectual property
The business has failed to realise the value of specific products or trademarks and has not ensured their protection.IndicatorsManagement is unaware ...more
Obsolete inventory
The volume and value of obsolete inventory is too high leading to increased costs and decreased cash flow.IndicatorsIncreasing storage costs. ...more
High inventory value
As a percentage of working capital, the value of the business's inventory is too high. This means that the business's cash flow is restricted ...more
Understanding management reports
The business is not taking advantage of benefits that can be extracted from effective use and efficient management of reports.IndicatorsManagement ...more
Inappropriate management structures
There are no clear lines of authority and management employees aren't being used to the greatest benefit of the business.IndicatorsThere's ...more
Erosion of market penetration/reputation
The business has failed to expand its market share over that achieved in previous periods.IndicatorsSales have remained static or have decreased. ...more
No quality control
There's a large amount of wasted time and material due to errors that have occurred and have required correcting.IndicatorsLabour time and ...more
Uncontrolled petty cash expenses
The amount of cash flowing out of the business through petty cash is increasing and has become a burden in both the amount and in the administrative ...more
Inadequate security
The assets, accounting records and other records of the business are not secure from theft, destruction or corruption. IndicatorsThe physical ...more
Over reliance on one supplier
The business is linked to the integrity and economic health of one supplier. This puts the business at risk if that supplier has ...more
Low staff morale
Staff are not committed to producing quality work and there's an unacceptable incidence of absenteeism, mistakes, rework and complaints. The ...more
Ignoring statutory requirements
Management does not have an understanding of the reporting and compliance requirements of relevant legislation and the business and its directors are ...more
Poor service from supplier
The business is constantly not receiving the supplies it requires. This disrupts the quality of service the business provides to its ...more
Frequently paying suppliers' terms
The business constantly finds it difficult to meet its suppliers' terms because of the payment cycle it has established to control these payments. ...more
No tax planning and payment budgeting
The business has failed to budget for the payment of tax and is paying too much tax. IndicatorsThe business has insufficient cash to meet its tax ...more
No long-term vision There has been a failure to give the business (management and employees) a definitive direction and purpose.IndicatorsStaffing is ...more
No long-term vision
There has been a failure to give the business (management and employees) a definitive direction and purpose.IndicatorsStaffing is inadequate. Lack of ...more
Misunderstanding working capital
Management doesn't understand the working capital cycle and don't know how to minimise the amount of capital tied up in the cycle. Sometimes it ...more
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