25 Oca

Why Do Our Companies Die So Early?

We cannot say that the level of our country’s development is at the desirable stage. In this case, the corporate structure of the companies, the professional management of the organizations and the quality of our human resources are directly affected by the development of the country. As in the whole world, our entrepreneurs want their business to live for a long time and to be passed on to future generations. It's desirable, but unfortunately it's often not enough to ask for this. To understand that asking for this is not enough, let's take a look at the report of a research on SMEs.

Of the new businesses;

• 24% fail at end of second year,

• 51% are unable to continue their life after their first four years,

• 63% do not see their sixth year.

• 80% of them disappear within 10 years.

Think about his, eighty percent of our companies, founded with great efforts and dreams, disappear within ten years. Are the rest very successful? They are not very successful either. Another study shows that the average life span of our companies is around 36 years. So, what's going on with our companies disappearing in such a short period of time? Many reasons can be mentioned, but I’d like to summarize the important reasons in general.

1 - Management Incompetence

I agree there are some issues we are good at as a country. We have an artisan sense, we are human-focused, we have strong feelings, we have practical intelligence, we do it when we want to, but let's face it we are not capable of “managing”. It will be enough to take a brief look at the family partnerships around you, the inheritance disputes, the stories of the business collapses, without having to go too far to understand how much we have failed in management and business. Unfortunately, many of our companies are doomed to collapse because they cannot establish their management and organizational structure and manage the company according to generally accepted management approaches.

2-Inability to Manage Finance

Imagine an average Turkish entrepreneur. He sets up his company through difficulties, and even fails several times until he has established a successful business, but he is indomitable. Instead of thinking about the medium-and long-term financial situation of the company when it succeeds in its business and money starts flowing into the treasury of the company, he immediately changes its car, pretending as if the seller has one last left in the firm's hands. This car that is bought is often ultra-luxury and is bought with the company's money. Aren’t there those that go beyond that and buy yachts, apartments and summer houses? Of course there are. (Of course, the company may not fail with a purchased car or real estate, but the point I want to emphasize here is the general perspective). When that happens, the company's safe and the boss's safe start to break into each other, and the failure to manage the company's finances starts to ring alarm bells. Another important issue is that in many businesses, a significant portion of money is tied to stocks, making the financial situation very difficult. At this point, the management of cash flow, payments and money becomes more difficult and may even run into a stone wall.

3-Failure to Develop Strategic Plans

Even in many of our companies that have proven success, there are serious deficiencies in developing strategic thinking, vision, medium-and long-term plans. This is exactly the case with newly formed companies. Many employers in this country have difficulty preparing their companies for the future on the grounds that they cannot see their way, and cannot look ahead from day-to-day operations. Even more, he often does not share his thoughts with his partners, managers, sons or daughters.

4-Uncontrolled Growth

Businesses are just like people. They are born, they grow, they mature and they grow old. For businesses, the growth phase is one of the steps that needs to be managed very well. When things are going well and money is earned, continuous growth is desired and this desire for growth is tried to be realized whether it is strategic, the necessary infrastructure, systems and human resources are sufficient or not. These dangerous moves lead to the collapse of our companies. However, growth is also a planned process that needs to be managed by professional people in line with specific goals.

5- Unable to Professionalize

It is necessary to identify the bosses who founded the company and brought it to a certain point as successful. But many of our entrepreneurs believe that they can continue their success and achieve new success. They often fail to comprehend the difference between the management style of their company's birth and growth or maturation. They do most of the work themselves, or they will always have their finger on the pulse. When the management approach is like this, they do not want to leave the business to the competent ones, that is, in modern sense to professionals. Many professional managers also do not want to work with bosses who do not want to leave the business and do not want to authorize but give responsibility.

The employer is not aware of this, but the lack of knowledge and know-how skills that will carry the company into the future will shorten the life of the company.

Abdulrezzak Çil, Phd

Founder and Executive of R&M Counselling

Psychological Counsellor and Guide

Executive Advisor and Coach