10 Ways Poor Business Management Led To The Failure Of A Group Of Companies

The article shows you the 10 Ways Poor Business Management Led To The Failure Of A Group Of Companies.

  • The Group
  • Business Structures.
  • Management Style.
  • Poor Personnel Management.
  • Poor Financial Management.
  • Poor Marketing Management.
  • Bank accounts
  • Final effects
  • Your take away

Some people are can easily identify profitable business opportunities.

Yet others can manage a business efficiently but lack the ability to identify a viable business.

This article shows you how poor business management led to the failure of a group of companies.

The Group

Mr. ZXY invested in the following businesses:

  • Aviation,
  • Transportation,
  • Manufacturing,
  • Brewery,
  • Education,
  • Estate development and tourism

Business structures

All Mr. ZXY’s  companies were duly registered with Corporate Affairs Commission as private limited liability companies.

He and one of his sons were the directors of all the companies.

Unfortunately,  all the companies were run like sole proprietorship in spite of their legal status.

Management Style

Mr ZXY never held meetings with his employees to to look at the problems of the companies

Similarly, he never sought the advice of business management consultants to help him find solutions to the problems of the companies.

Poor Business Management

His poor business management style affected his employees in many ways, including:

  • He never encouraged his employees
  • There were no promotions
  • No annual vacations
  • There were no pay raises for employees
  • Workers were owed months of unpaid salaries
  • Paid his employees poor salaries
  • Towards the end of each month, he would travel outside the country; just to delay payment of salaries.

Poor Business management: Financial Management

Mr. ZXY’s had very poor approach to financial management.

For example:

  • He could just walk into any of the companies and collect cash from the cashier.
  • Sales revenue were never paid to the bank
  • He had access to cash during working hours in any of the companies
  • Was fast in getting loans from banks
  • But extremely slow in paying back.

Poor Business Management: Marketing

His poor business  management also affected the marketing activities of his companies.

To him, any money spent on advertisement was money wasted.

In fact, a Marketing Manager who suggested that the companies should put up ads in some local radio/TV channels was fired.

He believed that customers would come on their own because of his connections.

Bank Accounts

His bank accounts were messy and the banks stopped giving him more loans.

The reason was that he was good at convincing bank managers to give him bank loans or overdraft.

But he paid back loans granted to him by the bank.

Consequently, the bank stopped giving him loans or overdrafts

Accounting Records

Mr. ZXY never saw any reason to keep accounting books and records for any of his businesses.

Consequently, it was very difficult for anyone to say whether or not the companies were doing well.

Final Effects

After some time, the side effects of poor business management started to show in the fortunes of all the companies, notably:

  • Employees were no longer sure that they would keep their jobs
  • Productivity in all the companies began to drop
  • Good employees left
  • Existing customer began to leave
  • The quality of customer service started to drop
  •  Bank reconciliation statements were never prepared
  • Annual financial statements for each company were 2-5 years in arrears.
  • Because accounts were not prepared, it was not easy to say if any of them made profits.
  • Therefore, none of his companies paid company taxes
  • He never paid personal income taxes
  • Older companies were folding up as fast new ones were registered.

Your Take Away

The take away from this story is that you should:

  • Give senior members of your business free hands to put their skills to work for you.
  • You should learn how to delegate duties and authorities to senior members of your staff.
  • Hold regular meetings with your employees
  • You never can tell who of them might have useful ideas that could move your business forward.
  • Do not spend business finances on things that do not add value to your business
  • Pay your employees salaries according to the work they do for you, their skill and experience.
  • Do not delay their salaries
  • Motivate your employees

Related:26 Best And Most Effective Small Business Management Tips Entrepreneurs Need To Succeed In Their Businesses:


Samuel Ijenhi