Contestant: I’ll take American Business Stats for 500.
Contestant: What is the amount of companies that have filed for bankruptcy up until August 2017.
Host: That is correct!
You read correctly. In 8 months, almost 26,000 companies have filed for Chapter 7, 11, 13 or 15 bankruptcies. Those are actually pretty normal numbers, according to American Bankruptcy Institute, if you’re looking at the figures from a historical point of view. There are many reasons that would result in a company having to admit they can no longer meet their financial obligations to suppliers and their employees. Some can be related to market conditions which make a company’s product obsolete or unable to compete, like in the case of Toys R Us. Others can be associated with bad business decisions or the bubble within the company’s industry suddenly bursting. But, what happens when bankruptcy was the end result of a particular set of human attitudes by those at the front of the company. That’s right, people can have just as much accountability and responsibility for a company going under. How? You ask.
Plain old stubbornness
Some businessmen are set in their ways. They have a pathological unwillingness to try things differently when things start to go South. These types of heads will refuse to do things in a way which is not theirs. For them, it’s either their way or the highway. Being stubborn will ultimately lead to the company’s downfall and for it having to file for bankruptcy. In order to avoid this from happening, a company needs executives that will not shy away from shaking things up and trying to do what it takes to help the business rise from the ashes.
Arrogance is not confidence
Remember Blockbuster Video? They may be the poster child for arrogance leading to disaster. Way back when Netflix was just becoming popular, they approached Blockbuster for a merger. The video rental company said no way, that they had zero need for an ally, and less from one who could not compete with them. How wrong they were. Nowadays, Blockbuster is out of business and is known as a pop-culture reference whereas Netflix has become one of the biggest companies out there and a company which revolutionized the way we watch media. And all because Blockbuster thought they were above everyone else in their industry.
Not knowing when to keep your mouth shut
Some company presidents or CEO’s are very outspoken, both on social networks and with the media. They will have no problem with speaking their mind on any and all topics, never thinking or worrying about generating controversy. This may have to do a little with the arrogance explained previously, which leads them to believe they are beyond reprimand. What they fail to consider, is that we live in a politically correct type of world, some would say that it’s a little too politically correct. Controversial comments can force allies and partners to stay away from any business dealings or even more damaging, banks not wanting to loan a company money to finance new projects. A lack of allies and funds could prove to be lethal for a company’s future. Therefore, the head honchos must know how to handle the media and understand that they must be very careful when giving their own personal opinion on controversial subjects.
Little to no sense of morals and ethics
Shady dealings are a dime a dozen in the business world. So much so, that we don’t even feel surprised when we hear about how Company X tried to cheat the government or Company Y. Not caring about what’s right and wrong and about what you should do and what you have to stay away from will definitely hurt the company in the long run. Yes, at first and throughout some time, the company will rake in the dough and think they are unstoppable. However, technology and investigative processes evolve over time to the point where they can detect what was once available. Or there could be a disgruntled employee who feels he or she didn’t get their cut so the start to denounce the company under anonymity. As soon as authorities start going after a company, you can bet they will find something and when that happens: Good-bye company! Executives at the helm have a moral obligation to do things correctly and not look for any shortcuts.
The market or competition is not always responsible for a company having to file for bankruptcy, whichever the type. The executives behind the decision-making process and their attitudes can also have a great impact on a company’s future. Therefore, a company needs to have people who are honest, innovative, open to new things, and humble if they truly want to avoid bankruptcy and all the boring and stressful litigation that comes with it.
For more insight into bankruptcy and other company related issues, don’t hesitate to check what Suzzanne Uhland has to offer on her blog.
* Featured Image courtesy of Pixabay at Pexels.com