In over 20 years experience as a commercial solicitor and trusted adviser, I have seen many clients thrive in business. On the other hand, some struggle. A few stand-out threats that can play a role in lacklustre business performance are:
- Lack of adequate due diligence when buying the business or starting the business from scratch.
- Poor positioning, e.g. wrong location, an untimely or ill considered location change, missing a target market or over estimating potential markets.
- Staffing, including theft and embezzlement, individuals or groups who undermine morale and who compete.
- Loss of focus, i.e. straying from the core business.
- Owners’ disputes.
- Regulatory changes.
- Changing markets, including effect of online, encroachment by unexpected or unforeseen sources of competition.
- Pricing, too high/low.
- Inadequate working capital/issues with borrowings and financiers.
- Expansion, either over or under.
- Record keeping and systems.
- Strategic and resource management issues.
- Cash flow management, including invoicing and debt recovery.
- Poor expense management; in particular managing exposure to the ATO.
There is no one golden rule or simple solution to manage threats. Often a complex set of interdependent factors are at play, which works against the success of the business in the given circumstances. So, when decline or underperformance is identified, it may be best to involve an experienced professional to assist. Doing so could even help to turn potential threats into strengths or identify and deal with others. To be prepared is also good strategy for success, e.g. proper due diligence on buying or starting a business often allows better assessment of prospects. That may in turn allow adjustments in strategy.
In the next column I touch more on the role your solicitor can play in that regard.