The Reasons and Symptoms of Failure in SME Firms

Analysing the sources and process of failure one can see a certain pattern. Namely, the management do not notice the critical situation in time, which due to the delayed or incompetently carried out repair actions ends in company collapse. Development thresholds are occurring in the process of the growth and development of the company. They are often tied with the crisis in the company. Their occurrence is preceded with symptoms of future crises in many cases. The analysis and understanding of these symptoms by entrepreneurs may be the cause of reducing the number of crises in companies of the MSP sector and unintentional economic failure.

The company policy is prepared and implemented by the entrepreneur and it covers such aspects as strategy and investment, marketing and sales, finances and human resources. The lack of enterprising or managerial skills in any of these areas and personal skills of entrepreneurs/managers may lead to unexpected problems that will decrease the company’s chances to survive.