Why do mid-sized companies go bankrupt?
Posted: Sun Jan 19, 2025 10:00 am
Discussions about the mortality of small businesses are recurrent when it comes to entrepreneurship and creating more inviting conditions for starting one's own business. But little is said about medium-sized companies.
The challenges of any company never cease. They exist in the pre-operational phase, in the creation of the business and in the following phases. It is the life cycle of organizations that at each moment need to overcome barriers with a view to long-term growth.
Since most businesses that are still in operation faced the same challenges when they first started, it is common to find studies and statistics that focus on the first 3 to 4 years of a company's life. But what happens after that? What happens when the company goes beyond this phase?
So-called growing companies go through iceland phone numbers the initial phase of investment recovery and enter a new cycle. Many acquire the size of what is called a medium-sized company (neither micro/small nor large).
The average business can exist for decades and is often run by family members or long-time employees. Some enter a stage of feeling self-sufficient and then fail.
In fact, some studies show that the failure of a medium-sized company is more common and disastrous than that of a so-called small company because when the problem becomes clear, years have already passed and the solution seems insoluble at first glance.
A study that will be published later this year in the US by Robert Sher shows that, unlike large companies, medium-sized companies do not have the technological and organizational talent to stop the problem that is quickly leading the company to bankruptcy.
Furthermore, there are some typical characteristics that medium-sized companies tend not to notice in time, as they become part of their daily routine.
These include: an arrogant sales force that puts excessive pressure on the value chain; outdated technology and infrastructure; few talents in key areas; and excessive dependence on a few customers.
The fact is that there are challenges at any stage of the entrepreneurial process. The role of the entrepreneurial leader is to perceive and anticipate problems, seeking solutions that are appropriate to the moment that their business is experiencing.
Medium-sized companies have already gone through the first phase that many companies in Brazil still cannot overcome (surviving the third year of life). However, the risks of a major setback are high if the entrepreneur is not attentive and vigilant.
The challenges of any company never cease. They exist in the pre-operational phase, in the creation of the business and in the following phases. It is the life cycle of organizations that at each moment need to overcome barriers with a view to long-term growth.
Since most businesses that are still in operation faced the same challenges when they first started, it is common to find studies and statistics that focus on the first 3 to 4 years of a company's life. But what happens after that? What happens when the company goes beyond this phase?
So-called growing companies go through iceland phone numbers the initial phase of investment recovery and enter a new cycle. Many acquire the size of what is called a medium-sized company (neither micro/small nor large).
The average business can exist for decades and is often run by family members or long-time employees. Some enter a stage of feeling self-sufficient and then fail.
In fact, some studies show that the failure of a medium-sized company is more common and disastrous than that of a so-called small company because when the problem becomes clear, years have already passed and the solution seems insoluble at first glance.
A study that will be published later this year in the US by Robert Sher shows that, unlike large companies, medium-sized companies do not have the technological and organizational talent to stop the problem that is quickly leading the company to bankruptcy.
Furthermore, there are some typical characteristics that medium-sized companies tend not to notice in time, as they become part of their daily routine.
These include: an arrogant sales force that puts excessive pressure on the value chain; outdated technology and infrastructure; few talents in key areas; and excessive dependence on a few customers.
The fact is that there are challenges at any stage of the entrepreneurial process. The role of the entrepreneurial leader is to perceive and anticipate problems, seeking solutions that are appropriate to the moment that their business is experiencing.
Medium-sized companies have already gone through the first phase that many companies in Brazil still cannot overcome (surviving the third year of life). However, the risks of a major setback are high if the entrepreneur is not attentive and vigilant.