Blind business? The 6 main causes of lack of control

There are many business projects and companies that arise every day around the world. Many entrepreneurs put large amounts of capital and energy into building a business that is prosperous and makes them successful in all aspects of their lives. However, according to different market studies that have been carried out, almost 80% of companies fail during their first year.

A strong point in this failure has to do, not with economic crises, but with the lack of control in the company. And having appropriate internal control in your company increases the reliability of financial information, the efficiency, and effectiveness of operations, and compliance with laws and regulations.

Regardless of the specialty of your company, it is important that you have adequate control since the most common consequences for companies that do not have a correct internal registry are fraud, theft of information, cash, or assets. Problems can even be generated in the production process that, without good internal control, would be very difficult to detect.

To help you prevent your business from failing, here are the top 6 causes of lack of control:

• Lack of corporate culture: Many companies make the mistake of starting to operate without considering their mission, vision, values, and strategy. Most new entrepreneurs are unaware of the impact that clearly defining a company culture has on a business.

New growing companies must consider their reason for existing, where they want to go, or how they see themselves within a certain time to work and operate in pursuit of a clear objective.

The lack of business culture can create confusion in the future about who the company is and where it is going, which will be reflected in its results and its relationship with customers, suppliers, employees, etc.

• Bad management: This is, in fact, one of the most common reasons why the owners of growing companies do not have control over them (As we told you in another article “You cannot control what is not being measured”). Mismanagement refers to problems such as the mixture of the personal expenses of the owners with the expenses of the company, the lack of anti-fraud controls, and non-compliance with the accounts receivable processes, among others.
  
  
• Lack of financial foresight: Some entrepreneurs make the mistake of working based on hunches and end up improvising in everything they do. This is a serious mistake that leads to financial problems in the short term. Poor planning and not determining the necessary funds to operate are some of the main reasons why new companies lose control and fail to survive.

<<< The cost of not knowing your costs >>>

Companies must define a clear financial structure, it is the only way to know what is spent and the benefits obtained.

In addition to that, many new companies start with capital from family or friends which not only leads to a lack of control in profit percentages but also leads to other types of personal problems.

• Lack of leadership: Many business owners make the mistake of wanting to do everything and avoid delegating activities to their team members and this is precisely one of the reasons why many companies fail to survive. It is extremely important that as a leader, you are aware of the importance and contribution of your company's employees. Value their work and respect their powers to carry out the processes. This is the difference between a business that evolves and one that does not.
  
  
• Lack of planning: Planning is very important when starting a business, unfortunately, this is a point that few entrepreneurs take into account. The lack of planning is a great limitation for the growth of companies, especially in the financial part and its control.

The realization of budgets and projections in the short, medium, and long term is necessary to maintain control of the business and be prepared in case of requiring external economic help.

We're sure you realize the importance of avoiding these six mistakes, and you may feel overwhelmed by the sheer amount of work that can be required to achieve good performance in all of these areas.

<<< Production planning and control >>>

For this, it is important to understand that internal control is a process carried out by the board of directors, the administration, and all the personnel of a company. It is designed to provide reasonable security to achieve objectives in different areas. If you are losing control of your company, shouldn't you pay close attention to your internal processes?