Five Signs Your Company Is Going Under

by Jackie Lohrey; Updated September 26, 2017
Letter of resignation

Even though you may be among the last to hear the official word, it really isn’t all that difficult to tell when your company is failing. If your employer is keeping tight-lipped, look for common warnings and then take steps -- such as updating your resume, taking classes to improve or increase your skill set and networking with others inside and outside your industry -- to protect yourself.

Key Staff Members Begin Leaving

According to the International Association of Administrative Professionals, a sure sign of trouble at your company is when key people start resigning. Look first at the management team, especially those in human resources, sales and finance, as these people are often the most privy to what’s going on behind the scenes. One way to confirm your suspicions is by monitoring social media profiles such as LinkedIn for increased networking activities by these individuals.

A Sudden Shift in Perspective

A shift in focus from results to an intense interest in process efficiency is a sign your company may be failing. In a "Forbes" magazine article, Jeff Schmitt, a marketing management expert, said to watch for a series of new policies, desk-side observations and requests to document what you do in a normal workday. Be especially wary if an independent efficiency consultant suddenly appears, as this could mean your company is trying to decide which staff members to include in a first round of layoffs.

Dead Silence

A sudden lack of communication can be especially troublesome in a business that normally has an open-door policy and a two-way communication flow. Business expert Don Magruder notes that avoidance is a common defense mechanism with people who don’t wish to lie or are unwilling to face the situation. Managers might be afraid to say too much. Regardless of the reason, avoidance and sudden silence from normally communicative people is a sure sign.

Late Payments

If accounts payables are starting to pile up and your manager has implemented a prioritization plan for paying them, your company is in financial trouble. Even if payments are not significantly late, sudden or increasing phone calls from multiple vendors and suppliers about the status of unpaid invoices means trouble. Even worse is when phone calls or past due letters start arriving from utility companies or the property owner.

Significant Cutbacks

Look for sudden and deep budget cuts in individual departments as well as company-wide cuts. For example, the company may cancel training programs, issue a travel moratorium and discontinue a 401(k) employer match. Your company may also implement a wage freeze and discontinue long-standing employee perks such as free coffee in the lunchroom.

About the Author

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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