Page 219 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes be capable of identifying the symptoms of sickness in its very incipient stage. In most of the
cases of industries visited, it was realized that the unit showed some definite symptoms before
falling sick. But due to innumerous reasons, like unavailability of detector of symptoms,
unwillingness to give cognizance, utter negligence of facts and lack of exact knowledge of
symptoms, the units were caught in disaster. More interestingly, the reasons were not very
complicated and with little effort could be neutralized and the units could have been saved.
Furthermore, it was noted that none of the units under study had fallen sick all of a sudden.
Sickness had overtaken the units slowly and in stages spread over a considerable period of time.
It is, therefore, thought desirable to work out the symptoms in concrete terms so that the
management and concerned authorities can be armed with techniques and safeguards which
may indicate sickness well in advance. In any case, these techniques should be such that they can
forewarn about the type and the extent of sicknesses and that too, the very moment when the
affliction makes its first appearance.

14.3.1 Symptoms of Sickness

Sickness in the human body can be treated easily in the early stages – at the time the symptoms
first strike – but when they are in an advanced stage, they may prove to be fatal or may defy all
treatment. Symptoms can be external like natural calamities, war, government rules and
regulations, new policy, etc., in which case the unit may not be in a position to play an effective
role. But where the symptoms are internal, in most cases, no extraordinary or special steps
would be needed to remedy the situation. The first signs of sickness generally fall within the
purview of daily routine of the unit. These can be treated most effectively. If even after the
detection of the following symptoms, the unit does not take an effective step, the agony is bound
to be prolonged and may, at times, prove fatal. It should, therefore, be made mandatory on the
part of the financial institutions, banks and the entrepreneur that they should have a system
under which signals of sickness are received in time, so that corrective action may be taken on
a scientific basis. It would, therefore, be appropriate to first of all enlist the important signals to
identify sickness at the incipient stage:
1. Absence or little movement in stock.
2. Production and/or sales witnessing falling trend.
3. Frequent proposals for enhancement in credit limits.

4. Persistent irregularity in cash credit amount.
5. Negotiable instruments like bills, cheques, etc., being more often than not returned unpaid.
6. High drawing in cash by the borrowing unit.

7. Casual reconstitution of the firm at short intervals.
8. Laxity in turn-over of account.
9. Frequent rejection of or strictures about the goods supplied, by buyer.
10. Those expenses which could be written-off may go on increasing as they are not so far
written-off.
11. Labor problems.
12. Overdependence on external funds.
13. Continuous increase in losses.

14. Denial on the part of the suppliers to supply raw materials.
15. Unreliability in ensuring stock and other assets adequately or in time.

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