No internal adjustments, however, are made to the declining sales. Senior operating managers and the financial personnel take jobs with the company s competitors or they form their own competing businesses. Their positions are left open, or they are replaced with less experienced, less qualified employees. The company lacks clear lines of authority, decision-making, reporting, and responsibility. Disappointed suppliers and customers stop dealing with the company.
Sales drop more drastically.
The industry begins to gossip about serious problems in this company, accelerating the decline. Finally, the founder must face the music with the banker, to insist that an increased loan will bring about the company s full recovery. The founder assures the banker that all the personnel and processes that were to blame have been eliminated. What is not said but vital for the banker to perceive is that an increased loan will also maintain the founder s life style. The typical company will be borrowing more money to continue doing things the same unprofessional way.