By Nancy Raiden Titus Journal Record Staff Reporter Business
failures will continue in the '90s like they did in the '80s,
making a growth industry out of the crisis management field, an
expert told Oklahoma City entrepreneurs and venture capitalists.
The crises faced by these businesses also offer good investment
opportunities for those who are willing to inject capital on short
notice, according to Lance P. Wimmer, senior vice president and
managing director of the southwestern region of Buccino &
He told the Oklahoma Venture Forum that a survey by his firm
of more than 1,300 professionals including attorneys, lenders,
crisis managers, chief executive officers and financial executives,
indicated that internal problems were the culprits.
The Venture Forum is a non-profit civic group that promotes
education in the venture capital process and allows entrepreneurs
to present their business ideas to potential investors.
"Businesses don't fail by themselves," Wimmer said. "Warning
signs appear very early on."
Debt-service burden and poor management were the major reasons
the '80s had more business failures than the '70s when there were
two oil embargoes and high inflation rates, he said.
The specific internal problems identified in the Buccino survey
were debt and inexperienced management teams: 30 percent listed
excessive debt as the leading cause of failures and another 54
percent cited management problems _ inadequate leadership,
inexperienced leadership, an inability to change and improper
Wimmer cited statistics from Dun & Bradstreet showing that
about 90,000 business failed in 1990, and 258,000 failed during the
period from 1987 to 1991. For the entire decade of the '80s, more
than 420,000 business failed, more than in the previous four
decades combined. The rate per 10,000 businesses also was higher
during the '80s than for any other decade including the 1930s.
"We will continue to see these kinds of failure rates. There is
an industry emerging here," he said. "We have problems coming down
Wimmer based that statement on another statistic that indicates
one-third of all businesses fail within the first three years.
Warning signs that the economy is mortgaging the future include
the nation's high consumer installment credit, the high federal
deficit as a percent of gross national product and the fact that
corporate debt now equals almost half the GNP. During the '80s, the
corporate debt rate also grew from one-third to one-half of capital
of all companies.
"This is going to mean more failures."
Some of the business problems were the result of such lavish
expenses as company cars or jets and other "corporate toys." The
lack of proper cash management then often led the failed companies
into problems with their constituents.
Banks showed reluctance to extend terms on payments, and the
company's employees exhibited low morale.
The management focus of these companies often is in putting out
fires rather than trying to solve problems at their roots, he said.
"Management was never trained to deal with a crisis," Wimmer
"The company may be on the edge of bankruptcy. There are not
very many management teams that know how to prepare for that."
Since 1981, Wimmer's firm has built a specialty in helping
businesses out of financial crises. …