Monarch And Carillion: What They Did Wrong

In the last six months, we have seen two huge companies go into liquidation, leaving thousands of people without jobs, thousands of people without flights, and thousands of people uncertain about whether their builds will be complete. For two huge giants such as these to fall in such a short space of time, there must be something going wrong that they have in common. Carillion was one of the biggest construction companies in the world. It was international, was singing huge contracts with the likes of the government. Monarch also had thousands of people using their services each day, and flew to over 60 destinations across the world. So what exactly did they do wrong? Well, it will be an accumulation of things that will have snowballed out of control, that is what we’re going to explore today. Read on to find out more.

Finance Management

Finances are one of the biggest areas of any well established business to try and manage. Even if you’re not a big business yet, you’ll still know how hard it is to try and manage the money coming in and out. This is one of the main reasons why both of the companies we’re talking about today failed. Carillion was in millions of pounds worth of debt when it went into liquidation, even though it had contracts that were bringing in millions of pounds. So where did they go wrong in this area? Well, it was simply borrowing money that go out of control. When you’re making so much money, it is easy to think you’ll be able to pay anything back. But this isn’t always the case. Just like when you borrow money in your personal life, borrowing money for your business comes with interest rates, and dates that you would need to pay things back by. Monarchs downfall came because it didn’t manage to get one vital license that meant it couldn’t sell package holidays. Whilst package holidays weren’t Monarchs biggest seller, they still needed it to stay afloat. If you aren’t always looking for ways to cut back, you’re running the risk of ending up like these two giants. Obviously, your business is not going to be on the scale of these two, so if you’re just a normal office business, you could look at bulk buying things to get your cost down. From the basics such as ink from 123inkjets, to the paper and pens your employees are using. It all might seem small and futile, but it’s the little things like this that will save you money. So it is important to remember with money that even the smallest of changes, or the smallest of setbacks, can put you into such a sticky situation. Take care of your money right from the very beginning, and look for ways to grow your business without having to borrow large amounts of money.Business is such a risky place to be, one day you could be up by thousands, the next you could be scrambling for money.

Time Management

If you aren’t managing your time correctly, you aren’t doing business right. Again, this is one of the main reasons both of these two major companies failed, especially Monarch. They were given weeks to gain the license they needed, and then given further time to try and gain it before they were forced into liquidation. Surely Monarch would have known they needed to secure this license, and surely they would have known when time was running out? Well, we can’t be sure of that, but what we do know is poor time management left one of the biggest airline companies without any customers. With Carillion, the same applies. It is no secret that the construction world faces many delays. But it is never usually the construction companies fault. Carillion might have been the ones actually doing the building, but things like cementing, setting up scaffolding, fitting the windows etc. is all done by outsiders who are usually self employed. It will have been this that will have cause setbacks, and setbacks cost money. So the lesson we can learn from this is to always make sure you’re doing the job yourself where best you can, and always pushing to be ahead of time, rather than on time. If you set yourself a time limit that is earlier than the actual time needed, you will have time to allow for mistakes to be made, and setbacks to happen.

Contract Management

It doesn’t matter what type of business you’re running, you’ll always have a few contracts, usually with different suppliers. But contracts seem to be one of the hardest things to actually manage. That’s because it isn’t just you that has to uphold your end of the bargain. Someone on the other end also has to play ball, which doesn’t always happen. This can again be linked to the downfall of these companies. For example Carillion would have had possibly hundreds of different construction contracts all over the world. If the people on the other end were delayed in payments, it could have caused the company to borrow more money than they needed to. Secondly, with Monarch, the people on the other end of the license agreement could have been delayed with filing all of the information, or processing it. Just small little things like this can bring a company down. With yours, make sure you’re keeping the amount of contracts you have running to a minimum, and it might also be worth having a contract manager to keep hold of all the information, and track what’s happening to your company. If you do feel as though someone on the other end of the contract is upholding things, it is important to chase it sooner rather than later. The longer you leave it, the more money you’re potentially going to lose.

So there you have it, those are some of the main things that two on the biggest companies in the world will have done wrong. It is unlikely that we’ll ever see Monarch or Carillion rise again, so don’t let your company fall.