10 Red Flags That Warn You of Imminent Company Closure
A lot of people are losing jobs left and right and after being in that position myself, I’ve documented some of the warning signs that you should look out for so you can be prepared…just in case.
In 2018, in what was actually not a surprise, but kind of a surprise, I found myself on the other side of locked gates. Unlike me, a lot of people were thoroughly shocked and devastated at the sudden closing of what they assumed to be a profitable company. In reality, if they had seen the signs I did, they would have been better emotionally and financially prepared for the obvious fallout.
It was around the five-year mark in my residency there when I knew they were doomed. Sadly, I overestimated the timeline I had given them. My bet was five to ten years. In the end, it was closer to three when the curtains came down. And I wasn’t the only one who noticed that the end was near. A manager who was on her way to retirement and was the bane of her superiors' existence, constantly griped about their handling of the company. Once she was out the door, things got considerably worse.
A clash in leadership isn’t that drastic of a warning bell, but the why was what had me opening my eyes and taking a good look around. And these were the warning signs I saw that made me say, this company doesn’t have long to go.
No New Full Time Hires
After I was hired, new hires dwindled significantly. Job openings were there. Applications were being received, but the only people getting jobs were contract workers. Nobody new was working full time. All the permanent workers were retiring, but their duties were either being consolidated under another portfolio or they worked some HR magic and got an intern to do another dude’s job while that person worked the position in the vain hope of it being a permanent promotion.
No Extensive Training
No new people meant no one to train, but when they took on an intern that poor sucker was shoved into a vacancy and worked as if they were always there. Same deal with contract workers. There were no safety introductions, fire drills, or even HR orientation. Just hi, how are you and get to work.
Cutbacks in Employee Related Activities
“This year there will not be any Christmas Party.” There may or may not be an explanation as to why behind that. Company sports days and retreats start being canceled. Cash bonuses start being replaced by hampers and those safety and office supplies you ordered are taking an awfully long time to get here.
No Large Purchases
The sink in the bathroom cracked. Patch it. Those drapes are 10 years old. A good washing will fix it. The microwave exploded. They can use the one on the 10th floor. It’s only six floors away and exercise will do them good as the elevator is always out. Sometimes these are not simply signs of managers being cheap, but a major red flag that there isn’t enough money coming in. Or it is not being budgeted properly. Either way, it’s a sign to get your resume together.
Job review time and you’ve been late one too many times, but instead of blowing up, your usual hardass manager is now shrugging it off. The same manager is now spending extensive time away from the office and not even batting an eye at employee theft. When this happens, know that the company has weeks, months, or maybe a year tops before it goes under.
No Long Term Goals
They talk about making quarterly goals, but the overall company mission is put on the back burner. There is no talk of next year or five years from now. All the conversion centers on the now and that is the collective narrative of all your superiors.
People start leaving especially from finance, legal and key decision-making positions. Talk of early retirement and changing jobs is in the air even though everyone loves working there. People are taking sabbaticals and courses en-masse. There is an air of secrecy and mystery around certain in-the-know employees.
Industry Has No Future
This was my first clue that this company would close. The industry was slowly dying and there was going to be no option in the next 10 years that it could be around in the same incarnation. Drastic changes were going to have to be made for the company to survive and since they weren’t retraining employees for new positions or making new acquisitions, that meant closure.
Late payments can be another warning sign or vice versa. The sudden need to be up-to-date with all invoices by suppliers and a desperate need to receive outstanding payments by the company. Selling off ‘old’ assets, but not replacing them with nothing new. Cutting back employee hours and cash bonuses.
Union Lock Outs
If your company is unionized, information starts getting scarce from the union. This can happen for two reasons. One, the union itself is unaware of what’s happening and that’s bad. Two, the union sold you out and that’s bad. If it’s the latter, then key union leaders will be first to go in the mass exodus. Negotiations will grind to a halt or start dragging out longer than they should. Wage increases or long-term benefits are no longer being offered.
These ten signs are just a few I observed before the doors closed on me and there probably are a lot more signs that I didn’t see. There are also some red flags that can hamper a company’s growth and lead to closure like bad company culture or poor business decisions.
Company culture and leadership styles play a huge part in a company’s long-term survival. However, they may not cause outright closure until they’ve burnt out all their existing employees and can’t get new hires to last longer than three months. Still, they have a chance of survival once they have an in-demand product and can pay the bills. But that doesn’t mean you should keep working in that toxic environment.
They are calling 2021, the year of the great work exodus when in reality, it was always coming. The blinders workers had on are fully off and the chains of 9–5 got weakened by Covid allowing people to finally experience what life could be without working for the man. Job loss awakened a lot of workers to the reality that there is no such thing as permanent employment.
And now, with clearer eyes, everyone can see not only the signs of company closure but the lack of vision by CEOs for a future that did not keep you a slave to the office. For visionaries, they should have foreseen this and made adjustments in training and scheduling. Or maybe, they did and when people choose not to return to work a CEO smiled and wiped his tears with money.