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World statistics show that out of 1000 newly established companies 900 (90%) of them go bankrupt during the first five years of their activity.

90% of the remaining 100 companies go bankrupt during the next five years of their activity, i.e. only 10 of them actually remain in the market.

The above statistics are quite impressive since in the 10th year only 10 working companies out of those 1000 remain in the market.

Competent analyses reveal two main reasons for the situation described above.

The first one is insufficient financial resources, and the second one is lack of professional knowledge in the field of management. Many companies start their activity being financed by various sources, and some of them in considerable amount. In the process of activity, these financial resources are gradually spent down. The lack of good management results in the inability of generating new and sufficient in amount cash flows, and eventually companies declare themselves insolvent and go into bankruptcy. It is exactly because of the lack of professional knowledge that enterprises are inefficiently managed and that all that leads to a fatal outcome.

What are the conclusions that we might draw from the above situation:

  1. When professional knowledge in management is lacking, financial means possessed by the company might be relatively quickly spent down.
  2. having professional knowledge, even with relatively limited amount of financial resources, would result in generating additional revenues that might provide for the normal functioning and prosperity of the company.

That is the main reason for the business of consultancy to rapidly grow in developed countries. Because even the most considerable fee paid for consultancy would be repaid many times if a given professional advice is of service for making a most favourable management decision.