7 Signs Your Company is About to Fold

It’s a story I keep hearing: People turn up for work, only to find the doors locked and the lights out. Then a meeting is called and the boss is saying: Hey, good news, no work today. Or any other day. The company’s folded. Don’t be fooled: It’s not as sudden as he claims. Most companies string their employees along until the last minute; it helps to prevent thefts, severance negotiations, and an abrupt exodus. Well in this article, I’ll show you how to spot the danger signs, so you won’t be left hanging:



The following signs typically occur within a six month period, although the business may not fold for another year or two. When you spot the following signs, brace yourself.


1. The Directors Sell Their Shares

In many companies, directors aren’t allowed to sell their shares. And for good reason; it’s the equivalent of the pilot climbing on board with a parachute and a prayer book. If the senior management have no faith in the company, why should their employees?

When you hear that directors, CEOs or any senior management are letting go of their shares, start your emergency savings. Even if it’s nothing more than a strategic move on their part, it’s a sign of desperation. Why would a director in a healthy company resort to such tactics?



2. Sudden Wave of Administrative Requirements

Most company closures are preceded by a sudden surge of book-keeping. That’s because the company is trying to identify problem areas and enact stop-gap measures. Suddenly, everything from the number of staplers to Cokes in the pantry has to be accounted for.

In another scenario, the company is trying to maximize its worth because its being bought over. In private education companies, for example, employees will be chasing down every last document to prove the worth of their syllabus. Tech and manufacturing companies will inventory every component, probably to strip and sell before they’re bought over.



3. Employee Empowerment After Lay-offs 

When you start hearing phrases like “employee empowerment”, especially after lay-offs, get nervous. Empowerment typically means a promotion, greater responsibility, and a pay raise of $0.00.

“Empowerment” happens when, after employees are slashed from the payroll, the survivors are forced to take on a wider range of jobs. Obviously, paying them more is out of the question; so the expanded job requirements are disguised as “promotions” or “empowerment”.

The “empowered” employees are effectively the clean-up crew; they’re the people who’ll turn out the lights and put up the chairs once the party’s over. If you’re happy to do that, go ahead; but you’re doing extra work for nothing, and you should be scouting for another job.

(PS: Some employees don’t mind empowerment, because a promotion enhances their resumes, and they’ll be looking for another job soon.)



4. Everything is Out of Stock

Remember when Borders was closing down, and their shelves became more barren than the Sahara desert? The same thing happens to the inventory of any dying business.

As an employee, this is one of the first signs you’ll see. Pay attention when stock day no longer requires a full employee turnout, or when products have been shelved so long they’re more yellowed than grandpa’s dentures. A healthy business is quick to restock; if your default response to customers is “we’re all out”, start looking for a new job.



5. Product Promotions Multiply Like Germs 

Despite plenty of things being out-of-stock, the number of sales promotions will actually increase. In fact, there’s an inverse relation: the less you have to sell, the more your company’s promotions will multiply, in a desperate attempt to clear the last of the crap.

Watch for insanely low prices, illogical two-for-one bundles (like an anti-virus software bundled with a video game), or for promotions so convoluted customers ask for an English translation. In the Food & Beverage industry, this usually manifests as multiple menus and a dozen new desserts (like half a banana stuck in week old vanilla).



6. You Suddenly Have More Bosses

This is partly related to point 3. As employees are laid off and haphazardly empowered, there is more “overlap” in the corporate structure. For example:

Half the Public Relations staff have been laid off, and their jobs are now assigned to Marketing.

Half the Marketing staff have also been laid off, so Management fills in some of the positions.

A person from Management (now working in Marketing) ends up reporting to the head of Public Relations, in addition to the head of Marketing and his original boss in Management. Because of the task overlap, that one employee now reports to three different people. And yes, it’s confusing as hell.



7. Top Performers Start Leaving

Top performers are very demanding, especially in terms of standards. These are the sort of people who, if an asteroid struck the planet and reduced us to sucking rocks for nutrients, would still complain if you don’t organize your rock sucking in an orderly fashion.

As a company enters its death throes, quality flies out the window. Products are built to fit a budget, and one that closely rivals the allowance of a Primary Three student. Coupled with point 5, the top performers will react like slugs in a salt factory. They’ll be crawling for the exit in droves, and you’ll notice a sudden drop in the competence level.



Be Prepared

Whenever you see these signs, quickly brace yourself for the worst. Start putting aside your emergency savings, in case you haven’t already got them. Apart from that, you should:

  • Start contacting associates and asking about job openings
  • Polish up your resume
  • Check your pay on the Mercer scale so you can estimate your next salary
  • Pay off your existing credit cards while you can

Ever been in a company that was folding? Comment and tell us what it was like!

Image Credits:
pauldwaiteVictor 1558, psd, shemp65, fsse8info, Benimoto, Sustainable sanitation, Victor 1558 (last image),

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