Coming from a startup background:<p>1. Senior people leaving (as has been said by pretty much everyone else in this thread).<p>2. Not having a clearly defined problem to solve, or a well understood target audience.<p>3. Not knowing who the competition are, or just dismissing them as "not being as amazing as us."<p>4. Little or no customer research - if you hear the phrase "customers don't know what they want" and it's not immediately followed by "so we need to do research and find out" - run.<p>5. Building solutions that don't really map back to problems. This can manifest in a lot of ways, but the most common ones I've seen: projects constantly changing in priority (entire projects materialise and become urgent overnight), features that are arbitrarily demanded, or in an over-emphasis on polish and minutia.<p>6. Departments not collaborating, things getting thrown over the fence. Workflows that move in the wrong direction.<p>7. Lack of autonomy - a handful of people make all of the decisions.<p>8. Micromanagement. People tend to micromanage when things aren't going well, which tends to make them worse. It's a downward spiral.<p>9. Being afraid to talk to management about problems; being chastised for suggesting ways to improve things.<p>10. When mistakes are made, focusing on blame rather than resolution and prevention.
I'm the CEO of a 20-person startup and we've been on the brink of failure twice. Both times, our employees were never aware of it from the symptoms other people might expect (e.g., late payroll, some senior folks leaving); in fact, during such times we paid everyone ON TIME so that we wouldn't be on the hook later if things went to hell.<p>I would flip the question back to you:
(1) Do you trust your CEO?
(2) If you DO trust the CEO, then the only time your startup is failing is when the CEO tells you they're close to failure, running out of money.<p>If you DON'T trust your CEO, then your startup is also failing and #2 doesn't apply.<p>That's how I would think about it.<p>I think every startup employee has the right to ask me about runway, cash on hand, etc. I would be open with that info and have shared these metrics in the past with them.<p>I say this because we (a) hire MBAs, (b) hire less qualified developers for roles that do not require deep technical knowledge, (c) have motivational posters, etc... And as we grow, become profitable, and scale to 50+ people, we require these things simply to survive and thrive.<p>How could someone mistake that for a startup on the brink of failure is beyond me, but that's what some people seem to be writing in these comments.
* Gut feel. This doesn't say much, but sometimes that is a good heuristic. It isn't one thing, but you'll just get a feeling.<p>* Custemers are not signing up and not paying. The most obvious one. But this can be hard to find. But say if you are used to add features or fix bugs customers find, and then all of the sudden nothing. It could mean product is in good shape, or nobody is using it.<p>* Senior people leaving. Especially developers whose judgement you trust.<p>* Drastic changes to the product. "Wait, why are we pivoting?" Corrolary: quite often the pivot fails. It is always in the news if it succeeds. but that is only because it is exceptional.<p>* No bonuses, and salaries have not been going up. If you somehow find out that nobody's salary went up and nobody got a bonus (this is hard often, companies don't want you to discuss those things).<p>* Maybe a sharp increase in team-building activities. Taking everyone for lazer tag is cheaper than increasing salaries. But it presents this image of "everything is fine". I have seen that -- a few senior people left. All of the sudden a sudden surge of minigolf, bbq, ski trips and other to mask away the issues. But then again, this can be a sign that the team is doing so well and are being rewarded. I guess this is more of a gut feel and depends on the large context (so it is a secondary sign).<p>* Owners start avoiding meetings and questions. Because they know they might have to lie. It is up to you, but you can try to ask directly. Then you sort of force their hand. That could backfire. You are now "not a team player" and not a "culture fit" so beware.
The skilled, senior developers leave.<p>Money problems (Travel cancelled, Free food/drinks stopped)<p>Drastically shorter deadlines.<p>They start hiring programmers who cannot code (Literally cannot fizzbuzz)<p>Rapid flip-flopping on projects couples with constant firefighting.<p>Starting to Micromanage developer time in intervals less than 1 day - (exactly 3 hours on X, exactly 2 hours on Y, exactly 3.5 hours on Z)
Lots of secret meetings, CEO more stressed and distracted than usual, strangers visiting the office and looking around, hasty writing of documents.<p>The dead giveaway - salary paid late or not at all.<p>If your salary is ever paid late then check to see if you are being paid all of your statutory entitlements such as pension plan and government insurances. If the company is not paying these things, go to the CEO and tell no one else except them that you know they are not paying your legal entitlements and you want it paid now. If you have lots of leave accumulated then that is cash value to you and is at risk when the company goes bust. Resign as soon as you can because companies typically need to pay out all your entitlements and unused leave when you resign - and you definitely want to do that before everyone else rushes to do the same, and before the company goes pop leaving you with nothing. Somehow you need to navigate in a non illegal/ non extortionate way letting them know that you'll go quietly if they paid you everything you are owed - careful on this one, you are breaking the law if you say "pay my entitlements or I'll.... " You are of course entitled to explain that you have spoken to your lawyer and accountant to understand exactly what they owe you, and also explain that they have advised you to contact the tax office if you are not being paid what you are meant to be paid, presuming that is the case, which it should be. The CEO won't be enthused about anyone asking the tax office why the company is behind on its payments and this will give incentive to the CEO to pay you fully out. Make sure you and your accountant calculate exactly what you are owed and have it in writing - don't let the CEO/company calculate that because it is likely to be wrong.
Sometimes I think this is the "Does she/he really love me?" question. Because it says a lot about the person asking and about their world view.<p>I'm pretty sure that every company I've worked in had a success rate that was inverse to the belief that it was failing. That is to say assume that the company is failing, always. That makes two things true, first when you get "bad news" that something hasn't gone right it doesn't suddenly throw you for a loop, after all the company is failing. The second is that you are more carefully looking for things that are helping, and putting energy into them so that you can extend the life of the company just that much more.<p>You are most at risk when you think you are <i>not</i> failing, then you take your eye off the ball and start coasting a bit. Taking some "me" time as it were. That is when a glitch or misstep will feel like a huge betrayal from "we're doing well" to "we're dooooomed!" And everyone will stop and reassess just when you need them to be taking action and responding.<p>Often the root of this question is, "Should I stay or should I leave?" After all if you conclude the company is failing you can give yourself "permission" to leave. And since that is the root question, I have found a better way to ask it is, "Is working to make this company a success helping me achieve what I want to in the next 5 years?"<p>Whether or not the company is failing is irrelevant as input to the question, "Is this the best way to be spending my time?" That question can only be answered by thinking about what you want to do, or be doing, or not be doing, in the future and evaluating if what your are doing right now is getting you closer to or further away from that future.
Saving money in new ways, with adverse consequences on work and employees that prove it isn't a benign optimization. Variant: ending or selling off "unnecessary" luxuries.
For example, the newest computers are cheaper than old ones, free food is replaced by a vending machine, art on display disappears.<p>The slightest hint of late payments. For example, salary one day late "because the bank made a mistake": in reality, the company was waiting for cash but negotiations with banks or other lenders were difficult enough to miss the deadline.
Some warning signs I have seen:<p>* conflict between founders<p>* investors start "suggesting" changes to strategy or stack<p>* hiring someone external to take over tech team<p>* instituting some new "system" to improve productivity<p>* appearance of consultants
My guide for a company in decline--and more pointedly for when it's time to leave--is the bullshit/productivity ratio. How much time are you being asked to spend on bullshit that doesn't get product out the door vs. real work on product? If b/p is high, that's a red flag. Now look at the first time derivative of b/p. Is b/p increasing or decreasing with time? If it's increasing, that's a bigger red flag. If it's decreasing, maybe the problems are getting fixed and you should consider sticking around. Finally, if b/p' is positive look at the <i>second</i> derivative. Is b/p accelerating or decelerating? If the former, LEAVE NOW. If the latter, maybe b/p is approaching an asymptotic level you an live with. Or not.
If every sale remains an exercise in business development and requires the driving force of a founder or similar key person, then the company is closer to failure than success.<p>While this type of biz dev feels like forward action in the trenches, in reality it means that you are only a few key deals or people from an empty accounts receivable.<p>Companies that bring process to the prospecting and sales cycle, and develop a path to closing business that is not highly dependent on a small pool of stakeholders have a clear path to growth.
This is very interesting question and answer is not so simple.<p>First, if a company is a startup which is not yet profitable and burning investors money you should assume that the company is failing. Yes - you might be wrong (i.e., the company is AirBnB, Dropbox, etc.) not but in 95% of cases the company will eventually fail. In this case, just ask CEO/CFO/your manager about what is runaway, cash on hand, etc.<p>Second, if a company is already established (out of startup mode) then you can see signs:<p>- senior management leave (they have access to more informations than you)<p>- rapid flip-flopping on features and priorities (maybe caused by above)<p>- TPS reports become a norm
If you have any exposure to the business side of things (which in a small[ish] company just about everyone does no matter the role unless the management is proactively hiding these things which then is a pretty clear symptom in and of itself), the impending doom is typically pretty evident.<p>Things like not being close to breaking even in the foreseable future, investors getting cold feet, having to pivot to appease the VCs etc etc.<p>On this last point - you really see the true colors of upper management when pivoting kicks in. If there are concrete actions taking place aimed at getting shit done to keep the company afloat - there might be a chance there. If, however, it's just posturing and paper-ware BS to fool the investors into thinking there's a fundamental change of direction - that would be a major sign of things being REALLY bad.
To me, the number one sign is the deterioration of HR policies. Beyond late salaries, when they begin doing away with flexible work environment, like variable hours, and try imposing things and micromanaging, effectively treating knowledge workers like shop floor laborers (there isn't anything wrong being a shop floor laborer, I am just providing a reference), it is a sign of what is imminent.<p>I used to work at a place, a 10 year old established medium sized company, that was hit so hard by recession of 2009 that it disintegrated. The HR thing I mentioned is the period I can trace back to to say when it was the beginning of the end.
In some sense, every company is always at risk of failure.
Fortunes can turn quickly.
Also, every success story has a few tense nail biters on the way.
If you are an employee (not a founder,) then keep a rainy day fund on hand, and leave if the work is no longer what you want to do. Also, make sure expense reports and paychecks are paid on time, even for successful companies!
<a href="http://c2.com/cgi/wiki?WarningSignsOfCorporateDoom" rel="nofollow">http://c2.com/cgi/wiki?WarningSignsOfCorporateDoom</a><p>* No more free soda or coffee.<p>* Toilet paper quality suddenly drops.<p>* Someone comes by to measure your desk and cubicle, but refuses to tell you why.
I will suggest that you fail when you give up and no company is ever completely free of the threat of failing, no matter how long they have been around. If you hit challenges that the C level staff cannot overcome, then you are likely to die. But C level staff are often able to do "the impossible."<p>It is going to be nigh impossible to determine that something is certain to fail. Paul Graham suggests that startups need to just "not die" to eventually make it. I will suggest that this continues to be true, even after they are worth billions of dollars.
There was a post on Reddit a few days back that I thought had some great answers:<p><a href="https://m.reddit.com/r/startups/comments/4zkka8/what_are_the_early_symptoms_that_a_startup_is/" rel="nofollow">https://m.reddit.com/r/startups/comments/4zkka8/what_are_the...</a>
As someone who has worked at quite a few startups this is the wrong question to ask. Out right failure is pretty easy to detect, and it kind of doesn't matter. A startup failing <i>fast</i> is the second best outcome (after a nice exit) for everyone involved, including the investors.<p>Startups that fail slowly are the worst, because there is an illusion of success that can drag everyone along for years.<p>Always keep in mind that the odds will always be astronomically high that you are working for a startup that will fail. You're probably working for a startup that's going to fail. Most startups fail fast (but never employ many people), but the startups that hire the most people fail slowly, so the odds are very high that you are working for a startup that will fail slowly.<p>So what should your question be then?<p>It should be: Am I enjoying my job and/or does this job contribute to meeting my career goals? If the answer is no for too many months in a row and you are relatively sure the answer won't change and that you have no power over making it change then it is time to move on, with <i>one</i> highly unlikely exception: Your startup is succeeding and your equity stake is enough that riding the wave of a bad job for a year or two will result in a good chunk of money for you.<p>So what are the signs of a company that is succeeding? There really easy to spot actually, even though you've never seen them:<p>1. Everyone's hair is on fire. Micromanagement is not a thing at your company because everyone is desperate to meet the insane demand and growth that your product has.<p>2. The technical work is very enjoyable, because the growth is insane. When you achieve incredible growth it actually stops managers from making decisions that don't scale, because the technical team will have numbers on their side of the argument. Your company can no longer afford to hack things together, because it has to scale <i>tomorrow</i>.<p>3. Talented people are banging down the door to work for your company.<p>4. Founders aren't talking about exits in terms of goals, but in terms of certitude. They've already received offers and they now have strategies in place to get the kind of exit <i>they</i> want.<p>5. BS of all forms is not experienced, because no one has time for it, even the people who normally spew it.<p>6. Hockey stick growth in either user growth or profit growth is trivial for you to see in your position. The founders don't have to convince anyone that your company is doing well, it's just plainly evident.<p>If you are not experiencing these signs and you hate your job than it's time to move on. Founders hate to hear this, but if they haven't gotten traction in the first year-and-a-half they probably will never get it. There are notable exceptions, but it's important to remember that you are not the exception (does your founding team seem exceptional to you?).
I wrote a blog post describing my personal test for this sort of thing: <a href="http://jasonlefkowitz.net/2013/05/introducing-lefkowitzs-law-of-corporate-financial-health/" rel="nofollow">http://jasonlefkowitz.net/2013/05/introducing-lefkowitzs-law...</a>