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Sickness in small industries

Management · Unit 10 · ~13 min read · Original chapter

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An industrial unit is sick when it cannot meet its obligations: it makes persistent losses, its net worth erodes, and it defaults on loans and payments. Sickness in small industries matters because small units employ many people and depend on limited capital, so a small shock can be fatal — and because a sick unit's workers, suppliers and lenders all suffer. Worked example: a small packaging unit loses its biggest customer, keeps paying fixed rent and wages, borrows to cover losses, and within a year owes more than it owns. The sickness did not start with the loss: it started with dependence on one customer, no cash reserve and no contingency plan — which is why diagnosis looks for causes, not just symptoms.

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