AWARENESS of the five fatal flaws of business could help Swindon firms avoid the pitfalls that potentially befall so many.

That is the claim being made by the South West branch of the Association of Chartered Certified Accountants (ACCA).

Recognising these flaws says the association, will help prevent many local businesses from reaching crisis stage.

According to Richard Houghton, ACCA's Wiltshire spokesman, business failures in Britain rose by 7.2 per cent in 2002, the highest percentage hike since the end of the economic recession in 1994, and more than half of these were small firm bankruptcies.

Said Mr Houghton: "Many small businesses fail to plan ahead or to conduct regular reviews of their strategies. Consequently, they are more vulnerable to threats from the competition and changes in the marketplace.

"Taking note of the issues outlined in the five fatal flaws need not be time intensive, nor costly, and could mean the difference between survival and failure."

So just what are the five fatal flaws and what can you do to combat them?

Fatal Flaw Number 1: recognises that many companies fail to keep a close eye on potential opportunities and threats.

Consequently, firms should constantly monitor local developments, such as newly opened businesses and closures, and the effect that these changes might have on their customers and suppliers.

Fatal Flaw Number 2: highlights the fact that a number of firms do not have formal credit management processes to ensure their customers pay on time. Delayed payments can reduce cash flow and leave firms unable to pay their own debts to suppliers.

To combat the problem, businesses should set up simple but robust processes, such as the production of monthly debt reports followed by the close monitoring of outstanding payments.

Fatal Flaw Number 3: focuses on businesses which rely solely on one or two lucrative customer contracts, leaving them vulnerable should these customers stop buying.

Firms should thus expand their customer bases and for similar reasons broaden their supplier bases.

Fatal Flaw Number 4 : considers the fact that neglecting customer needs loses contracts.

Employees at every level of the organisation, irrespective of size, should be made aware of the importance of recognising the needs of customers and delivering value to them.

Fatal Flaw Number 5: suggests that many small firms spend insufficient time talking issues through with their advisers, including accountants and bank managers, and only go to them when matters reach crisis point and are much more difficult, if not impossible, to resolve.

Mr Houghton added: "This demonstrates that smaller firms face greater challenges from the fast pace of business than their larger rivals.

"The message is clear: being complacent is not an option in today's economic climate."