Causes of Business Failures

Business failure refers to a company/firm stopping operations as a result of its inability

to make a profit or to earn enough revenue to cover its expenses.

Causes of Business Failures

We need to be aware of the causes of business failures in order to prevent it from happening

in our own businesses. Below are some of the causes:

1.    Recessions
2.    High interest rates
3.    Poor management decisions
4.    Poor inventory (stock) management
5.    Poor credit management
6.    Poor location of the business
7.    Poor planning
8.    Poor management of cash flow
9.    Competition from other similar businesses
10.    Low sale of products or services (declining market)
11.    Insufficient capital/fund/ financing.
12.    Overdependence on a single customer
13.    Over-investment in non-current assets (fixed assets)
14.    Unexpected growth of the business
15.    Insufficient knowledge of your customers and their buying habits.
16.    Failure to understand and communicate what you are selling
17.    Failure to anticipate or react to change in technology, preference, fashion or other
         changes in your marketplace
18.    Personal use of business funds
19.    Lack of plan and/or lack of focus
20.    Lack of management control
21.    Lack of experience
22.    Lack a professional advice
23.    Poor customer service
24.    Absence of a planned Budget    
25.    No plough back of profit/retaining earnings

more to follow...

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