Business Failure

Running Head: Business Failure

Business Failure

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Business Failure

Business failure is a situation where a company is unable to make profit or generate revenue and thus unable to maintain its normal operations. Business failure always starts with the business running out of cash consequently being unable to pay its expenses. There are several reasons that cause business failure. Some of these reasons are as a result of organizational structures and management within the business or as a result of external factors that are beyond the control of the business such as changes in government regulations policies and laws, natural catastrophes, political instability and war, increased competition, recession among others. However, it is important to note many business failures are as a result of more than one factor. The most important factors are therefore those factors that are within the control of the business such as the organizational structures, management and leadership styles and the business cultures. Risk analysis is also important because it can significantly lower the level to which the business is involved with in unreasonable risks.

There are numerous organizational structures that can lead to a business failure. Poor planning is the most important reason why businesses fail. A successful business enterprise whether large or small is as a result of a well planned and executed business activities. Inadequate funding of activities in both large scale and small scale businesses is also a major cause of business failure. Lack of sufficient fund limits the ability of a business enterprise to progress in a business undertaking beyond the initial stages. The marketing strategies adopted by the organization are also an important factor. Poor marketing strategies results into inability of the business to reach its customers and gives an advantage to the competitors. The relationship between the suppliers and the...