Business Failure
Introduction
It is a fact that only about 50% of small businesses are still trading after their first three years from initial set up. There are many reasons why this happens but there is only one conclusion: business failure. Business failure is not only common with new start-ups but also with businesses that have been around for some time regardless of how successful they are.
Although business failure happens to businesses of all sizes, small businesses are exposed to bigger threats because they simply do not have the back-up of extra finance and resources that most larger companies possess: and also because of the extremely poor ability to source finance from banking institutions.
Business failure does not always occur because of problems in your own business, but can be achieved as a knock-on effect from actions made by other businesses, suppliers and customers. It is therefore important that you recognize the early signs of business failure before it is too late for the s ituation to be resolved.
What is Business Failure?
Business failure occurs when your business has reached a point (commonly insolvent) where it can no longer continue trading without encountering further problems. These problems may offer no feasible solutions and by continuing to trade, you put yourself in deeper trouble. At this point, it is important that you accept business failure early or you will face increased financial and legal problems when you try to save your business or put it to rest.
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