What causes a busiess to go bankrupt?

[Starmix]

There are times that a business owner forgets to update his planning thinking that his old plans may be sufficient to support the latest technology and trends in the market. Another cause is inadequate planning, forecasting, budgeting, and cash flow management. Next is the lack of profitability. A business that consistently operates at a loss or fails to generate sufficient profits may not be able to sustain its operations in the long run. Further, excessive debt accumulation, whether through loans, credit lines, or other financial obligations can create a burden on the business and lead to bankruptcy if repayment becomes unmanageable.

 

[Good-Person]

@sweetieM - Lack of funds is the most essential things that could make a business go bankrupt. It is the root cause of this issue. Just imagine a company have incredibly huge cash reserves. This is why big companies like Apple and Tesla have a really low chance of going bankrupt.

 

[Kane]

Not generating enough sales is one of the main reasons why a business can go bankrupt. When the business is nmot generating enough sales, it can hardly pay for its running cost, and hence will start running in losses. However, there are many reasons why a business is unable to generate enough sales, and not having enough marketing budget is one of them

 

[Starmix]

@sweetieM - Lack of funds is the most essential things that could make a business go bankrupt. It is the root cause of this issue. Just imagine a company have incredibly huge cash reserves. This is why big companies like Apple and Tesla have a really low chance of going bankrupt.

You are so right, insufficient funds may lead to financial distress which is why it is not advisable to operate a startup business without a sufficient budget, risk is always present in businesses. Some companies grew big and were able to build a business empire because of huge capital. They are not easy to sink to failure.

 

[Heatman]

The main thing that is capable of making a business become bankrupt is poor management which is going to result in excessive unnecessary expenses that will impact on the profit making of the business. The moment your business is very poor in profit-making but is having excessive expenses to pay for, there is no way that business is going to survive bankruptcy.