Aug 13, 2012

Reasons Why Business Go Bankrupt

There are many reasons as to why a particular business, managed by a person went bankrupt. It depends on the nature of the business, the time and market position. Apart from all these reasons, there are some general causes or reasons as to why businesses go bankrupt.

The goal: Before going to start any business establishment, you should be very clear in your mind as to, why you want to start a business? What is it that you want to achieve through business? Choosing what kind of business set up will help you achieve your goal. When you are clear on these aspects, you are ready to start business. Without proper understanding on these aspects, there are plenty of chances that a business may go bankrupt.

Financial aspect: This is a very crucial aspect of business; the entire capability to run or to drown a business lies on your capability to manage finances, and to use them properly. This is where most of the business people take wrong steps. Right from securing capital to start a business, to the working capital that you need to run the show, till the time you achieve breakeven point, everything should be planned, and practical assessment should be made. When one starts business without properly working on these aspects there are chances of business going bankrupt.

Risk factor: One should be able to assess the risk factors associated with the business, at the personal level and at the professional level. What are the kind of positives and negatives associated with particular kind of business? What if I succeed? What if I don’t? To what extent you will be able to bear the risk? When one takes drastic steps without assessing the risk factors their consequences, there are pretty much chances of business going bankrupt.

Self worth: one should assess his own capabilities, knowledge wise, experience wise, and as a person, if he is worth managing the particular kind of business one wants to start. When one does not have any kind of knowledge or experience, regarding the business and wants to start a particular business because of its profitability or because there is great demand for it in the market, there are very much chances that the business may go bankrupt.

Change: If you want to withstand in the market, it is very much necessary to apply or implement the changes in the way, business runs or may be regarding products, services or anything that situation and time demands. People who are not willing to change, or willing to make changes in the business, according to the time and demand, cannot survive long in the race, and are by themselves increasing the chances of going bankrupt in the business.

Relationship: Last and very important reason as to why many businesses go bankrupt is because of their attitude towards, employees and most importantly clients. One should never take their clients for granted in any kind of situation, you should always look for ways and reasons to better your relationship with clients, as long as your client base is strong, whatever may be the market position or other factors but you have your business, business is for people, and by people, when you are able to connect yourselves with the client you having clients but through them and their reference, you have more business generated. Who so ever neglects relationships in business, goes bankrupt in business.

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