Business sometimes ceases to exist due to some strange reason. To be quite honest, just 25% of new businesses survive after 15 years of operations. 

Data from the U.S. Bureau of Labor Statistics (BLS), Data shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. Before going further, let’s define business failures.

Business failure is a circumstance in which a business organization ceases to exist usually caused by its inability to generate enough revenue to support its operations.

The reason for business failures are:

1. Lack of clearly defined objectives: Many businesses fails because their business ideology is not clearly defined. Some businesses are "jack of all trades and masters of none".

A business that focuses its energy and concentration on multiple tasks at the same time may not achieve excellence in any of them. 

For a business to achieve success, it must have an ideology that revolves around a particular objective or goal.

2. Poor book-keeping and accounting: The bookkeeping and accounting aspects of business encompass all the processes of recording, interpreting, classifying, and communicating financial activities. 

Unfortunately, some businesses see this aspect as a waste of time. This can be seen in most sole proprietorship businesses where the owner of the business doubles as the accountant of the business. 

Owners who double as accountants may fail to record transactions like '' drawings of goods, credit sales to family relation “. 

The so-called large corporation often employs incompetent and unqualified accountants who constantly give misleading financial information. 

As a result, the strengths and weaknesses of this business are usually misperceived. Plus, in most cases, the profit of this business may be understated or overstated.

3. Inadequate planning: This is another factor so deleterious to business success. 

An employee in organizations suffering from inadequate planning may experiences low morale, thereby, leading to low productivity. Poor planning also leads to Cash inflow issues.

4. Lack of funding: A business depends on its capacity to sell goods and provide services to earn and generate a lot of revenue for its operations.

Businesses with cash flow issues are most likely to liquidate. Capital is the biggest source of funding for the business. 

Business Managers must ensure that the revenue generated by the business always exceeds the cost of generating such revenue to avoid liquidation.

5. Dire customer services and marketing strategy: Many businesses produce what they like without even minding their customer's needs. 

If the business is to continue to exist for a long time, business managers should ensure that goods or services produced or rendered meet the needs of its customers.

Furthermore, every business enterprise should provide advice and assistance to the customer or client who buys and use their products and services. 

The importance of marketing is underlined by the fact that it is one of the primary activities of Michael porter's value chain

Unfortunately, many businesses in our do world today do not provide quality customer services, and this had led to them losing customers to competitors who provide quality customer services. 

Poor customer service is, in fact, now becoming the most common cause of business failure.

6. Mismanagement of toxic workers: This is another factor so inimical to business success. 

Toxic workers are workers who don't recognize a duty to the organization for which they work or their coworkers concerning ethics or professional conduct toward others. 

Many business owners and managers don't know how to deal with toxic workers. Hence, the toxic worker is one of the causes of business failure.

Toxic workers are dangerous because their behaviour circulates to others. They're not just rude, they can create an adverse, highly stressful work environment. Toxic employees are a drain on your organization. 

They deflate and hinder performance, and bring down the productivity of other employees. This, in turn, leads to business failure

7. Bad management: This can impact employees and the overall operations of an organization

Incompetence managers can have challenges relating to staff members and keeping them motivated. 

Substandard supervisors may not be able to balance budgets, increase revenues, or perform the crucial tasks adequately.


To avoid business failure, a business manager should ensure that the business generates enough revenue for its operations. 

Also, the business should use the best strategy possible needed to provide quality services to their customer as no business will survive without its customer.

Furthermore, every business organization should employ competent workers that can further the business goals and objectives, otherwise, the business will fail

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