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5 Reasons of Business Failure

reasons of business failure
Author name: Ashish Gambhir
Created date: 10-09-2022 04:02 PM
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Top 5 Reasons of Business Failure


Business Failure – Business Failure refer to the possibility of inadequate profits or even losses and shut down of business. There can be many reasons for business failure but the top 5 reasons are discussed below:

  1. Improper Accounting – Accountings helps Business enterprises to keep systematic records of business transactions. It helps enterprise to know about the financial performance and financial position of the enterprise. Improper Accounting system in an organization does not give a clear view about Profitability of enterprises. It is necessity for an enterprises who carries business to determine whether their business is profitable or not, whether their assets are sufficient for payment of his liability or not and to determine all of these is not possible without proper accounting system.
  2. Miscalculated Costing of their products – It is a big problem faced by many enterprises especially in Hotels industry. In today’s era costing of your products play a very important role in your business existence. Many new businesses were failed at initial stage of business development due to miscalculated costing of their product.
  3. Lack of Marketing – In today scenario, we cannot imagine a business existence without marketing. Marketing technique which is also known as 4 P’S Product, Place, Promotion, Price is adopted by many enterprises for their business growth. Marketing Technique not only helps you to survive in these competitive era also helps you to get competitive advantages over your competitor.
  4. Mismanagement – Management means getting the things done by others. Managements of things and people helps in smooth functioning of the enterprises. Mismanagement leads to ineffective utilization of business resources which effect profitability and competitiveness of enterprises.
  5. No Hierarchy – Management of whole business activity by a single person is not possible. There should be hierarchy in every business enterprises to avoid mismanagement. Hierarchy helps business person to be more focused on strategic decision rather than operational decision.

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