It may be that your company has one hundred employees or having five, but the main reasons why a business fails are the same and have to do mostly with negligence or management failures.

As an entrepreneur you should know and understand which are to act more wisely when it comes to building your business.

Not having a Sales Strategy

Many entrepreneurs start their businesses with great enthusiasm, great products or services and even a good financial backing, but they forget that to succeed you need to know to sell effectively. Lack good sales strategy that ensures profit and soon your expenses are more than your income.

Do not have a Monthly Spending Budget

The messy handling or omission of a monthly spending budget can be a risk factor for your business. Shopping blindly discretion or make expenditures exceeding those stipulated in items for each purpose will soon put your business on the tightrope. Equally dangerous is to have a budget but do not be disciplined in its management and consistent application of expenses.

Excessive Costs or Local Offices

Many times in an effort to find the best points or locations for your business, the mistake of paying excessive prices for local offices often do not return in sales it really worth it commits. Not consider variations of the market according to different times or consumer behavior can impact severely on your expenses and affect your business.

Top 8 Causes Of Business Failure

Mismanagement of the Loan Portfolio

Giving too much credit or expand your portfolio without controlling arrears is another critical factor that can affect your business. Sell ​​to credit is an excellent tool that promotes business growth, but it must be granted within the limits of your capital and credit your grant you the suppliers.

Payroll Unnecessary Personnel

Personnel management is one of the determining factors for the success or failure of your business. From the beginning, you must be very careful and smart when hiring staff. You must evaluate your ability to contract and working conditions you offer according to the laws that exist in your city and avoid indiscriminately grow your salary or your wages are off the market. A poorly managed payroll or overstaffing can kill your profits.

Abuse of Bank Loans

Abuse in credit management for the growth of your business can lead to an undesirable state. Loans can be good provided they are under control and used for investments in a good percentage return enough to pay them and still make a profit for the business. However, when you exceed the loan application or use bad credit from your suppliers offer you then you are taking your company to a debt which can cost you too much to leave.


Probably the No. 1 cause of why businesses go bankrupt. The comfort has to do with indifference, with laziness, a lack of planning, with the presumption to believe that circumstances can not be changed.

Lack of Vision

Vision is the ability to see beyond what is possible. Is dreaming is believing that the impossible can be achieved. Vision is the ability of a leader to transform their limitations in large projects. Many businesses die for lack of vision of the leaders who lead.