Business failure

• Causes of business failure

  • Lack of cash to pay current liabilities
  • Financial or operational factors
• The factors that are most likely to cause a particular business to fail depend on lots of things, such as the experience of the owners, the size of the business, the product it sells and the market it's in
• For businesses that operate in a dynamic market, such as in the technology market, a lack of innovation can be a big cause of business failure
• For businesses that sell very price elastic products, economic changes that increase the relative price of their products (e.g. the availability of cheaper imports) can have a big effect on demand
• Large and fast-growing businesses are more likely to fail due to communication problems than smaller or slower-growing firms