Learning From the Past, What Causes Businesses to Close

Many business owners will spend their time, effort and money on strategizing for success, searching for ways to exploit the market or trying to assess how they can sell more or improve their brand. Whilst the search for success should most certainly occupy the minds of those people in business, much attention should also be placed on the avoidance of failure. So many businesses collapse each year and whilst this does not bode well for many, you can use this to your advantage and learn from those who have made mistakes in the past.

The reasons why so many companies go under are pretty varied but there are usually just a handful of key reasons why the collapse took place. Let’s take a look at some of the most common reasons and what you can do to avoid following in their footsteps.


Business is about far more than just having a great product or service and making the most sales, it is about longevity and in order to gain this, you need a strong reputation. Customers want to be able to trust in your company and offer loyalty, a rare commodity in today’s market, and they can do so if you have a strong reputation. Your online reputation is particularly important and if you want to ensure success then you need to work hard on building it and most importantly, maintaining it. If you use a business like Reputation Management Consultants Eric Schiffer and his team then you will be able to protect your reputation online with ease and be safe in the knowledge that your business can continue to grow without negativity.


It sounds somewhat farcical when people say that a business has had problems because of financial mismanagement, especially when you consider that finances are the root of all business. With that being said, it can happen and more often than not this is down to a severe lack of financial knowledge. If you aren’t financially savvy then enlist the help of someone who is, don’t play fast and loose with finances if you do not know what you are doing as you will end up failing.


Growth kills many companies, both those who are trying to go too big, too soon, as well as those who fail to understand when they should seek growth. Your business model should have a detailed 5, 10 and 15 year plan for growth, it should understand the triggers for growth and what that process will look like. If a business tries to grow too soon then they will end up paying out a great deal of money without having the sales to back it up. On the other hand, if a company fails to grow when the business is strong, then they could result in collapse under the weight of their own success. Either way, a strong strategy for growth is the only way to avoid these problems.