What are the top two reasons that cause businesses to collapse?

There is no business that is too big to fail. Like any football team, if goals are not scored, matches cannot be won. Such a football club is heading south!

The same thing applies to business. If money is not coming in, the business will soon have expenses piled up and no cash to pay the bills.

Anything that stops money from coming in or leads to a sudden loss of cash, can cause the business to collapse.
Fines and penalties due to non-compliance to laws and regulations. Lack of compliance could cause a profitable business to go down under overnight.

If a company earns income and does not pay to the taxman the right amounts, it could lead to collapse. For that reason, you need a great lawyer and accountant to save you lots of costs that could arise from non-compliance.

Poor business model. If you don’t have a marketing pipeline, you need a good business model that guarantees revenues that match with the timing of your expenses. You need monthly incomes so that you may pay monthly bills. Carefully examine your business to know how money comes in and goes out.

Who are your strikers? Are they scoring goals? Do they take initiatives to score goals? Are your strikers focused on long term relationships to guarantee pipeline revenues?

If you are not selling and retaining customers, then you will soon run out of money. Without cash flow, you cannot run a business. Keep that in mind. If you don’t score, you cannot win a match. It is that simple.

Copyright Mustapha B Mugisa, 2019. All rights reserved.

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