Reasons of a Business insolvency/Bankrupt

Insolvency/Bankrupt occurs when a company is unable to pay its debts as they become due. It's a critical financial state where the liabilities of a business exceed its assets, making it unable to meet financial obligations. Insolvency/Bankrupt can be a result of various factors such as poor management, economic downturns, excessive debt, or unexpected events. Insolvency/Bankrupt is actually caused by loss of capital, loss of revenue and loss of credit. A business in the process of becoming insolvent really is like “death by inches”. Although many businesses are all too well aware of their problems, they fail to deal with the issues correctly. We can summarize the reasons of insolvency/Bankrupt of a business as follows:

Poor Leadership

Lack of clear leadership structures, defining roles and responsibilities

Lack of expertise in Business operations

Lack of Planning, Monitiring & Control

Lack of Coordination among businee functions

Lack of focus on competitive advantage

Rigid Strategy/wrong Business Policy

Making risky & Bad investment

Poor financial management

Insufficient Funding

Bad Cash Flow Management

Excessive debt and borrowing

Risky, unreliable business strategy or investments and competition

Inadequate resources to cover the costs of making the business viable

Lack of market demand

No Customer Knowledge

Lack of Customer Relations

Over reliance on one or two clients

Dependence on Key Employees

Loss of a staff member integral to business success

Wrong Recruitment Selection Strategy

lack of strict oversight, regulation, or control

Ogranizational Culture

Internal dirty politics

Natural Disasters

Legal issues

Economic downturns

Not embracing change

Technological Changes

Lack of accountability