Business failure

Business failure

Business Failure, or colloquially "going out of business", refers to a company ceasing its operations following its inability to make a profit or to bring in enough revenue to cover its expenses.

Some businesses fail early on. This can occur as a result of poor management skills, insufficient marketing, inability to compete with other similar businesses, or a lack of interest from the public in the business's offerings. As well, some firms can be sold to another owner, or merged with another firm. Some businesses may choose to shut down prior to an expected failure. Others may continue to operate until the very last day before they are forced out by a court order. Yet with some small businesses, the owner may voluntarily cease operations not due to financial constraints, but as a result of a personal decision, such a retirement. After closing, a business may be dissolved and have its assets redistributed after filing articles of dissolution. A business that operates multiple locations may continue to operate, but close some of its selected locations that are under-performing, or in the case of a manufacturer, cease production of some of its products that are not selling well. Other failing companies may be purchased by a new owner who may be able to run the company better, or else merge with another company that will then take over its operations. Yet some businesses may be able to save themselves through bankruptcy or bankruptcy protection, thereby allowing themselves to restructure. Even in the above mentioned cases it is not always easy to determine the reason for business failure, and there is not just one single definition for business failure. Many authors find the term "failure" to be inappropriate, and therefor use the term "exit" instead. Thus, a business exit is a situation where a business ceases existing due to liquidation, closure, bankruptcy, sale or transfer or even a merge.

ee also

*List of business failures


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