By Brian McKay

Businesses fail every single day, it’s sad, but it’s true. In fact, it’s widely believed that nine in ten of all business fail, which is a terrifying statistic if you’re just starting out in business. This figure is disputed a lot, but whatever the true number, there is no denying the fact that a lot of businesses do fail. If your business simply stops trading, you could be considered closed down, but dissolving your business is the legal way to do it, and is recognised by the government. Knowing some of the most common reasons why businesses fail, may help you to avoid your own going down the same path. With this in mind, here are some of the most common reasons why a business might dissolve.

  1.  Retirement

A very common reason why a lot of businesses dissolve is that its owner has decided to retire and didn’t have anyone to take over for them. This usually happens because the business owner doesn’t have any family to pass the business down to and doesn’t want to leave their business in the hands of an “outsider”. However, they could have family, but don’t feel as though they can trust them with the business. Whatever the reason, the decision to find out how to dissolve a Limited Company is sure to be a difficult one, especially if the business was passed down to them from family.


  1. Poor Accounting

If you don’t have much experience dealing with finances, then owning a business is sure to be a difficult task. You need to know where all of your money is going and coming from each and every month, or you could risk losing money. You also need a plan for times when you don’t have as much money coming in as you need. If you don’t have much accounting experience, you might want to consider hiring an accountant to help you out.

  1. Low Income

Very few businesses can survive without any money at all, and no business can do it for very long. Your low income could be because of any number of reasons, such as poor accounting,  a defective or mediocre product, or bad marketing. If you don’t have much money coming in, you may decide that it’s best to dissolve your business before you get yourself into too much debt.


  1. Poor Management

It may sound harsh, but sometimes a business failing has no cause other than poor management by its owner. There are so many things that a business owner can do that could jeopardise the success of their business. For example, a lot of businesses fail because the owner tried to grow and expand too quickly. This expansion could put a strain on the entire business, causing it to lose more money than it’s making. The owner could also have little experience running a business, so don’t set proper goals or manage the books.

No one wants their business to fail, but sometimes it’s unavoidable. Hopefully, the information above can help yours to avoid failing too.

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