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Reasons Why Some Companies Go Bankrupt.

Discussion in 'General Business' started by Celestina Angel Serome, Jul 22, 2019.


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  1. Celestina Angel Serome

    Celestina Angel Serome Administrator Staff Member

    Bankruptcy has become the order of the day in so many companies simply because they lack the idea or skill to avert this problem from befalling them. Many companies have gone bankrupt because of the bad decisions and steps they must've taken. A company can only progress when the right decisions are taken, when a good relationship is built with investors, when the company and shareholders have a good reputation, and most importantly they should be a high level of competence and experience in the owners and shareholders.

    When a company lacks the above listed, the company is sure to go bankrupt.
    The term bankruptcy is when a company or an organization loses funds and unable to pay back debts, therefore, leading the company to its downfall. Due to the incabability of paying back the debts of the company and even unable to pay staffs, the company loses profit, staffs and even investors, and this will automatically bring the company down to bankruptcy . A company faces crisis when bad decisions are made by unexperienced and incompetent personnel.

    How the affairs of the company is managed matters a lot; Good management and coordination in a company helps in building that company.

    Here are some reasons why some companies go bankrupt :

    Incompetence and poor management :

    when employed staffs and business owners are incompetent, there is no way the company can make progress. They wouldn't know how to run the company, mistakes that will ruin the company will be made repeatedly, and if a problem crops up, there will be no skilled way of sorting it out, so it is very necessary to employ competent staffs that can help in running the company.
    It's not just the staffs that needs to be competent, the person in charge of the business has to be competent and experienced for a better growth of the company.

    Poor decisions:

    Making the wrong decisions can really cause a lot of damage, that is why before a decision is made and carried out, it should be discussed among the board of directors in order to get everyone's opinion and suggestions before a decision is carried out in a company.

    Further more, before putting your signature on any document, you must carefully read through it, so as to know their demands, policies and what the document entails; if favorable to you, then it can be signed.

    Excess debts:

    This could really hinder the growth of a company. When a company is drowning in debts and unable to pay back let alone make profit, the company can never grow. No fund is coming in; if any fund comes in it will most definitely be used to settle the debts, and if this continues the company will no longer be able to function well because anything that come in is used to settle the debts. This will then lead the company going bankrupt.

    Bad reputation :

    It is said that a good name is better than riches. If a company's reputation is tainted in the eyes of investors and customers, it will face huge loss, because their products or goods won't be trusted in the market and other companies will find it difficult to invest in such a company with a bad reputation.

    one has to be careful in building a company's reputation so as not to destroy it, because a bad reputation yeilds bad and no profits.

    Trusting the wrong people :

    It is very important to do business with trust worthy people, and people who are straight forward in their dealings. Doing business with a sly person or trusting the wrong person will cost you a lot in business, so if you must invest or get into business, it must be with a trust worthy person/company, and their dealings has to be clear and straight forward.

    The conclusion of everything is that, low level of competence and experience ruins a company, so business owners should take the necessary measures to ensure their company's growth.
  2. Joy

    Joy Member

    You gat it killed here. You are so right and I love everything I read here. I must say I learnt a lot from this thread. God bless you.

    I would always add that new business that go after a profit of a company are so expose to their bankrupt.

    I have learnt a lot from the live of those outside company that made it in Nigeria market. E.g jiji naij and so others. They invested for over a year without intake of profit. All income was directed towards advert and today they have become some top standing companies in Nigeria way beyond competition.
  3. Celestina Angel Serome

    Celestina Angel Serome Administrator Staff Member

    Thanks Joy, and God bless you too
  4. serome

    serome Administrator Staff Member

    So true

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