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Personal Finance Specialists

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rescue credit common causes of business failure

Sadly more businesses will fail within the first 3 years than succeed.  But why does this happen?  The graph shown above provides us with some pretty interesting statistics as to the most common causes of business failures.  We have listed below the top three causes of business failures and provided some recommendations or solutions to fix them.


Insufficient Cash Flow

43.70% of business failures occur due to poor cash flow (or not enough of it).  I guess this would apply to any personal or business situation, cash flow is the life blood of your business so if there's no cash flow then kiss your business goodbye.

Luckily the business finance team at Rescue Credit have specialist lenders on hand who can help you tap into some of those outstanding invoices.  If you have 30, 60 or 90 day accounts receivable then why not consider using some debtor financing?  This service can help you release up to 80% of your accounts receivable so you can get down to trading again and not worry about when that invoice is due to be paid.

Contact Us to discuss your business cash flow needs or complete our online application

Poor Management

42.10% of business failures occur due to poor management.  Does the manager of the business know exactly what sales they need to keep the ship afloat?  Do they have sales targets, KPI's and good customer retention/relationship strategies in place?  Do they know what their expected expenses and outgoings versus gross business revenue will be each quarter?  Do they have auto-responders in place to manage their customer database?

Fortune 500 companies make it to the top for a reason and it always starts with hiring the right people.

If you think there's room for improvement with the way your business is managed then get in contact with our partners at Bigger Business Profit they are business growth specialists who will provide you with a free diagnostic of your business and identify any gaps then work with you to improve your business, sales and profitability.

Trading Losses

33.90% of business failures occur as a result of trading losses.  It's a very simple and basic form of math yet many businesses will get it wrong - if you buy and apple for $1 and sell it for 50 cents then you're going to go broke over time.

Unfortunately many business owners get emotionally attached to their business and they keep drawing down on the home loan, over-extending on their credit or work ridiculous hours to keep the lights on.

You need to know when to cut your losses and move on or improve your sales strategy and product offering and QUICKLY.

  • Can you sell against tough competition?
  • Do you have an effective sales strategy where you can view, manage and improve your business sales results?
  • Do you have a lead generation and sales funnel to capture new sales on an ONGOING basis?

If you answered NO to any one of the above questions then we suggest you start working on those points right away.  If you don't know where to start or what to do then get in touch with our friends at Bigger Business Profit who specialize in growing small businesses by helping them increase their sales and generate leads on an ongoing basis.