Failure of Business Enterprises;
Caused by Productivity or Management?

RAJKOOMAR Manish

Table of Contents
Definition of Business Failure3
Closures and Failures: The Numbers3
Reasons For Business Failures
Failure Due to Production Related Issues4
Failure Due to Management Related Issues5
Recovering From Business Failures8
Conclusion9

Definition of Business Failure
Business failure is defined as the termination of a business that results in financial loss for at least one of the business's creditors.
All entrepreneurs who decide to establish their own business face the possibility of failure, and a good deal of sources holds that failure is not only possible but probable for the small business owner seeking to launch his or her own enterprise. It has long been said that four out of five new businesses fail within five years of their establishment, for instance, but current studies indicate that such gloomy forecasts often present a false picture of entrepreneurial realities. Indeed, many business experts that the majority of small business owners are actually successful with their ventures. , The US Chamber of Commerce - published newsletter; Nation’s Business pointed out "Outright failures of small businesses are in fact remarkably rare." Moreover, Nation’s Business explained that "if failure is defined, reasonably enough, as a business closing that results in losses to creditors because the firm files for bankruptcy or because it simply closes its doors without paying its debts."

Closures and Failures: The Numbers
In 2002, 22.98 million businesses operated in the United States, but the overwhelming majority of these were enterprises without employees. The U.S. Census Bureau maintains data on the closure of businesses with employees (a universe of 5.66 million firms) but without specifying the cause of the closure. Dun & Bradstreet