This Cause the Business Bankruptcy

In building a business, there must be gain and loss. You can also prevent this by finding out the causes of bankruptcy, both internal and external. This is also not an easy job. From here it takes more than just sufficient and building capital as well as a strong and trusted business background.

In this case, often a business is built from scratch, then it may experience setbacks due to a series of unexpected things that will happen. Although, there are also a lot of factors that can affect the bankruptcy of a business, the reasons for the bankruptcy of a business can be divided into two factors, the first is external factors and the second is internal factors.

There is no complete control over business

There are several internal causes that can affect the stability of a company to cause bankruptcy, and the first is a lack of complete control over the business you are running. This one thing is an absolute authority and you really need to pay attention to it, especially if you are pioneering, aka things that need to be considered when starting a business.

And this line of things usually happens to a row of businessmen who do not focus on their business, or when they have no other side business besides the business that they are in. In general, there are business people who believe too much in everything for their employees or employees, without paying extra attention. This also affects the business, even though the turmoil of the business world always develops from time to time. If a business runs without careful or careful supervision, the potentials to develop a business can be overlooked. In fact, your efforts may eventually stop and may result in setbacks.

Ineffective Management

The second thing to consider is the management in a company. This is because the management position in a company plays an important role. And this is particularly related to the handling of human resources. Management in a business can be said to be effective when achieving or choosing goals can be done well. You can do it at the right time too. anyway, from several alternative options. Meanwhile, management can be said to be efficient if it can use minimal resources in order to produce optimal output and volume.

So, if the company’s management cannot function normally, as well as effectively and efficiently, then the company’s goals will not be achieved. Some of the visible impacts include the emergence of waste from resources, then unskilled management, and losses from the amount of production that is not optimal.

Less responsive to contemporary developments

The best lesson is to learn from a mistake, if the bitterest attempt is bankruptcy. One of them is the Kodak company. In the end, the Kodak company had to be eroded by digitization in photography. Of course, this is related to business opportunities that are increasingly transforming in all businesses related to social media, online services, etc.
And nowadays all focus on devices, technology, digital is earmarked to improve film quality. Currently, innovation is mandatory to attract consumers and investors. This affects the product that continues to grow will have a better selling value, attract and a bigger market.

Unbalanced Between Capital and Debt

The amount of capital in a business that has it must be balanced with the amount of debt and receivables of the company. If a company has large debt with high interest rates, it can cause minimal profit.In fact, this one company will continue to lose money. Likewise, there are receivables that are too high, this will cause the income balance to become unstable. Then, assets that are idle and not productive can reduce income. Also, in the long term this will affect the financial instability of the company.

Do not understand consumers and competitors

Along with the times and technology, interests, consumer needs of the product are increasingly diverse. Businessmen must also have a good strategy in serving their customers, and one of them is by maintaining good relationships with consumers. How do you provide good service, hear their complaints. With that line of methods, business people can find out what types of products are currently trending. Likewise, in responding to competitors, business people must continue to monitor all the steps taken by competitors. Then, you need to know the marketing strategies that are being carried out by competitors.

At least, the company’s position can understand competitors, even if possible, make a strategy that is a step ahead and attractive compared to competitors. Thus, business development did not run in place. Then, you can get closer to consumers and competitors who are equally profitable for business people.

Instability of the World Economy

The instability of the world economy could also be one of the causes of bankruptcy. This certainly makes production from business activities sluggish. This world economic condition must also be anticipated by all business people. One more policy undertaken by the Central Bank of The Federal Reserve, in the United States, namely that the withdrawal of the simulus also had an impact on the economic slowdown in Indonesia. The level of consumption has also become low, this is because people also tend to save or spend money at more needed items.

Raw Material Difficulties

Difficulties with raw materials from suppliers are usually caused by circumstances such as natural disasters. Thus, the supply of raw materials is hampered. This is beyond the expectations of business people. For that, it is a good idea for business people to make backup
plans and other plans in finding suppliers for these raw materials.

Fraud By Debtors

If the debtor who gives receivables with a long payback period can also result in losses to the company. This is because there are many assets that cannot be used to provide income.

Tight Competition

It is undeniable, a business must have competitors, aka competitors. For some parts of the product, the competition has become very tight. This is because it cannot be avoided, therefore companies must always improve themselves in order to meet customer satisfaction. The tighter the competition, it should motivate business people to provide the best added value for consumers.

  1. There is a change in consumption patterns

Usually, bankruptcy can also be caused by more dynamic technological developments. Consumers can also move to other products if business people do not take anticipatory action. The decline in consumers could cause a decrease in income, or over time it could cause business people to lose money. In maintaining a business is not an easy thing. You need to find the keys to how to survive and avoid the causes of the business bankruptcy itself. Don’t get trapped, you need to learn more about it.