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Why Businesses Fail. Cathy Hayward analyses the secrets of business failure.

A summary of the causes of business failure is provided in this article, they are:

Bad management including:

over-dependence on one client;
imprudent accounting;
over-optimism in planning;
erosion of margin;
loss of long-term finance;
lack of working capital and/or cash flow;
excessive overheads;
loss of market;
fall in sales.

Unexpected event;

such as an uninsured fire or medical scandal.

Bad debts;

a lack of credit management.”

Extracted from Cathy Hayward’s article “Going for Broke”, which is featured in the April 2001 edition of “Financial Management”.

“Financial Management” is a magazine published by the Chartered Institute of Management Accountants (CIMA). Write to or visit

Editor: Ron Wells

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