What Is Meant By Business Failure?

When a business fails most people say it is broke or it has gone bankrupt. However, these statements may mean several things so we may say a business fails when:-

(a) The firm goes out of business.
(b) The firm closes down. Here owners shut down their business willingly.
(c) The firm fails to meet its obligations:

• Pay salaries
• Pay debts
• Pay expenses
• Make profits

These failures will be shown by the following:-

    •    High operating costs
    •    Falling profits
    •    Increasing debts
    •    High employee turnover
    •    Unserviced equipment
    •    Falling stocks

Note:

All businesses that go out of business actually fail, some just stop operating mostly for such reasons as retirement or death of the owner