Bankruptcy and failure are words that no business owner wants to hear. Even as an employee, you gain some degree of ownership of the company you work for and you want it to succeed; in the end, it is your job that is on the line as well as your own professional and even personal growth that is at stake. The main goal of a company is to be profitable, something that can come in many different ways of course but that it ultimately leads to the preservation of the firm, the sustainability of its workforce and the evolution of the company itself as it aims for more benchmarks that ensure its success for posterity.

When profitability becomes an issue, many companies are forced to contemplate bankruptcy, leave the market or reorganize themselves into different alternatives that can adjust to the new demands of their environment. However, while lack of profitability is still the main reason why a company fails, it is by no means the only factor that forces organizations to go down that road, since a faulty business model or a failure in leadership are also reasons to blame because they may be the cause that leads to a lack of profit.

Today here at Suzzanne Uhland’s Blog, we want to talk about the reasons why businesses fail and why they must sometimes consider bankruptcy as the only legitimate choice when faced with these predicaments.

Non-sustainable business model

A business model is what allows a company to establish an identity and offer value to their client, thus it is of great importance to their overall strategy. When the business model is not properly established or solidified, then a number of problems may arise that will ultimately become something that seriously needs to be considered if the company wants to survive.

An example of this is when a company enters the market meeting the need for a product that may be a fad or is momentarily popular and they do it just for the sole purpose of meeting that demand. When this happens, the market may become saturated with other organizations that had the same idea and then there just aren’t enough customers for everyone, especially when customers already have the product or are satisfied with their current service provider. It is difficult to establish a customer base when you aren’t offering anything new but merely another choice that isn’t necessarily an improvement.

Something else to consider is entering a market that is already saturated or that has been monopolized by larger organizations that make difficult for newcomers to properly compete and take a piece of the pie. This paired up with industries that present high requirements in initial investments or with restrictive legal requirements that make it overly difficult for companies to enter the market, are counted amongst the main reason why the business model of a company can be considered as the main reason for their downfall.

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This goes along right with the attitude an entrepreneur may have when breaking into the business or the way an organization is generally lead. Being passionate about what you do is not enough, as we saw earlier when we talked about business models for example; and just like that, a company that doesn’t have strong leadership will inevitably fail.

Sometimes the problem lies in the lack of research when the company is being created or failing to upkeep this curiosity as the company grows and the market expands. As a business, you must always and without fail research who your customers are. Knowing your customers means understanding that they are not all the same and those market strategies do not work in all of them equally. Your competitors are also agents of change and that need to be monitored because they are expected to adjust their strategies to encompass a wider audience.

Leadership is another great deal when it comes to company success. It is impossible for an organization to be lead by something who doesn’t know the business and who is out of touch with the requirements that it poses for its success. Good leaders are people who are able to work under pressure and who are adaptable enough to be able to come up with contingencies and solutions to anything that the situation throws at your company. Running a business is all about knowing which tasks need to be prioritized and in which order things need to get done. Making difficult decisions should not be a hindrance for a well-adjusted leader and no company can succeed without having a person with those qualities at the helm.

Your team must be motivated and encouraged by a leader who sees the company as an extension of themselves and understands that the team as a whole must succeed and not just some areas of it.

If any of these aspects we have mentioned are apparent in your organization, you may as well prepare and expect the company to liquidate or seriously restructure their mission shortly, as they will not survive the market for long.

* Featured Image courtesy of Stocksnap at