M - M anaging a business and ensuring that all of its areas...

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anaging a business and ensuring that all of its areas of activity are working properly requires a great deal of vision, numerous sacrifices and trustworthy employees. Even if all of these are in place, other factors can cause people to lose their business. Here are some of the reasons why your company may be encountering financial problems: Increased competition Smaller pool of clients Loss of a major contract or client Increased operating costs Major changes in the industry Legal disputes with partners Force majeure (natural and other disasters, etc.) Various accidents Departure of important staff members Ill-advised business decisions. IN DETAIL Not Enough Cash Flow Cash flow is calculated by subtracting total expenses from total income. If the resulting number is positive, the company is turning a profit, and is considered to "be in the black." If the resulting number is negative, the business is losing money and considered to be "in the red." Businesses with only modest cash flow may find it hard to expand their operations, and businesses with negative cash flow have even fewer options. If a business lacks the ability to create cash flow, it will be forced to take on debt to continue operations. Business loans can help a company restructure, retool, increase sales or expand into new markets. However, too much debt can sink a business permanently. Too Much Debt Too much debt can be detrimental to a business. High credit card interest rates and large loan payments can raise your monthly expenses, and make it harder to turn a profit. Few banks will approve loans for businesses with too much outstanding debt. If a business reaches a point where the debts and liabilities outweigh revenue and cash flow, the business is deemed to be insolvent and bankruptcy may be the only recourse. M
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