Firstly,let's get acquainted with the key terms that make up the topic for better understanding of the theme.Liquidation is a word drawn from the verb 'Liquidate' which means to close down a business and use the money raised from disposing its assets to settle its existing debts. Businesses here refers to all forms of venture or activity that is established and operated with the basic motive of profit making. Thus,Early Liquidation of Businesses is the unlikely and sudden close of a business due to certain circumstances beyond effective control. Many businesses today go in the manner which they come,that is by sudden action as a result of some compelling factors as insufficient or lack of expert planning behind their formation,etc.These are the categories of businesses that will be discussed in this topic.Let's now analyse some of the causes of such early and unlikely liquidation in details.
1. LIMITED BUSINESS KNOWLEDGE - Most businesses are set up simply because the owners have the capital required and not because they have the idea or knowledge to carry on such business effectively.Some persons do not bother at all,while some who actually do,make little research with results that can only hold the said business for a short period of time.They don't try to seek expert advise on the business they intend to establish and even when they do,in attempt to avoid cost they consult cheap and doubtful expertise.
2.POOR CAPITAL BASE - Most business do not operate with a sound capital base yet they take the high risks of acquiring debts from huge borrowings and credit transactionsThese debts thus accumulates and paralyses the capital flow of the business and consiquently halts its operations making the business to place more priority on off-setting its debts than operating its usual profiteering activities.This can affect patronage from prospective customers and cause decline in existing customers' confidence towards the business.It can also drive away prospective investors in the case of a company.Ultimately,in its incapability to meet up its debt,the business is forced into liquidation either voluntarily or by court order.
3. WRONG BUSINESS MOTIVATION - Some persons venture into business that appeal to a particular increasing current demand or occassion without carrying out any study to determine the future prospects of the business in the event of the fall of such demand.Examples:A cement factory set up to meet the demand for building blocks in construction sites.Most of such business falls or fail to record progress on wet seasons.A toy production company set up to meet the demand for gifts of toys at a time of festivity for children.
4. WRONG SITTING AND POOR PUBLICITY - The place in which a business is located is another cause for its early liquidation.A business could be sited in a place where the demand for its product or services are scarce or grossly absent.A business could also be in an environment that resist's customers approach due to crisis,pollution by air,water or land and distance barrier.Such businesses are likely to last only for the period of being newly set up,after which people would gradually withdraw.
5. POOR MANAGEMENT STRUCTURE AND STAFF CONTROL - Most well established businesses with solid capital base suprisingly crumble soon as they are set up majorly because there is lack of good management system or organizational structure to help the business achieve its objectives and also because there is poor staff control stemming from a poor management and staff relationship.
Effects: The effects of early liquidation can make a huge impact in not only those involved in the business but also the general public in varieties of ways.Some of the effects are.
1. The owner loses his investment,his reputation is dainted and he becomes exposed to emotional trauma or disorder for which he may become hesitant to invest or engage in any business again,courtesy of his/her ugly experience.
2. The crumble of a business makes a wrong impression on others,who may be having the intentions of establishing such kind of business and serves as a discouraging factor.
3. The abandoned physical structure of the business if not sold out or demolished,forms a waste where it is erected and also serves as haven to hoodlums,criminals,cultists and their hazardous and nefarious activities.
4. Unemployment the managers and employees. The Way Out: The way out is simple and practical.Just as the causes are known,the solutions can be equally determined.For alreadly established business,the owners are advised to take a time out to do a thorough evaluation of their business of whatever nature to ascertain if any of the causes highlighted in this article are playing out on their business.If there is,no cause for panic because something can be done.
1. MAKE ADEQUATE PLANNING,RESEARCH AND CONSULT EXPERT ADVICE - Before venturing into any business whether on a small or large scale,a vital step is to draw a careful plan and present such plan before an expert in business matters for review,criticisms,corrections and perfections in order to have a sound foundation for forming such business.This step requires patience,humility ,optimism and of course prayer to Jehovah the Almighty God.
2. GET THE RIGHT MOTIVATION OR INSPIRATION - Do not just run into business simply because alot of people are involved in it or because there's a present and increasing demand for such nature of business and its activities.Be careful to make an eagle's view of the future prospects of the business in the event of the fall of such demands.Also,do not start a business simply because you have the finance but because you have the passion and right support to start and maintain an effective operation of such business.
3. Do not make the mistake of operating a predominantly credit based transaction,borrowing huge sums when you just started a business.It indicates lack of finance planning and management and also sends the wrong message to prospective investors.Be sure to utilize your finance without being too economical.Make proper budgeting.
4. Always be sure to site your business structure whether headquarter or branch in a place that is exposed to public patronage as well as environmentally conducive.Do not site your business in a place that is hidden or lost to patronage and always maintain good sanitation of your business environment.
So far we have been able to explore the topic indepth and I believe existing business as well as intending business venturers would have a little or more to gain from this topic in the interest of their business.I pray that as you practicalize the solutions proferred,you save your business from liquidation and early one at that and make huge progress by God's grace.Cheers!!!.
Well written, thanks. If some businesses knew they, they'd still be in business today
Thanks for educating us on business more grace
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To those who don't know business required enough research and tactics
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