Unfortunately, 60% of new businesses in the UK close within three years, and around the fourth close in just a year. These odds may be worrisome, but there are detectable causes that can be circumvented if you have the right awareness, preparation, and proper resources. Here are some situations that could cause your business to fail if you don’t have systems in place to prevent or quell them.
Over half of major businesses experience corporate fraud, and this comes both from internal and external forces. Unfortunately, fraud from internal factors makes up 52% of all cases, with almost half of those stemming from senior management positions. Corporate fraud lawyers can make all the difference in taking proper action against these crimes, especially if there are a lot of intricacies to sift through that may make it harder to pinpoint the actionable offence.
The problem with this case is that it affects the entire business and can embroil the company’s name in criminal matters even if it’s just a select group or individual perpetrating it. There are various ways for employees to commit corporate fraud, such as payroll fraud, money fraud (which involves payments to third parties), theft, and falsification of statements and documents, among other things. Keeping checks and balances closely monitored can help prevent this. However, it’s also essential to have the resources to deal with it if it has already been ongoing without your knowledge. After all, statistics suggest that only around half of the businesses experiencing this are aware of it.
46% of businesses in the UK have experienced a data breach within the last year, and many small businesses can’t recover from major data loss. The problem here is that breach attempts are increasing in frequency, but business owners still aren’t as well-equipped for them. Many businesses take months before even realising they’ve been breached, at which point much sensitive data may already have been lost or leaked. On top of this, human error still accounts for many vulnerabilities in network security from small to major enterprises.
Even in cases where the breach is immediately identified, data recovery can be troublesome, and it may be even harder to track down malicious sources to prevent further attacks. It requires better preventative security as a whole to be implemented from the beginning and to invest in backup systems.
Ineffective Money Management
Poor management of financial resources is one of the most common causes of bankruptcy for various companies in different industries. It manifests in several ways, like a sudden loss of cash flow, overspending, mishandled allocation of funds, and no safety fund prepared in the event of a restricted stream of income. That is why it’s vital to organise funds and monitor everything that goes in and out. Creating a financial plan and sticking to a budget can do wonders in keeping a business moving forward.
By avoiding these issues or, at the very least, knowing what to do if you find your business facing them, one does not have to fall into a hopeless rut that ends in closure.