Reasons for increased debts in a business

[cherry123]

A business with high level of debt is leading for failure. Any high level of owings in a business will impact negatively on a business. So a business owner needs to checkmate the factors that brings increased debt in the business to halt it

Some reasons for increased debt in a business includes the following:

High cost of running the business as there's is no implementation of a budget.

Lack of Improved cashflow. Money coming into the business is very low

The business lacks grants and support. which might bring about borrowing and debt

No equity financing and thee might be high level of less sales.

Add yours

 

[King Belieal]

When the business is struggling to sell, it's business revenues would deplete and by the time they want to restock, they get stocks on debts which would end up choking the business.

 

[cherry123]

Sure I agree with you any business struggling to sell, will have a business revenues that's reducing and by the time for restockjng comes they get stocks on debts which might kill the business.

 

[eldavis]

One major reasons for increased debts in business can be due to poor management. When there is poor management they would definitely be misuse of resources which would lead to the company spending more and would lead to debt.

 

[timewo]

When the suppliers/vendors are increasing their prices, the expenses for the business will also increase. For example the domain registrars have increased the domain renewal prices, so my debt and losses have increased.

 

[Starmix]

There's a business like that because it lacks proper management of cash flow. The owner might get used to applying for loans thus having an accumulated debts that might be hard to pay and eliminate.

 

[SHAHID987]

I didn't increased prices of the products except few products in which I purchased in high price from wholesale market. I tried my best to give impression to my customers as I maintained the price.

 

[Starmix]

I never like to apply for a loan just to have additional deliveries. It's better to wait for the right time your savings from your business be enough to avoid accumulation of debts.

 

[nomad]

If the running cost for the business is high, if the business is not earning enough money and expenses are higher than revenue, the business is likely to get into debt.

 

[Starmix]

In my case my business is not complicated. I always profit and I am so thankful of the time and my loyal customers. I save all proceeds from my business to get ready for another branch. I don't want to apply for a loan. I'm afraid of debts.

 

[Kera]

It could be lack of proper financial planning and decisions by the business leaders that makes the business to be in constant debts.

 

[Starmix]

The business owner might be extravagant and wasteful. He might have no right planning and strategies to make his business grow big.

 

[Shavkat]

If the company keeps on investing without conducting a business feasiblity study. It is one of the reasons.

 

[Kosi G]

Lack of proper planning is the reason why businesses take more debts. Debts are not bad though when it is strategic and would grow the business.