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Five Less-Known Reasons Why Businesses Go Bankrupt

Businesses go bankrupt for various reasons, some more common than others. While many people know the most prominent causes, such as not making enough money or spending too much, several other reasons are less known. In this article, we will discuss five of those lesser-known reasons. By understanding these causes, you can take steps to prevent your business from going bankrupt.

Employee Theft

Most business owners expect the best from their employees. Unfortunately, however, sometimes employees take advantage of their position and commit acts of theft. This can range from stealing office supplies to embezzling money. It’s estimated that businesses lose around $50 billion annually from employee theft. While it is impossible to prevent all employee theft, you can take steps to minimize the risk.

One of the first things you should do this create an access control system. This system can ensure that employees can’t enter restricted locations. The first step in building this system is access control software. The software is responsible for managing who can access what. Furthermore, it should generate logs of employee activity. These logs can help you track down any potential theft.

Another way to reduce the risk of employee theft is by performing background checks on all new hires. This way, you can ensure that you are only hiring trustworthy employees. In addition, you can start by investing in an employee screening program. By doing these things, you can reduce the amount of employee theft that happens in your company.

Phishing Scams


Phishing scams might not mean much to companies but can mean their lives to individual employees. Americans lose on average $3,000 from these scams, and if your employees are losing money, your business can lose your employees.

As a business, you want to reduce the chances of your employees being scammed. The first way to do this is by increasing awareness. You can do this by holding training sessions on spot phishing scams. Furthermore, you can install anti-phishing software on all company devices. This software will help to block any phishing emails from reaching your employees.

Another way to reduce the risk of phishing scams is by investing in an excellent cyber security policy. This policy should include things like two-factor authentication and password management. By implementing these measures, you can make it much harder for scammers to get access to your employee’s accounts.

Mental Health Problems

Absenteeism is a trillion-dollar problem in the United States, but most companies don’t attribute it to mental health. However, mental disorders are an insidious cause of absenteeism, costing businesses $200 billion annually.

One way to reduce the impact of mental health problems is by creating a culture of open communication. You want your employees to feel comfortable coming to you with any issues. Furthermore, you should ensure that your employees access mental health resources. It can be things like employee assistance programs or therapy services.

Another way to address mental health in the workplace is by promoting wellness. This can be done in several ways, such as providing healthy food options and encouraging physical activity. By promoting wellness, you can help to prevent mental health problems before they start.

Bad Micro-investments

Micro-investing has become a popular way for people to save money. However, it can also be a way for businesses to lose money. This is because micro-investments are often made without sufficient research.

As a business owner, you must be careful about your micro-investments. You should only invest in things that you understand and have researched thoroughly. Furthermore, you should plan how you will exit the investment. You can avoid losing money on bad deals by being careful with your micro-investments.

Bad Location

Businesses that rely on retail sales can be particularly susceptible to bad locations. A bad location can lead to low foot traffic and high costs.

As a business owner, you must be careful about your choice of location. You should consider things like foot traffic and the surrounding businesses. Furthermore, you should negotiate the best possible lease terms.

If you want to reduce your chances of building your company in the wrong location, consider these options:

Do Market Research

Market research is vital when choosing the right location for your business. But, first, you need to understand the needs of your target market and find a location that meets those needs.

Consult an Expert

When it comes to finding the perfect location for your business, it can be helpful to consult an expert. An expert can help you understand the market and find the best location for your business.

Businesses get bankrupt because of the accumulation of these less-known reasons. Therefore, as a business owner, you need to be aware of these potential problems and take steps to prevent them. Doing so can reduce the chances of your business going bankrupt.

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