The business to be exist in the market the effective management and effective leadership is vital in today's competitive market. Today the business market is very competitive companies face different challenges in the business environment. The business must have strategic plan to continue in the market. The most of the time business goes bankrupt due to the poor decision from management. Apartment from ineffective management and ineffective leadership. The business could be bankrupt for some other reasons like market condition, financial situation, accidents and tax-related problems.
During the poor economic condition most of the businesses struggle to survive in the market. The economy is boom it would favorable condition to operate business and generate more profit. But in the recession period most of the consumer purchasing power would declined result in reducing business revenue. Thus the business face difficulty in making profit, lead lose and bankruptcy. Increase in the competition also face some small firms to go out of the business.
The finance is the life blood of any business. So the finance should be manage effectively. The business can be operated by allowing credit to customer as well as purchasing good on credit and taking loan from lender. The business have to maintain good liquidity ratio by managing creditors, debtors and lenders (loan). If the finance was not managed effectively sooner business will run out of cash. If the business do not have cash for working capital the chance of business going bankruptcy will very high.