I was in the corporate world for the first half of my career. During the course of my work, I encountered clients that failed and gone into liquidation. I also read stories about failed enterprises, like 1.99 Shop that rose rapidly and collapsed spectacularly.
Ambition and passion alone cannot guarantee success in any venture. Two common reasons for business failures are over-trading and cash flow management. A shop can expand and keep increasing many outlets when it reaches a point when the owner cannot personally manage them. He has to rely on a team of employees to help him do so. Employees are not the same as the owner and share different personal goals.
Often time, business owner is good at creating and producing goods for sale. The reputation of the firm is as good as the owner who provides services to clients. What can be lacking is accounting and finance knowledge of these owners. Without proper cash management, a sound business venture with its products and services could fail because there is a cash flow problem. Employee wages, rental expenses and supplier invoices must be paid and without cash it becomes a problem.
Each time when I read about a business venture that is expanding rapidly, I would be concerned whether there is over-trading. Is the owner still in control? Is there someone managing the cash flow of the business tightly?
Entrepreneurship is about survival in a business. It goes beyond selling products and services. It must not reach a stage of operation that the owner has no life beyond work/business. Burnout and loss of interest can kill the business.