What is a common reason that may lead to a business unable to survive?

A business often struggles to survive when it experiences a lack of resources and finance. Resources are essential for day-to-day operations, including the ability to procure materials, pay employees, and invest in marketing. Without adequate financing, a business cannot cover its fixed and variable costs, leading to cash flow problems. This financial strain can result in the inability to sustain operations, pay debts, or invest in necessary growth opportunities, ultimately jeopardizing the business's viability.

In contrast, having high liquidity ratios typically indicates a strong financial position, as it reflects the ability to meet short-term obligations. Excessive capital can lead to inefficient use of resources but does not directly threaten the survival of a business. Effective management practices usually indicate a well-structured organization capable of navigating challenges, such as financial difficulties or resource allocation, meaning they tend to support longevity rather than hinder it.