What Does It Mean to Go “Belly Up?”

When a business has gone “belly up,” it has failed.  “Belly up” is a term that is used to describe any financial venture which has gone bankrupt, whether it is a new start-up or an established business that has found itself on the wrong end of a financial crisis.   

When an institution goes “belly up,” it might shut down on its own or be shut down by business regulators or investors.

Why Might a Company Go “Belly Up”?

What is Belly Up?Image Source: Pixabay

  • A start-up company might never get off the ground. A large portion of new ventures fail within the first year of business. 
  • Internal corruption such as money laundering or other illegal practices.
  • The company is spending more money than it is making; it is easy to spend money, but there is no guarantee of making money.

  • A company might go “belly up” if they try to expand before they are ready.  Some companies begin to experience success and believe it is time to expand rather than taking the time to explore the market and ensure that the sales potential is there.
  • It may seem strange, but sometimes a company can sell their product too quickly and run out of money to produce more before they get paid for what they have sold; in this case, the business may go “belly up” because they are not able to supply their demands.

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