Yes to both questions. A business model or operation that can't generate enough profits to pay it's costs has no worth to it's owners or society in general. It is a leech on all other properly run businesses and the individuals of the community. Saving it only prevents one of the better attributes of a free market -- constructive demolition.

I hate your premise: that anyone other than the business owner has any part of the decision about the success or failure of that business. Who has the right to say whether or not a business is "allowed to fail"? Only the owners of that business.

In a heartbeat. Bad decisions - both in life and in business - have consequences.