2.3.3 Business Failure

Question 1

What is business failure

Answer 1

• Failure to continue trading under existing ownership

Question 2

What are some internal causes of business failure

Answer 2

• Cash flow issues ( high gearing )
• Failure to reach break even level of output
• Ineffective marketing

Question 3

What are some external causes of business failure

Answer 3

• Economic shocks
• Increased competition eg new entrants
• Sudden change in legislation

Question 4

What are some financial causes of business failure

Answer 4

• Cash flow management
• Not meeting break even level of output
• External shocks

Question 5

What are some non financial causes of business failure

Answer 5

• Poor management
• Inefficiency in operations
• Ineffective marketing