2.3.3 Business failure Flashcards
1
Q
why do new businesses fail because of no demand for the idea
A
- poor market research and unrealistic plan
- competitor response
2
Q
why do new businesses fail due to a good idea being poorly executed
A
- wrong people: poor management
- growth is too quick or slow
- failure to manage cash flows
3
Q
why do new businesses fail due to external shocks
A
- economic change
- legal and social change
4
Q
define business failure
A
when a business ceases to trade or does not trade in a profitable way
5
Q
define liquidation
A
process of closing a LtD or Plc there will be a sale of assets and the company is dissolved
6
Q
poor management of cash flows factors
A
- significant increase in stock level
- inadequate credit
- failure to plan
7
Q
inadequate financing factors
A
- use of short term overdraft for long term investment
8
Q
lack of management factors
A
- failure to implement credible business strategies
- failure to understand costs
9
Q
significant external shocks factors
A
- loss of important customer
- sudden decline in market demand
- change in legislation impacting demand
