business failure

Question 1

internal causes of business failure

Answer 1

• lack of planning
• cash flow problems (overtrading, over borrowing, poor financial managment, seasonal factors)
• lack of funds
• reliance on a small customer base
• marketing problems (consumers may not like a new product or inappropriate advertising)
• poor leadership

Question 2

external causes of business failure

Answer 2

• competition
• changes in legislation
• changes in consumer tastes
• economic conditions (recession)
• changes in market prices

Question 3

financial causes of business failure

Answer 3

• bankrupcy
• shortage of cash (inability to pay immediate debts)

Question 4

non financial causes of business failure

Answer 4

• lack of planning
• lack of skills
• failure to meet consumer needs
• reluctance to change