Business Failures

Question 1

How does lack of planning contribute to failure? (Internal causes)

Answer 1

At the start, entrapeneurs can overlook the importance of planning but it provides a roadmap showing a clear direction of development

Question 2

How 3 cash-flow issues contribute to business failure (Internal causes)

Answer 2

1) over-trading - where a business is attempting to fund a large volume of production with inadequate cash
2) allowing too much credit - allowing the customers to long for payments leading to borrowing
3) over-borrowing - As more loans are taken out, the more interest rises.

Question 3

2 reasons leading to failure (Internal causes)

Answer 3

1) poor leadership - result of poor decision-making and not making urgent changes can bring down a company
2) marketing problems - business products that dont meet customer needs will stumble, as well as inappropriate pricing startegies

Question 4

Factors contributing to failure (External causes)

Answer 4

1) competition - the strength and success of business rivals can push others out of business. compeititors might bring out suprise products or read market condition more effectively
2) changes in consumer taste - if business do not adapt they are likely to fail

Question 5

Financial factor contributing to failure

Answer 5

Shortage of cash, the inability to pay immediate debts

Question 6

Non-financial factor contributing to failure

Answer 6

failures such as lack of planning or business skills.