Business failures

Question 1

What are internal causes of business failure?

Answer 1

• Failing to understand the market
• Poor planning
• Poor decision making
• Bad organisation
• Overtrading
• Non viable ideas in the first place

Question 2

What are external causes of business failure?

Answer 2

• Economic environment
• Changing social trends
• Demographic changes
• Political environment (changes in tax etc)

Question 3

What are financial causes of business failure?

Answer 3

• Poor management of cash flow

- Inadequate or inappropriate financing

Question 4

What are non financial causes of business failure?

Answer 4

• No credible business plan
• Failure to understand the market, costs and key customers
• Failure to administer the company properly
• Excessive marketing expenditure
• Significant external shocks