Challenges faced by entrepreneurs and why businesses fail

Question 1

What are the challenges faced by entrepreneurs

Answer 1

Sourcing Capital (finance), Identifying successful business opportunities, Competition, Building a customer base, Determining a location

Question 2

Why do businesses fail?

Answer 2

Lack of record keeping, poor management skills, lack of cash and working capital , changes in the business environment

Question 3

What does it mean by a lack of record keeping

Answer 3

It is impossible to remember everything. Records can help to understand stock levels, revenue and costs, if you’ve paid your taxes, how many hours you workers have worked

Question 4

What does it mean by poor management skills?

Answer 4

Management skills have to be learnt either from prior experience or with ‘buy in’ managers. You can try learn on the fly but this is risky. Bad leadership= bad decisions, low morale and poor resource management

Question 5

What does it mean by lack of cash and working capital

Answer 5

New businesses often struggle to secure source of finance. You need working capital for day to day costs. Lack of cash and working capital can mean the inflexibility of a business towards costs and the inability of the operation to carry on