Enterprise Flashcards
Why do businesses fail in the early year?
Why do businesses fail in the early year?
Why do businesses fail?
- Lack of record keeping
- Lack of cash and working capital
- Poor management skills
- Lack of record keeping.
Why does this occur?
- Entrepreneurs think they can remember everything.
2. Fail to pay insufficient attention to customers needs
- Lack of record keeping.
How can it be prevented?
By keeping up-to-date records of business transactions and other matters.
- Lack of record keeping?
How can this be done ?
This can be done by:
Keeping them in
-computer records
- however it is also advisable to keep paper records, such as receipts from suppliers, or details of big deliveries as
• First- acts as a backup if computer fails
• Two- provides evidence to tax authorities
- Lack of cash and working capital.
Why is this needed?
What would happen without it?
- for the hold if inventories
- to give credit to customers.
Business would fail to:
Buy suppliers
Pay suppliers that offer credit to customers
- Lack of cash and working capital.
How can this be avoided?
- injecting sufficient capital to the business at the beginning, for the first few months.
- good relations with the bank. So that short term problems, overcome with a. Draft extension
- have credit card control. Not leaving to pay things for so long, as ir Will start to chase up.
- Poor management skills
Why does this occur?
Due to?
Because, some times entrepreneurs have had work experience in the business area, yet they do not know how to manage.
This is due to lacking: Leadership skills Decision making skills Communication skills Selling and marketing skills Cash handling and management skills Planning and coordination skills
- Poor management skills
How can this be avoided?
- entrepreneurs taking training courses to learn these skills, before staring anything.
- seek management skills through employment
Impact enterprise has on economy
Impact enterprise has in economy
What is its impact? E E F I E P S
Employment creation Economic growth Firms survival and growth Innovation and technological change Exports Personal development Social cohesion
Why employment creation?
Because the more businesses means the more people employed.
Therefore national level of employment decreases.
However if business suffers alteration, in a positive way, leading to expansion. This means that additional jobs will be created.
Why economic growth?
The more businesses there are, the more goods and services created, leading to an increase in ECONOMIC CAPACITY.
Business also, shall be creating more and more the gross domestic product, showing how much the country produces and therefore ECONOMIC GROWTH .
More smaller businesses, HIGHER LIVING STANDARS, hence happier society
And increase in output and tax will lead to an increase in government tTAX revenues.
Firms survival and growth
Because there are some businesses that fail, yet, others make great success and survive, and
Therefore this success shall- employ large about of people,
contribute to economic growth and
most importantly help buying declining business that maybe forced to close due to economic changes.
Innovation and technological changes
As the more businesses created, they tend to become more innovative and therefore created different ideas- DYNAMISM TO ECONOMY.
This creativity leads to other businesses wanting to create even more innovative ideas leaving a world of competition
Increase IT, Will make the sector more advanced, hence more advanced to other countries .
