Reasons for business failure Flashcards
What is one major financial reason why a business might fail?
Cash flow problems or lack of finance – A business might not have enough cash to pay for day-to-day expenses, leading to failure.
Why is cash flow important for a business’s survival?
Without good cash flow, a business cannot pay its bills, suppliers, or employees, even if it’s making a profit overall.
How can lack of finance cause a business to fail?
The business may not be able to invest in growth, buy stock, or recover from unexpected costs, leading to closure.
What does it mean when a business is ‘not competitive’?
It means the business can’t match or beat rivals in price, quality, customer service, or innovation.
How can being not competitive lead to business failure?
Customers may choose competitors instead, reducing sales and profits, eventually causing the business to shut down.
Give examples of why a business might not be competitive.
Poor marketing, outdated products, high prices, or weak brand image.
Why is it important for a business to adapt to changes in the market?
Markets constantly change due to trends, technology, and customer preferences. A business must keep up to stay relevant.
How can failure to adapt cause business failure?
If a business ignores changes in consumer needs or new technology, it risks losing customers to more adaptable competitors.
Give an example of a market change a business might need to adapt to.
A shift towards online shopping or increased demand for eco-friendly products.
