risks can rewards

Question 1

give Three main reasons why start-ups fail

Answer 1

• Insufficient customer demand
  Poor market research & unrealistic plan
  Competitor response – e.g. price –cuts or extra promotion
• Good idea, but poor execution
  Wrong people; poor management
  Growth is too quick (overtrading) or too slow
  Failure to manage cash flow
• External shocks
  Economic change (e.g. credit crunch, oil prices)
  Legal, social & technological change

Question 2

give 3 financial rewards

Answer 2

• Profits – usually reinvested into the business in the early years
• Dividends – taking profits and cash out of the business
• Capital growth – an increase in the value of the business

Question 3

give examples of non-financial rewards

Answer 3

A sense of satisfaction
Building something
Being in control
Making that first sale
Opening a new location
Employing more people
Getting an industry award or good publicity
Getting great feedback from customers