Chapter 15 Reasons for Business Failure

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18

Draggable item		Corresponding Item

Draggable item		Corresponding Item
Investing too much in fixed assets		When a business is unable to continue to run its operations
Unexpected expenditure		When a business is unable mange the amount of cash coming into and out of the business on a regular basis
Seasonal factors		When a business has insufficient funds (working capital) to run the business e.g. wages, stock, bills
Lack of business skills		Business is unable to compete in the market
Not competitive		A business does not keep up with changes currently happening in the market e.g. technology, Nokia, Kodak, Blockbuster
Business failure		Developing new products or using new technology, designs
Financial management		New businesses entering into the market, competitors
Poor cost control		Not managing costs within the business e.g. wages, stock & utilities gas, fuel, electricity
Poor leadership		Poor marketing mix for products, e.g. poor design, overpriced products, unsuitable channels used for marketing e.g. TV instead of social media
Failure to adapt to changes in the market		Owner does not have the skills and experience to carry out the different functions HR, marketing finance
Over borrowing		When the leader makes mistakes, poor decision making
Lack of finance		Taking on more work than a business can afford to handle afford
Cash flow problems		Making poor investment decisions e.g. timing when business first trading not purchasing expensive capital items e.g. machinery, vehicles
Overtrading		Borrowing large amounts of loans from the bank
External factors		Careful management of cash and finances during periods of less sales
Ineffective marketing		Such equipment or machinery breaking down
Innovation		Consumer tastes, legislation PEST
New entrants		Poor handling of money coming into out of business not understanding importance of cashflow

Investing too much in fixed assets

When a business is unable to continue to run its operations

Unexpected expenditure

When a business is unable mange the amount of cash coming into and out of the business on a regular basis

Seasonal factors

When a business has insufficient funds (working capital) to run the business e.g. wages, stock, bills

Lack of business skills

Business is unable to compete in the market

Not competitive

A business does not keep up with changes currently happening in the market e.g. technology, Nokia, Kodak, Blockbuster

Business failure

Developing new products or using new technology, designs

Financial management

New businesses entering into the market, competitors

Poor cost control

Not managing costs within the business e.g. wages, stock & utilities gas, fuel, electricity

Poor leadership

Poor marketing mix for products, e.g. poor design, overpriced products, unsuitable channels used for marketing  e.g. TV  instead of social media

Failure to adapt to changes in the market

Owner does not have the skills and experience to carry out the different functions HR, marketing finance

Over borrowing

When the leader makes mistakes, poor decision making

Lack of finance

Taking on more work than a business can afford to handle afford

Cash flow problems

Making poor investment decisions e.g. timing when business first trading not purchasing expensive capital items e.g. machinery, vehicles

Overtrading

Borrowing large amounts of loans from the bank

External factors

Careful management of cash and finances during periods of less sales

Ineffective marketing

Such equipment or machinery breaking down

Innovation

Consumer tastes, legislation PEST

New entrants

Poor handling of money coming into out of business not understanding importance of cashflow