Chapter 15 Reasons for Business Failure

When a business is unable to continue to run its operations

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

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

Business is unable to compete in the market

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

Developing new products or using new technology, designs

New businesses entering into the market, competitors

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

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

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

When the leader makes mistakes, poor decision making

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

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

Borrowing large amounts of loans from the bank

Careful management of cash and finances during periods of less sales

Such equipment or machinery breaking down

Consumer tastes, legislation PEST

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