Chapter 15 Reasons for Business Failure

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