Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill /...

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Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital d) Inability to stay competitive Ch. 5 Notes Pg. 107-110 Why Do Businesses Fail?

Transcript of Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill /...

Page 1: Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital.

Reasons for failure are usually more obvious than reasons for business success…

a) Lack of skill / knowledgeb) Expanding too quicklyc) Lack of capitald) Inability to stay competitive

Ch. 5 Notes Pg. 107-110

Why Do Businesses Fail?

Page 2: Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital.

High school and post secondary business courses

Experience in business

Business failure often results from:1) Poor marketing2) Poor accounting

Lack of Skill or Knowledge

Page 3: Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital.

Marketing experts:

- good at promotional ideas- creative advertising- colorful & eye catching displays- predict demand- spot trends & fads- appreciation for product design/package graphic- good customer service

Page 4: Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital.

Accountants

- set budgets - Buying Quotas: limits on the amount

of money a business should spend on inventory

- negotiate terms- pay invoices on time- keep financial records- make sure a business is profitable

Page 5: Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital.

Expansion, developing new products, franchise or acquire others businesses

Decisions need to be based on research

Businesses that become successful so fast may try to grow too quickly without analyzing expansion plans

Forgetting your origins can cause businesses financial difficulty

Some businesses are so large that change happens very slowly

Expanding too Quickly

Page 6: Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital.

Running out of money is often a result of failure to budget properly

It is recommended that you have one year of operating expenses in reserve when going into business

Initial capital from personal savings, bank loans, investors, partners, friends and family.

If a business is profitable revenue from sales will eventually cover the operating costs.

Lack of Capital

Page 7: Reasons for failure are usually more obvious than reasons for business success… a) Lack of skill / knowledge b) Expanding too quickly c) Lack of capital.

Businesses can compete using their product mix, product quality, service, price, location, reputation & expertise.

Creative businesses will find a way to stay competitive

A main reason for small business success no competition in the area

Big Box Stores: A large retail store that sells a wide range of products at low prices

Inability to Stay Competitive


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