Question

Question 2
a) Mention any four (4) causes of business failures. (4 marks)

Answer 1

1) Lack of proper financial management: Poor financial planning, inadequate cash flow management, and excessive debt can all contribute to business failure. When a business does not have control over its finances, it becomes difficult to meet expenses, invest in growth opportunities, and sustain operations.

2) Ineffective marketing and customer relationship management: Failing to understand customer needs, market trends, and competition can result in a lack of customer attraction and retention. Ineffective marketing strategies, poor customer service, and an inability to adapt to changing customer demands can all lead to business failure.

3) Insufficient planning and strategy: Lack of comprehensive business planning, including a clear mission, goals, and strategies, can hinder a business's ability to grow and adapt to market conditions. Without a well-thought-out plan, businesses may struggle to identify opportunities, make informed decisions, and allocate resources effectively.

4) Inadequate competitive advantage: Inability to differentiate oneself from competitors and offer unique value propositions can make it challenging for a business to attract and retain customers. If a business does not have a competitive advantage, such as superior products, innovative technology, or excellent customer service, it may struggle to stay viable in the market.