Why is cash flow challenging during the launch phase of a business life cycle?

Question

(1 point)
Responses

There is a consistent loss of market share during this phase.

There is a consistent loss of market share during this phase.

There is a decrease in profits during this phase.

There is a decrease in profits during this phase.

There is usually negative sales growth in this period.

There is usually negative sales growth in this period.

There are initial start-up and maintenance costs that need to be covered.

There are initial start-up and maintenance costs that need to be covered.

Answer 1

The correct response is: There are initial start-up and maintenance costs that need to be covered.

During the launch phase, businesses often face high initial costs related to product development, marketing, and operational expenses, which can create cash flow challenges even before generating significant revenue.