Business Failure

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  • Business Failure
    • Internal Factors
      • Financial
        • Liquidity
          • poor financial management, lack of forward planning
          • may lead to cash flow problems
        • Poor Accounting
          • poor procedure can mean cash flow is not being closely monitored
      • Non-Financial
        • Management error
          • clear and skilled leadership is crucial, poor management can be fatal
        • Wrong strategy
          • business loses touch with the market and its customers
        • Communication
          • lack of it means business can't co-ordinate
        • Failed Expansion
          • many businesses expand and fail because they don't anticipate all the problems
        • Poor Quality
          • in the digital economy, poor quality or service can be quickly exposed
        • Lack of investment
        • Poor marketing
    • External Factors
      • Financial
        • Exchange rate
        • Interest rates
        • Lack of finance
        • Recession
        • Financial crisis
      • Non-Financial
        • Structural change
        • Competition
        • Natural phenomena
        • Government regulations
        • Supplier problems
    • highest rate of business failure is amongst new businesses
      • difficult to test a business model without trading
      • easy to be over-optimistic in the business plan
      • competitor response is often aggressive
      • management may lack experience

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