Reasons why a new business may fail

Explain reasons why a new business may fail

  • Inadequate capital/ lack of funds- initial/ operation capital may be inadequate to sustain/ run/ expand due to lack of collateral/ security
  • Poor inappropriate marketing/ strategies/ leading to low sales/ fewer customers/
  • Unfair/ stiff competition
  • Inadequate/ lack of poor/ inefficient management skills. The business may have insufficient skills to operate/ manager
  • Lack of inadequate manpower
  • The business may not have enough manpower to operate/ manage
  • Lack /inadequate modern technology/inappropriate technology. This may lead to less quantity/ quality goods/ services
  • Unfriendly / poor management policies. May be the government policies are unfavourable to the growth/ explosion of business
  • Inadequate/ lack of market due to low income of buyers/ customers/ cultural practices/ beliefs
  • Poor pricing which might make the produce/ services too expensive to attract buyers/ too cheap to sustain the business
  • Inappropriate product/ business for the intended market/
  • Political instability/ insecurity that may hinder smooth running of the business
  • Poor/ inadequate infrastructure which may hinder access the market/ inputs/
  • Lack of planning to accommodate future changes.
  • Misallocation/misappropriation of resources leading to wastages/ misuse of resources.
  • Poor customer relation/ care leading to loss of market.
  • Poor time management which may cause loss of business opportunities/ inabilities to accomplish tasks




reasons why a new business may fail


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