Answer to Question #211246 in Finance for Sphesihle Zuma

Question #211246

Do you agree with the assertion that businesses fail for a number of reasons? Substantiate on your answer by discussing the following :

1. Poor financial control


3. Unrealistic time frames

Expert's answer

Yes businesses do fail.

•Poor financial control; The basis of every business is availability of capital, lack of funding lead to failure this is because their is no way to purchase supply and products for sale and re_stock commodities without adequate funding. Fixed cash flow lead to business owner not saving surplus profit to enhance either growth of the business or save for personal benefits.

•Inflexibility; Location of business is a critical factor, accessibility allow for transportation of goods and services. If business is located within an area out of reach by customers or very distant the business will fail, because of inadequate customers and not meeting the market _niche thus the stock remain stagnant hence the business collapse.

•Unrealistic time frame; This is associated with business plan problems, having a good plan with clearly outlined goals and objective is the basis of successful business. Limited time and short term plan within unspecified time leads to business failure.

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