When a business fails the entrepreneur may lose money, have to pay back money borrowed, have difficulty finding another job and have low self-esteem and low self-confidence because of the failure.
It is not unusual for a business to experience failures and when there are risks involved, these risks can either go well or they can fail. Some reasons why a business may fail include:
Poor cash flow - the entrepreneur may experience difficulty with cash-flow in the
business and this could put the business at risk
Lack of expertise - the entrepreneur may not be expert in all areas of the business and thus
could end up losing all their investment
Lack of experience - the entrepreneur may be young and inexperienced to take on the
responsibility that is required of them and therefore the business may
never get off the ground
More time and effort required than expected - the entrepreneur may find that running their business is taking up a lot of their time and on account of this, time with family and social
occasions may be pushed into the background.
Other reasons for failure may include:
Too much competition for the same product
A lack of customer demand
A poor economic climate
Poor market research carried out by the business
Failure to manage and keep control of the business if it grows very quickly
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