Business Success or Failure

Question 1

Why do businesses need success?

Answer 1

If they are not being successful, they will be unable to re-pay their loans to banks or pay employees or pay their suppliers for inventory.
In this case the bank and other trade payable will force the business to close.

Question 2

Signs of success for a business

Answer 2

Increasing profit - successful business will be increasing its sales, widening its market and making increased product as a result.
Attracting new competitors into the industry - successful businesses will be introducing new products to the market so other businesses will want to enter the same market to share in the success.
Expansion - successful businesses will want will be growing, enlarging its premises, taking over other businesses and opening new branches.

Question 3

Signs of failure for a business

Answer 3

Loss of profit - unsuccessful business will lack variety of products and inventory will be low. Therefore decreased sales will lead to loss of profit.
Poor cash flow - meaning that a business will not have available cash to pay its trade payables or employees therefore suppliers will not supply inventory and employees will not work there.
Loss of customers - business will lose its customers because of the lack of variety of products, low stocks or poor service.