Social Sciences, asked by boyl6378, 10 months ago

What are internal cause of business failure ??????

Answers

Answered by Anonymous
1

Explanation:

INTERNAL CAUSES OF BUSINESS FAILURE

Poor Management

This is perhaps the most common cause of business failure. Poor management refers to a situation where the manager or managers are not able to see the current problems affecting the business and solving them quickly enough. Management is not only expected to identify and solve current problems but also to be able to foresee problems that might happen in the future and take steps to completely nullify their impact on the business or at least to minimize their effect on the business. When managers lack important business management skills such ability to plan, record and report the business' money issues accurately, market the company's product effectively and manage his relation with customers properly, the business may suffer failures.

Poor Accounting Practices

Before a manager will be able to make decisions about the business, he or she needs to know exactly how much money is available to the business. In other words, the manager must have a good knowledge of the financial situation of the business before making any decision. However, where the business is operating a poor bookkeeping practices, it becomes very difficult for the manager to know what to do in any situation. Poor accounting practice can also cause regulatory bodies to either over tax or impose penalties on the business. It must also be noted that poor accounting practice or poor financial record keeping can also make it difficult for the manager to see the problems that the business in facing.

Poor Cash Flow Management

Cash Flow Management helps a company to estimate how much cash the business will have on hand at any given moment. It makes it possible for the managers of the company to know whether there will be a shortage in cash available to the business at one point and at what time that shortage could occur. When the cash flow of business is not managed properly, there may be a fall in cash on hand. This could affect the business in many ways: The company may not be able to pay for goods it has bought from its suppliers, or pay for loans it may have taken from the bank; paying the salary of its workers could become a problem …and so on. In short when cash flow is not well managed the business could experience a lack of working capital which may cause the business to fail.

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