Causes of Business Failure (Edexcel A-Level Business): Flashcards
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Overtrading definition
Overtrading definition
Funding large production with inadequate working capital
Most common cause of business failure
Most common cause of business failure
Cash-flow difficulties
% of start-ups ceasing within 5 years
% of start-ups ceasing within 5 years
Over 90%
% of failures from external causes
% of failures from external causes
About 20%
Insolvent
Insolvent
Voluntarily ceases trading, unable to pay debts
Bankrupt
Bankrupt
Taken to court by creditors unable to secure payment
Undercapitalised
Undercapitalised
Having insufficient capital or funding
Credit control
Credit control
Management of customer debts
Bad debts
Bad debts
When customers fail to pay
Price takers
Price takers
Businesses that must accept prevailing market prices