OTE2601
Assignment 2 2025
DUE 15 June 2025
, QUESTION 1: Reasons Why Most Businesses Fail (20 Marks)
Many businesses, especially small ones, fail within the first few years due to a range of
internal and external challenges. Below are key reasons:
1. Poor Financial Management:
Entrepreneurs often lack budgeting skills and overspend without tracking income
and expenses. This leads to cash shortages and debt.
2. Lack of Market Research:
Starting a business without understanding the needs of the target market or
competitors often leads to failure. Products may not match what consumers
want.
3. Inadequate Planning:
A business without a solid plan lacks direction. Entrepreneurs need to plan for
goals, expenses, staffing, marketing, and possible risks.
4. Insufficient Capital:
Many businesses are underfunded from the start. Without enough capital to
cover early costs, including rent, stock, and salaries, businesses close
prematurely.
5. Poor Location:
If the business is not accessible or visible to customers, it loses out on foot traffic
and exposure, which reduces sales.
6. Lack of Business Skills:
Many entrepreneurs have the passion but not the skills needed for pricing,
inventory management, and customer relations.
7. Weak Marketing:
If people don’t know about the product or service, they can’t buy it. Poor
advertising leads to low sales and business stagnation.
8. Failure to Adapt:
Businesses that don’t evolve with trends or technological advancements quickly
become irrelevant.
Assignment 2 2025
DUE 15 June 2025
, QUESTION 1: Reasons Why Most Businesses Fail (20 Marks)
Many businesses, especially small ones, fail within the first few years due to a range of
internal and external challenges. Below are key reasons:
1. Poor Financial Management:
Entrepreneurs often lack budgeting skills and overspend without tracking income
and expenses. This leads to cash shortages and debt.
2. Lack of Market Research:
Starting a business without understanding the needs of the target market or
competitors often leads to failure. Products may not match what consumers
want.
3. Inadequate Planning:
A business without a solid plan lacks direction. Entrepreneurs need to plan for
goals, expenses, staffing, marketing, and possible risks.
4. Insufficient Capital:
Many businesses are underfunded from the start. Without enough capital to
cover early costs, including rent, stock, and salaries, businesses close
prematurely.
5. Poor Location:
If the business is not accessible or visible to customers, it loses out on foot traffic
and exposure, which reduces sales.
6. Lack of Business Skills:
Many entrepreneurs have the passion but not the skills needed for pricing,
inventory management, and customer relations.
7. Weak Marketing:
If people don’t know about the product or service, they can’t buy it. Poor
advertising leads to low sales and business stagnation.
8. Failure to Adapt:
Businesses that don’t evolve with trends or technological advancements quickly
become irrelevant.
