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GCSE Business · key term
When a business cannot continue operating and stops trading.
Used by Edexcel
Specification 1.1.2 · Paper 1
Revise: Risk and RewardBusiness failure occurs when a business cannot continue operating and stops trading. Falling sales revenue, poor cash flow or competitors attracting customers away can contribute to failure. Revenue is the money received from sales; cash flow concerns money moving into and out of the business.
Distinguish business failure from financial loss: failure concerns the business stopping trading; financial loss concerns money the owner or business loses.
Do not assume that higher risk guarantees higher rewards, or that negative cash flow automatically means business failure.
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