Question

1. Why is developing a financial plan so important to an entrepreneur about to launch a business?

2. Although there are many reasons a new business could fail or succeed, a few are fairly common. Think about the common reasons for success and failure in starting a new business. Identify a business that has failed and one that has thrived and explain what accounted for the success of one and the failure of the other.

Answer 1

Financial plan

• Helps in confirming that the ideas are a business
• Used to convince others on the potential of an idea
• It indicates whether an entrepreneur is on track
• Offered a point of preparedness on areas of weakness

Break-even point

• Helps in determining whether the cost incurred can be recovered
• Helps in assessing true costs of a business
• In ascertaining the contribution of every product and service offered by a business to the overall profits

2

Reasons for success- Microsoft company

Strategic focus-a good leadership that is able to drive vision in a focus. Perseverance during hardships.Know-how to attract investors thus creating a better environment for growth.Focus on meeting customers needs to ensure satisfaction.In addition,good marketing plans such as having good customer relations,sales and responsiveness.

Explanation:

Walmart failed in Germany,India

Lack of planning-having no plan for directions.Rapid extension-this business confused expansion with growth just because they had good profits in America that did not mean extension.Poor leadership who focus on sales not customers.Poor inventory management as well as poor credit management which led to great losses.