Reasons Why Retail Business May Fail
The following reasons may result in the failure of retail business;
1. Lack of Experience: If the trader or business owner does not have the experience, it means problems are inevitable which may lead to the winding up of such business where a solution cannot be immediately sourced for.
2. Bad Debts: If the trader does exercise caution on the sales of goods on credit, it may result in irrecoverable debts which may lead the business to fail.
3. Excessive Spending: Many traders spend their money on frivolities such as celebrations, naming ceremonies, marriage anniversaries, etc where a large sum of their capital is spent.
4. Lack of Proper Record: Improper or lack of record for the business transactions made can lead to failure. Keeping proper records in business is essential to guide against some losses.
5. Lack of Projection: A retailer must learn how to forecast future happenings that is whether there will be an increase or decrease in demand for his products since some customers’ demand for some products fluctuates with season/periods of time.
6. Avoiding of Insurance Policy: Most Traders feel it is a waste of resources/money to take an insurance policy. Their ignorance never allows them to see the importance of taking an insurance policy to protect the business in the event of any uncertainly/eventualities. To guide against business risks, there is a need for an insurance policy which will provide compensation if need be.
1. Explain the following and give three benefits of each.
b. After-sales service
2. Enumerate four characteristics of large scale and small scale retailers.
3. Give two examples of small scale retail outlets and three examples of large scale retail outlets.
4. State five reasons why retail business may fail
5. Explain the following and give three benefits of each.
(b) After sales service
(c) Self-service (d) Vending machine (WASSCE June, 2005)