Financial Viability
What does financial viability mean?
A business's ability to survive and make enough money to continue operating.
Give one example of an internal factor.
Staff, pricing, marketing, management, product quality.
Give one example of an external factor.
Economy, weather, competitors, government laws, technology.
What does "putake" mean in business?
The purpose or reason the business exists.
A bakery has long queues every morning. Is this likely to increase or decrease financial viability? Why?
Increase because more customers usually mean higher sales.
Name two signs that a business is financially viable.
Makes a profit, positive cash flow, growing sales, can pay bills, etc.
Why is good customer service important?
It encourages repeat customers and increases sales.
How could inflation affect a business?
Costs increase, reducing profit if prices cannot be raised.
Besides making profit, what is another business purpose?
Helping the community, sustainability, creating jobs, solving problems.
A clothing store's rent increases by 20%. Is this an internal or external factor?
External factor.
A café's expenses increase faster than its sales. How could this affect financial viability?
Profit decreases, making the business less financially viable.
A business reduces staff training to save money. What could happen?
Customer service may decline, leading to fewer customers and lower profits.
A new competitor opens nearby. What might happen?
Customers may switch, reducing sales.
How could a strong business purpose improve financial viability?
It attracts loyal customers and motivates employees.
A café receives many negative online reviews. What internal factor should it improve?
Customer service and/or product quality
Explain why a profitable business may still have financial viability problems.
It may have poor cash flow and be unable to pay bills on time.
Explain how effective marketing can improve financial viability.
It attracts more customers, increases sales, and improves profits.
Explain how government regulations could increase business costs.
Businesses may need new equipment, training, or compliance measures.
Explain why customers may support a business with a strong environmental purpose.
They share its values and are more likely to buy from it.
A business increases advertising but sales do not improve. Give one possible reason.
Wrong target market, poor product, ineffective advertising, strong competition, etc.
Which is more important for a new business: making a profit or maintaining positive cash flow? Justify your answer.
Positive cash flow is usually more important initially because bills must be paid even before profits are made.
A business has excellent products but poor management. Which factor is likely to have the greater impact on financial viability? Explain.
Poor management because it affects decision-making, staffing, costs, and overall performance.
A business cannot control external factors. What strategies could it use to reduce their impact?
Diversify products, improve marketing, reduce costs, build customer loyalty, etc.
A business chooses sustainability over short-term profit. Discuss how this could improve long-term financial viability.
Builds customer loyalty, strengthens reputation, and may reduce long-term costs.
A business faces rising costs, a new competitor, and declining customer satisfaction. Which factor should the owner address first to improve financial viability? Justify your answer.
Customer satisfaction because retaining customers helps maintain sales.