Business success and failure - CCEA

Key facts about business success and failure

• Entrepreneurs start businesses with various goals, such as making a profit, growing the business or helping society.
• Signs of success include increasing profits, expansion and positive customer reviews.
• Signs of failure include falling sales, poor cash flow and high staff turnover.

Entrepreneurs set up businesses for different reasons and with different goals.

Some of these objectives could include making a profit, growing the business, helping a group in society (social enterprise) or developing a strong corporate image.

What are the signs of success in a business?

• increasing profit

• attracting new competitors into the industry

• expansion (growth)

• favourable customer reviews

• word of mouth recognition (eg the general public have heard of the business)

• listings on social media / increased publicity (online and offline, eg getting mentioned on the local news)

Read this information about PharmaOne, then answer the questions.

PharmaOne, a top UK pharmaceutical company, has announced its best ever financial results, with record-breaking revenue, profits, and employee numbers. For the year ending in September 2021, PharmaOne’s revenue grew by £60 million, reaching £740 million, while profits before taxes rose by 25% to £80 million.

To keep up with rising demand, PharmaOne is launching a £200 million expansion across the UK, Europe, North America, and Asia. Over the next three years, they plan to create over 2,000 new jobs worldwide, with 1,200 of those roles in the UK.

CEO David Grant praised the company’s employees, saying that PharmaOne’s success is due to reinvesting profits into developing and delivering essential medicines. Recently, PharmaOne has ed over 250 research projects and developed many treatments in areas like cancer, immune diseases, and COVID-19.

It is estimated that over 40% of new businesses fail within 5 years.

The most obvious signs of this are:

• falling sales and customer numbers

• falling profits

• poor cash flow

• unfavourable customer reviews

• high staff turnover / staff redundancies

• branches closing down

Top Trend Clothing, a popular UK fast fashion brand, has entered istration after failing to pay its suppliers. With around 300 employees, the company has hired Crest Financial to find a buyer for its business and assets. Rising costs, inflation, and decreasing consumer confidence have placed Top Trend Clothing under severe pressure in an increasingly tough market.

Experts suggest Top Trend Clothing struggled to compete with faster, cheaper brands that are also more eco-friendly. Many young shoppers now care more about sustainability and fast fashion brands are under pressure to adapt. Top Trend Clothing’s founder, Leo Patel, recently stepped down as CEO following the brand’s financial struggles, despite a cash injection from IronHill Investments last year.

While Top Trend Clothing will continue to operate for now, it’s uncertain if a buyer will step in. Rival fashion company FlashFit is rumoured to be interested, but the shift towards sustainable fashion could make it harder for Top Trend Clothing to survive.

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