Many small businesses fail because they are selling products or servic

QUESTION

Many small businesses fail because they are selling products or services that are new and untried. This sounds like the definition of innovation. Yet, why does this often lead to failure of an enterprise?

What will be an ideal response?

ANSWER

Answer: By selling products and services that are new and untried, the business is assuming a greater-than-average level of risk.
Explanation: All businesses operate in a climate of risk. Small businesses attempting to sell new products or services face additional risks and often lack adequate resources to weather challenges that a larger business selling new products and services may be able to manage.