ACTIVITY 1.3 Farah branches out on her own Farah was a well-qualified dressmaker. She had worked for two of the biggest dress shops in town. Why do businesses fail She was always arguing with her shop manager, who was very jealous about Farah's superior dress- making skills. Farah was now determined to set up her own business. She was lucky that her father was prepared to invest $5,000 in it, but she would have to find the rest of the capital needed - about Lack of record keeping $10,000, she guessed - from her own savings and a bank loan. Her first step was to investigate the prices of shop premises and she was disappointed Lack of cash and working capital when she found out how expensive the city-centre locations were. Her father suggested a cheaper but less busy out-of-town location. She contacted an Poor management skills accountant who offered to look after the financial side of the business, but he would charge at least $2,000 per year. Farah wondered if she could learn to keep the accounts herself if she attended > Changes in the business environment classes at the local college in the evening. She wanted to make her shop very different from all of the competitors in the city and she had the idea of offering lessons in dress-making as well as selling finished dresses. She had been asked so many times KEY CONCEPT LINK by customers, 'How did you do that?' when they were pleased with her latest dress designs, that she was sure this was a great business opportunity. The section above introduces some of the important What she had not realised was the amount of paperwork she had to complete before her business functions of and skills required by good managers, could even start trading. suggesting why the key concept of management is so [22 marks, 30 minutes] important. 1 Outline three problems that Farah had to deal with in setting up this new business. [6] 2 Which of these problems do you think was the most important one for Farah to find a good solution to? Explain your answer. [6] 3 Do you think Farah had some of the right qualities to be a successful entrepreneur? Justify your answer. [10]