Gerald started a business using the savings from his previous job.He planned to run his business on the revenue generated from sales.However,a few months later,he found it difficult to pay his staff,rent,and other expenses.Seasonal sales and inability to secure sufficient credit from local banks made it difficult for Gerald to operate the business normally.Which of the following causes of small-business failure does this scenario best illustrate?

Question

Quizplus · Accepted Answer

Gerald's difficulty in paying staff, rent, and other expenses due to seasonal sales and inability to secure sufficient credit indicates undercapitalization. This means Gerald did not have enough capital to support his business operations, especially during periods of low revenue.

Gerald Started a Business Using the Savings from His Previous