Which are some common reasons for the failure of micro-enterprises?

The choice highlighting a lack of market demand and insufficient capital identifies two critical factors that can significantly contribute to the failure of micro-enterprises.

Market demand is essential for any business to thrive; without it, even the most well-planned ventures can struggle. If a firm’s offerings do not align with what potential customers want or need, sales will inevitably suffer. This mismatch often leads to inventory and cash flow issues, threatening overall sustainability.

Insufficient capital is also a major concern. Many micro-enterprises operate with tight budgets and limited funding. This lack of financial resources can hinder the business's ability to invest in necessary areas such as product development, marketing, or even day-to-day operating expenses. When these enterprises are under-capitalized, they struggle to cover costs during lean periods or to scale up when opportunities arise, which can ultimately lead to failure.

Combined, these factors—market demand and capital—create a precarious scenario for micro-enterprises, making this answer a strong reflection of the common reasons for their failures.