3.2.4 - Reasons for staying small

Question 1

What is a small business

Answer 1

• The usual definition of small and medium sized enterprises (SMEs) is any business with fewer than 250 employees.
• There were 5.2 million SMEs in the UK in 2014, which was over 99% of all business.
• Micro-businesses are business with 0-9 employees.
• There were 5million micro-businesses in the UK in 2014, accounting for 96% of all businesses

Question 2

What are the differentiation strategies of a small business

Answer 2

• Creates value; highlights quality or durability of the product
• Non-price competition; a differentiation strategy will focus on other ways of attracting customers such as taste and style
• Brand loyalty; a differentiation strategy can gain customer loyalty
• No perceived substitute; a differentiation strategy that focuses on quality and design may give the impression that there are no suitable substitutes in the market place

Question 3

What are the USPs of a small business

Answer 3

• USP stands for unique selling point or proposition, it means what makes this product different from others on the market?
• It is a way of promoting the features of the product or service of the business; quality, customer service, delivery, price, technical features or functions e.g. a feature is the reliability of the product, the benefit to the customer is less breakdowns and repairs