Defining business growth

Question 1

Identify 7 measures of business growth

Answer 1

Profit, sales, market share, subjective measures, employment, entrepreneurial income, financial ratios

Question 2

What type of growth do these all measure?

Answer 2

Internal/ organic growth

Question 3

What are the two most popular measures of these?

Answer 3

Sales and employment growth

Question 4

Why is sales a common measure of growth?

Answer 4

The data is easily obtainable, often used by the entrepreneur themselves to measure growth

Question 5

Why is employment a common measure of growth?

Answer 5

The data is easily obtainable, provides info on the business’ resource base

Question 6

List 5 disadvantages of these measures

Answer 6

Effects of time (e.g inflation), doesn’t measure external growth (e.g mergers), costs of subjective measures, Data can be misinterpreted, they may not reflect the entrepreneur’s goals