Enterprise, business growth and size 1.3 Flashcards
What are the characteristics of a successful enterpreuner
Hard working
Risk taking
Creative
Confident
What is a business plan
Document with important information about your business
What does a business plan include and how can it help
Contains: Products you will sell, cost of your business and what is required to operate the business
How can it help:Plan business to reduce risk of failure and apply for bank loans
Why do governments support new businesses
New businesses create jobs reducing unemployment
Business may grow larger and contribute to the country
How do governments support new businesses
Loans at low interest rates
Grants money to train employees
Land to set up business at low-cost
How do you measure size of a business
Number of employees
Value of output
Value of sales
value of capital employed
What are the limitations of measuring business size using number of employees
Some businesses use machines and some businesses produce more with less employees
What are the limitations of measuring business size using number of value to output
Some businesses may produce very little but high quality where as some produce lots but low quality
What are the limitations of measuring business size using number of value of sales
Some businesses produce less products but spend more time producing a single product where as some may be producing more at a time.
Example: Sports car vs normal car
What are the limitations of measuring business size using value of capital employed
Different businesses depend on different types of capital. Some business may rely on machines whereas some rely on employees
Why do businesses grow
Increased chance of higher profit
Lower average cost
Increased control of markey
How do businesses grow
Internal Growth – Business grows by itself (Business gets larger as profit increases e.g. more customers)
External Growth – Take-over or merger with another business.
What are the examples of external growth
Joint Ventures – Two or more business agree to start a new project together.
Conglomerate merger – Two businesses in a completely different industry combine to form a new business
What are some problems of business growth and solutions
Large businesses are difficult to control - operate business in small parts
Poor communication in large business - use technology to communicate
Cost of expansion is high - Expand slowly
Why do businesses remain small
Owners objective - Owners want businesses to remain small to have more control, large businesses may be stressful to run
Types of industry - Some businesses such as hair salons provide personal services so growing too large will lose connections with customers
Market size - Businesses that produce specialised goods likely to remain small as limited customers
