Section 3: Enterprise, business growth and size Flashcards
Entrepreuer
a person who is willing and able to create a new business idea or invention by taking risks
Business Plan
A detailed written document outlining the purpose and aims of a business which is often used to persuade lenders or investors to finace a business propsal.
Revenue
The amount a business earns from the sale of its product.
business start up
A newly formed business. They usually start small, but some might grow to become bigger.
What do enterpreneurs do
- They organise reasources
- They make business decisions
- They take risks
haracterisitics and skills required to be an enterprenuer
- Communication
- Self confidence
- Problem solving
- Organisation
- Team work
- risk taker
Elements of a business plan
- Business objectives
- Business location
- Business idea
- Business marketing
- SOurce of finacne and profits
How do business plans help enterprenuers
- Reduce risk
- Increases Value
- Provides a direction
Government suppor for business start ups
- Training and support sessions
- Enterprise xones
- Finance
Ways to measure business size
- Size of workforce
- Value of capital employed
- Value of business sales
- Value of Business output
Size of workforce
How many workers in a business
Value of capital employed
A measure of all the money
Value of business sales
The total sales revenjue privce x quanitity
Value of business output
Financial worth a goods produced
Reasons why businesses groew
10 Market share
2) Market power
3) Easier access
Internal growth
- Greater market share
- New technology
Advantages for internal growth
- Pace growth
- less risky
Disadvantages for internal growth
- slow pace
- limited finance
Inorganic External growth
2 companies form one
Vertical Interigation
take over another firm in the supply chain
Forward Vertical interegation
Take over of a firm forward dairy to icecream
Backwards vertical Integeration
Take over of a firm backwards in the supply chain
ice cream shop to ice cream factory
Horizontal integration
takeover of a firm at the same stage of the production process
Advantages of vertical integreation
- Reduce cost of production
- Competitive
- Reduce risk
_ Quality
Disadvantages of verticla integreation
- Little expertise
- Culture clash
ADvantages of horizontal integreation
- Increase market share
- Reduce competetion
- New knowledge gained
Disadvantages of horizontal integreation
- Cultural clash
Diseconomies
Problems of growth
- larger firms are harder to control
- Poor communication
- High costs lead to cash flow problems
- Difficulties in taking over
Reasons why small firms exists
- Personalised service
- Repond quickly
- unable Access external finace
Advantages of small firms
- Highly customised and unique
- Personal realshionships
- Changing market conditions
DisAdvantages of small firms
- Limited access to finance
- Struggles to take holidays
- Hard to get high quality staff
Why do some business fail
- Finacial factors
- Poor managment
- Overtrading
