1. Size of business Measurement of business size Significance of small businesses Internal growth

2. Measurement of business size Learning objectives Identification of different ways to measure the size of a business

3. Measuring business size Methods (more useful when comparing firms in same industry): 1. Number of employees Problem: highly automated firms 2. Sales turnover Problem: high-value production vs low-value production 3. Capital employed – long-term investment Problem: Firms in different industries have very different capital equipment needs 4. Market capitalisation = Problem: share price changes everyday 5. Market share = Problem: more than one way to measure this.

4. Other forms of measurement Number of outlets Total floor sales space – supermarkets Number of guest rooms Number of students No best measure – depends on the need Good to compare on at least two criteria

5. Significance of small businesses Learning objectives Be able to identify the advantages and disadvantages of being a small business Know the strengths and weaknesses of family businesses Understand the importance of small businesses and their role in the economy Know the role of small businesses within the economy

6. Significance of small businesses UK:  Turnover less than £2m a year  Assets less than £950,000  Employees less than 50 They are very important to all economies

7. Significance of small businesses Create many jobs Create new product ideas – greater choice for consumers Compete with larger firms – eg. the cost of air travel has been reduced significantly due to small airlines Possibility to grow into large companies – eg. The Body Shop, Hewlett-Packard, Tesco, Microsoft Lower average costs allow small businesses to offer lower prices to the consumer

8. How do governments assist small businesses Reduced rate of income tax Loan guarantee scheme Providing information Subsidised rent in some areas

9. What problems do small businesses have Lack of specialist management expertise Problems raising finance Limited product range Finding suitable and reasonably priced premises

10. Student activity You are setting up your own small business in Nanjing with some friends. Prepare a presentation for the rest of the class explaining What your business is How you will integrate with other businesses in the area (large and small) The advantages that you will have as a small business The problems that you are likely to face How the government may help you

11. Family businesses

12. Internal growth Learning objective Know why and how a business might grow internally