Business Studies Find your chair: Look at the picture what does this mean to you? Be prepared to answer if called upon: This does not require any verbal or non-verbal communication with anyone else in the class.

Business Studies Chapter 3

Chapter Overview How the size of a business can be measured. The significance of small and family businesses for the economy.

Measuring the size of a Business The size of a business can be measured by: The turnover of the business The number of employees The market value of the business Other indicators such as the number of stores or even the number of vehicles (like a bus company)

Small Businesses Most economies the largest group of businesses are small businesses. However, larger businesses usually employ more people and have higher values of output.

Why are Small Businesses Important? Small businesses are extremely important because they: Create jobs, reducing unemployment Provide competition for established business to ensure they stay competitive. Provide new sources of ideas. Usually small businesses are creative and innovative.

Advantages of a Small Business They are relatively easy to set up. They are flexible because decisions can be made quickly. They usually are ran by motivated people that want to see the business work. Usually very creative and willing to try new things. Government will possibly try to help you in the form of subsidies or tax breaks.

Disadvantages of Small Businesses They lack the power in the market. Usually difficult to get steep discounts from suppliers. Lack the experience compared to established firms. They find it difficult to raise finance because of the high risk involved because so many small businesses fail.

Family Businesses (Strengths) A number of businesses in an economy will be ran by families. This is more common in some countries such as India and China. Family members will share the same values this leads to fewer disagreements. If the business succeeds then the entire family will benefit. Family members are usually very supportive of each other. A number of family members may provide financing for the business.

Family Businesses (Weaknesses) Sometimes business decisions are based on emotion instead of business reasons. Family members may lack the proper experience to run the business. Maybe difficult to manage your relationships with other family members if you disagree with them.

Why and How a Business Might Grow Internally. The size of a business is not fixed – it can change over time. The most common way is to expand your business. This is called external growth. The other way to expand is internal or organic growth. This means expanding your current operations. A business may try to expand sales of existing customers/markets. Develop new products for its customers. Find new markets where it can sell its existing products.

Why Businesses Grow More power over suppliers and customers which might mean more profit. Potential to reach more customers. The owners will be satisfied that the business is worth something. The owners can have a sense of achievement because they have grown the business.

Homework Case Studies: Small Business Finance A Family Business Questions 1-10 DUE MONDAY JUNE 8TH