Term
| What is a small business? |
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Definition
-Turn over less than 2 million
-Assets less than 950 k
-Less than 50 employees |
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Term
| Why do we care about business size? |
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Definition
-"Small" businesses for government
-Investor compare to competitors
-Customers believe large companies are more trustworthy and stable
-Fewer production issues than with larger companies. |
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Term
| How to measure business size? State issues. |
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Definition
-Number of employees (issue- Automated machinery)
-Sales turnover (Revenue) (issue- Comparing forms in different industries "high-value production")
-Market capitalisation (issue- Only for limited companies and share prices change)
-Market share (issue- Total market may be small meaning little comparison) |
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Term
| Family business definition |
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Definition
| Businesses owned and ran by a family |
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Term
| What is the importance of a small business for the economy? |
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Definition
-Employ people (A significant amount of people are employed by small businesses)
-Run by dynamic entrepreneurs with new ideas for goods and services. Creates variety
-Creates competition for larger companies. Which improves choice for consumers
-All businesses start small
-Costs are lower (Salaries and revenue) |
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Term
Family business:
Advantages? |
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Definition
-Common values
-Loyalty
-Decreased costs
-Support each other |
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Term
Family business:
Disadvantages? |
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Definition
-Family conflict
-Favouritism
-Succession planning in the vent of death
-Can't fire them |
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Term
| 4 ways governments support small businesses? |
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Definition
-Grants (Loans without repayment)
-Low-interest loans
-Tax-free periods or locations
-Support/guidance
-Training courses for staff |
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Term
| 4 reasons why to grow a business? |
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Definition
-Increased profit
-Increased market share
-Increased economies of scale
-Increased power and status
-Reduced risk of takeover |
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Term
| How does businesses grow? |
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Definition
| Internally and externally |
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Term
| What is internal growth (organic growth)? |
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Definition
| Expanding the business from within its own internal resources |
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Term
| How to expand a business using internal growth? |
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Definition
-Number of employees
-Increasing production of existing products
-Opening new outlets
-Increasing quantity of goods sold |
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Term
| Advantages of internal growth? |
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Definition
-It can be financed through internal funds e.g. retained profits
-Less risky than taking other another business
-Allows business to grow at a more sensible rate |
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Term
| Disadvantages of internal growth? |
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Definition
-Slower growth the shareholders may prefer rapid growth
-Growth achieved may be dependent on the growth of the market
-Harder to build market share if the business is already the market leader |
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