1.

3 Enterprise, business growth

and size
Enterprise and entrepreneurship
1.3.1 By the end of this section you should:
• Know the key characteristics of successful
entrepreneurs
• Understand the contents of a business plan
and how business plans assist entrepreneurs
• Understand why and how governments
support business start-ups, e.g.through grants
and training
 Activity
• Do activity sheet 1.3.1A
• The outline image represents an entrepreneur.
• Note around the image the different skills, attributes
and characteristics of a successful entrepreneur. (use
pages 24-25 of the book)
• Try to write your ideas next to the appropriate part of
the body. For example, they could write ‘Good
communicator’ next to the mouth.
• Extension: Highlight the skills, attributes and
characteristics that you think are the most important
to an entrepreneur.
 Entrepreneur
Focused
and
determined

Risk
Creative
seeking

Qualities of
an
entrepreneur

Innovative Organized

Hard
working
and
intelligent
 Business Plan
• This is a written document that outlines the
business’s aims and vision (plan for the future)
• Use it to attract (encourage people to give)
finance
• Work out the timeline for the business
• Gives the owner ideas of how the business
needs to develop, in line with targets and goals
• Measure its success,
• Keep the business on track
 Business plan
• What are the sections included in the business
plan?

Spend 5 minutes to read P.26-27 and report!

 Business plan
• Business summary
• Business details
• Market research
• Marketing
• Day-to-day running of the business
• Finance
 Activity
• Do activity sheet 1.3.1B
• Read the extracts from a business plan and
draw lines to match these with the correct
section of the plan
• You can refer to the information about the
business plan on pages 26-27 of your book
• Extension: you can try to identify the most
important parts of the business plan and to
justify your choices
 Activity
• Do activity sheet 1.3.1C
• Work in pairs to discuss and identify the
benefits and limitations of a business plan to a
business and to an entrepreneur
• Then make a judgment on how useful a
business plan is overall

Extension: Use your points to write a complete

answer to an exam-style question
 Government support
What can the government do to support the
business start-ups?
• Read P.28-29!
 Government support
Government might support business start-ups by
• Grants – these are sums of money that are
given to businesses to help pay for set-up costs
or expansion
• Advice – giving them advice and support like
the knowledge of tax, employee rights
• Training – Providing courses for unskilled,
unemployed or older people can help to get
more of the population into work
 Government support
• Loans – the government can help by providing
small loans aimed specifically at businesses
that are struggling to gain finance
• Tax relief- this allows businesses a set an
amount of time when they do not have to pay
any tax
• Mentors – having access to people who have
run a successful business is vital for future
business growth
 Plenary Activity
• Do activity sheet 1.3.1D
• Read a case study about how government support
businesses and answering questions based on the case
study
• Highlight key terms and key content while you are
reading the case study
• Try to find out any key ideas and any numerical
evidence that can be used to justify your answers
• Work out the answers onto your notebook
• Extension: Write your own questions based on the case
study, you can swap with other students to answer
1.3.2 By the end of this section you should:
• Understand the methods used for measuring
business size, for example, the number of
people employed, value of output, capital
employed
• Understand the limitations of methods used
to measure business size
• Name the businesses that are in big, medium
and small size
Big Medium Small

I want you to identify the ways in which they

vary in size, e.g. number of employees,
number of outlets, etc.
How to measure the business size?

Take 5 mins to read the book p.30 and 32

Please go over the different methods used to
measure the size of a business, including the
benefits and drawbacks of each method.
 Activity
• Do activity sheet 1.3.2A
• List the methods that can be used to measure
the size of Dean’s Doughnuts based on the
information in the case study
• Identify the evidence for each method given in
the case study and write it in the table
• Use 5 mins to finish it
• Extension: identify the benefits and limitations
of each method as it applies to Dean’s
Doughnuts
How to measure the business size?
• Capital employed
– The amount of money invested in the business
– This gives a value for the business that reflects what is
has invested and what it would be worth if sold
– However, it is difficult to value assets accurately
• Market share
– The total amount of sales a business has as a percentage
of the total sales in that market
– This provides a useful comparison against businesses in
the same industry
– However, you cannot compare one business’s market
share with that of a business in another industry
How to measure the business size?
• Number of outlets
– The number of shops the business owns and runs
– This gives a geographic idea, as each outlet will take up a
certain amount of space
– However, outlets are not equal to sales or profit. A
business can have lots of outlets but not many customers.
• Number of employees
– Total number of people who work for the business
– Shows the scale on which the business operates
– However, you cannot compare with different industries.
Even if a business only has a few employees, their skills
and knowledge could be worth millions of dollars
How to measure the business size?
• Value of business
– The price another business is willing to pay to own the business
– This can be good reflection of the true worth in the market
place.
– However, this measure can be inaccurate, as sometimes a
business will be bought for more than it is worth.
• Value of output
– Often called sales or turnover, this is the value of the products
or services sold
– This shows how much the business is producing and how much
people are willing to pay for these products
– However, revenue alone does not take into account the costs of
the business
 Plenary activity
• Do activity sheet 1.3.2B
• Discuss the limitations of each method and
write three limitations of each method in the
second column of the table
• Then discuss and agree on the main limitation
of each method and write it in the third
column of the table.
• Extension: Think about the benefits of each
method.
 Consolidation
• Do Question on P.32 onto your Notebook,
• We will check next lesson
1.3.3 By the end of this section you should:
• Understand why owners may want to expand
their business
• Understand different ways in which businesses
can grow (develop or expand)
• Understand problems that are linked to
business growth and how these might be
overcome
• Understand why some businesses remain small
• Imagine you run your own takeaway food
business.
– Why might you want to expand your business?
– What would you like the business to be doing in
five years’ time?
– Do you want to operate globally or in just one
country?
Discuss with your neighbor and write down your
answers onto your mini whiteboard
Why owners may want to expand their
business
Larger premises
means more space
to develop
products
Buying in
bulk Improved
allows cost efficiency
savings
Benefits of
growing a
business
Additional Improve
reputation by
revenue operating in
or profit multiple areas
Attract more
customers to
the business
Different ways in which businesses can grow

Take 5 mins to read the book p.34 and 35

Please go over the different ways in which
businesses can grow.
Different ways in which businesses can grow

• Internal (Organic)
– This occurs when the business opens new outlets or
factories, or moves into new markets abroad.
• External (Inorganic)
– This happens when a business buys another business
through a takeover
– A merger combines two businesses that come together
as one
– This automatically grows the business.
– This process can be involuntary for some businesses, as
larger businesses buy enough shares to force a takeover
 Mergers are beneficial
• Split costs allow both businesses to reduce
debt or borrowing
• Sharing the risk between two firms makes it
easier to justify decisions
• The two businesses can share resources such
as employees, office space and assets (e.g.
aeroplanes)
 Activity
• Do activity sheet 1.3.3A
• Read a series of mini case studies
• Identify the type of growth represented in each
case study
• Work in pairs to read the case studies and decide
together on the type of growth
• Compare your answers with another pair of
students in your table
• Extension: write your own mini case tudies to
share with other students
 Problems?
• Think!
• Are there any problems when the business get too
big????
• Key words to think
– Money
– Staff
– Competitors
– Product quality
– Culture clashes
– Ability of the owner
 Problems that linked with growth
• Production problems
– Struggle with large orders
– Costs go up
– Reputation drop
– Quality fail
• Communication
– The business can get so big that communication
between managers and other staff stops
– Decision-making can be stopped
– Morale become low
 Problems that linked with growth
• Morale
– feel valued or listened to?
– Difficult to maintain motivation and employee
happiness
• Clash of cultures
– Struggle to work well together
– Different ethos and working environment
 Possible solutions?
• Training
• Management changes
• Incentives for staff
• Set realistic targets
• Invest in the business
• Production problems – right staff and production
method
• Communication
Read P.36 for more details
 Activity
• Do activity sheet 1.3.3B
• Read the mini case studies about businesses
that have experienced problems as they have
grown
• Suggest the most appropriate solution(s) for
these businesses
• Extension: Evaluate the likely effect of each
solution. Will it definitely solve the problem?
Will it solve the problem in the long term?
 Reasons to remain small
• Operating at maximum
– Extra space or outlets will not bring any benefit.
• Extra cost
– Some small businesses cannot afford to hire new staff
or move location
• Economies of scale
– The business may be operating at its perfect output and
any increase in this may result in efficiency dropping
• Neither time nor desire
• Knowledge
– Owners do not have the skills or knowledge to expand
 Consolidation
• Do Question on P.37 onto your Notebook,
• We will check next lesson
1.3.4 By the end of this section you should:
• Understand the causes of business failure,
such as a lack of management skills or changes
in the business environment
• Understand why new businesses are at greater
risk of failing
• Imagine you have started up your own
business, a restaurant.
• What issues would you face?
• Why are you more likely to fail than an
established business?
Think about real-life businesses and competitors
as examples.
Discuss with your partners and report
 Why do business fail?
• Take 5 mins to read P.38 -39 and report to me
the reasons of business failure
 Why businesses fail
• Lack of long-term funding
• Initial errors
• Lack of management skills
• No reputation
• Market conditions
• The economy
• Large competitors
Why are new businesses more likely to fail?

• No reputation or loyal (regular) customers

• Small size of budgets
Any other reasons?
 Activity
• Do activity sheet 1.3.4B
• Complete the activity sheet individually
• Discuss with your neighbor after finishing see
if you have different answers
• Extension: Which factor is the most common
in causing new businesses to fail? Rank the
reasons.
 Consolidation
• Do Question on P.40 onto your Notebook,
• We will check next lesson