Define the term 'entrepreneur'. [2 marks]
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An entrepreneur is an individual who creates and runs a business, taking on financial risks in the hope of profit. (1 mark) Entrepreneurs often identify opportunities, innovate, and manage resources to start and grow a business. (1 mark)
State one characteristic of successful entrepreneurs. [1 mark]
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Risk-taking. (1 mark)
Identify three methods of measuring business size. [3 marks]
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Number of people employed. (1 mark) Value of output. (1 mark) Capital employed. (1 mark)
Explain why a business might want to expand. [3 marks]
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To increase market share. (1 mark) To achieve economies of scale. (1 mark) To diversify its product range. (1 mark)
Analyse the problems linked to business growth and suggest how these might be overcome. [5 marks]
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Problems linked to business growth include: Financial problems. (1 mark) Management problems. (1 mark) Communication problems. (1 mark) These problems might be overcome by: Seeking external finance. (1 mark) Improving management structures. (1 mark) Investing in communication technologies. (1 mark)
Calculate the number of employees a business needs to reach if it wants to double its size based on the number of employees. The business currently has 50 employees. [2 marks]
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The business currently has 50 employees. (1 mark) To double its size, the business needs to reach 100 employees. (1 mark)
Discuss the reasons why new businesses are at a greater risk of failing compared to established businesses. [6 marks]
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New businesses are at a greater risk of failing due to several reasons: Lack of management skills. (1 mark) Limited financial resources. (1 mark) Insufficient market research. (1 mark) Intense competition. (1 mark) New businesses can overcome these challenges by: Investing in management training. (1 mark) Seeking external finance. (1 mark) Conducting thorough market research. (1 mark) Developing a unique selling proposition. (1 mark)
Evaluate the different methods of measuring business size and suggest which method is the most appropriate for a service business. [8 marks]
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The different methods of measuring business size include: Number of people employed. (1 mark) Value of output. (1 mark) Capital employed. (1 mark) Each method has its advantages and limitations: Number of people employed is easy to measure but does not reflect the business's financial performance. (1 mark) Value of output reflects the business's financial performance but can be affected by changes in prices. (1 mark) Capital employed reflects the business's investment but does not reflect its financial performance. (1 mark) For a service business, the most appropriate method of measuring size is the value of output. (1 mark) This is because service businesses often have a high number of employees but low capital employed, and the value of output reflects the business's financial performance. (1 mark)
Explain how a business plan can assist entrepreneurs in starting a new business. [5 marks]
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A business plan can assist entrepreneurs in starting a new business by: Providing a clear roadmap for the business. (1 mark) Helping to secure external finance. (1 mark) Identifying potential challenges and solutions. (1 mark) Setting clear objectives and targets. (1 mark) Monitoring and evaluating the business's performance. (1 mark)
Discuss the reasons why some businesses remain small and suggest strategies that could help them grow. [6 marks]
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Some businesses remain small due to several reasons: Limited financial resources. (1 mark) Lack of management skills. (1 mark) Fear of losing control. (1 mark) These businesses can grow by: Seeking external finance. (1 mark) Investing in management training. (1 mark) Delegating responsibilities. (1 mark) Expanding their product range. (1 mark)