what does a business plan include gcse

Business Plans

In this post

Business plans are used to outline the industry in which a business is working in as well as the economic structure of a company to give an idea of the financial prospects of a business. They are used primarily to organise the routes to market that a company will take and give projections on earnings and target dates for when the company expects to have a certain income.

Writing a strong business plan is important for any business, whether large or small, and is the perfect way to map out your route to success. Not only will the plan contain your aims and plans to attract new customers but it can also act as a strong tool for financial projections and help you to set out goals for your company. Throughout the units that we have already covered on this course we have seen a lot of aspects that could be included in a business plan, and including as much information as possible is key.

A lot of entrepreneurs fail to produce a clear business plan when they set up a new company and this can be a big issue further down the line. By not outlining your company and its operations you may affect the business in a negative way and be unable to keep track on the progress and route the business is taking. If you are seeking finance to launch your company it is more than likely that you will need to create a business plan to secure a loan, but this should not be thrown away once you have started the business. Your plan can be updated and adapted at any time and you must try to keep things relevant and up to date so you know the long-term aims of your company.

Why create a business plan?

Some entrepreneurs fail to create a business plan before starting a company because they feel it is a waste of time. They know what they want to do, how they want to do it and everything that is needed has been formulated in their heads. This is a very good skill to have, but without your thoughts and projections down on paper it can be very easy for them to become misinterpreted, forgotten or skewed. Simply having things thought out in your mind is not enough to convince others or explain your strategies to those you are working with. Business plans are used to organise your approach and produce a strategy that allows you the best possible chance of success. They should include:

• Information about your company so that you can plan the structure and objectives which you have
• Your relationships with others and how these can be used (e.g. banks, lenders and accountants)
• To find weaknesses in your plans and areas where you must improve
• Areas for discussion so that you can find out other people’s opinions and include them in the planning process

Some people start a business and want everything to be done immediately. With great confidence that they can do it all alone and have no input from experts, they may not stop and think about forming a clear plan that includes facts and figures to help them along the way. Doing this can be of massive detriment to any business and you need to gather as many opinions, facts and ideas as possible from those around you.

What to avoid

A business plan should include lots of information but there are a few things that should be avoided. You should put some restrictions on the long-term (over 1 year) predictions of your finances. A long-range prediction on the amount of money you will have coming into the business can be completely meaningless because it is very hard to predict how a business will perform far into the future.

Very few business plans get the figures projected spot on, so remember to give a good indication of what you expect to earn but try to be conservative with this. By exaggerating the earning potential of the company you will not be impressing anyone and this will make it difficult for you to plan your spending. Outline clear time frames and indicate your aims during these periods. Try to show what you will be working on at any time, for example if your business will take quite a lot of setting up then the first 6 months may be devoted solely to this and you should outline this in your plans and projections. Try to correctly anticipate the money and time that will be required for processes to be completed and always factor in a margin of error. By slightly exaggerating the money that will be required when completing a stage of expansion or setting more time than is needed, you will be well prepared if some unforeseen issue crops up.

Don’t just use the business plan to explain how great your product or service is. This alone will not turn your business into a big success (although it is very important). Identifying areas to improve and how you will market your company is much more important than simply relying on the uniqueness of your product.

The purpose of a business plan

Business plans are used for a variety of different reasons and the importance of these should not be underestimated. Creating a plan that is precise and includes information that is relevant to the new or existing business will ensure that ideas are implemented quickly. Without a solid business plan it will be much more difficult to judge the success of the new venture and the direction of the company will be hard for everyone to see.

Minimising risk

The risks when starting a new business can be huge. Money is invested into new businesses and time will also be spent on getting a company off the ground. Without a business plan in place, owners and employees could end up wasting their time in certain areas. Using resources inefficiently and having no clear direction for a business can lead to disaster very quickly. The best way to avoid this is with a clear outline of what the business needs to work on and what resources will be needed in order to make the venture work. A business plan will be used to set goals and objectives while losing no time in areas that do not see a large enough return on the investment.

Securing finance

Many people use business plans to secure finance for a new venture. This finance can come from several different sources such as banks, investors and start-up funds. Having a business plan that shows exactly how the business will operate and where money will be made will act as a way to convince potential investors to finance the company. With clear profits to be made and a route to market mapped clearly, investing in a business will be a much more desirable prospect for a potential investor.

Formats of business plans

There are many different formats which a business plan can be created in but the main areas to cover are:

Executive summary

Company summary, products and services, market analysis, strategy and implementation, management and personnel, financial plan.

Any business plan should include an executive summary which gives an outline of the business and the vision of the owners. Here you should briefly explain the business and its activities as well as the key areas that will help the company to succeed. A mission statement can be included to explain why your company will be unique in the market and what will give you the edge over your competitors.

You should also include some information about the financial aspirations of the company here to show the economic aims over the first few years in operation. Remember, these do not need to be hugely accurate and taking a realistic look at what can be earned is essential. It is usually best to complete the executive summary of the company last as you can include information from other sections in this part of the plan to give a good overview and concise insight into the business and your plans.

The company summary will explain key aspects of the operation of the company. This includes the owners of the business as well as where the business is located. Information about all directors must be included in this area of the plan and you should summarise their roles within the organisation. If you have any other personnel that will be involved at a senior level then they should be included also. In this part of the business plan you need to outline the funds required to set up and maintain the business also. By including information about the company’s location and operations you will be able to forecast the money required to get the company started and any investment that will be needed. Try to include a spreadsheet showing where the initial funding will come from and how much is being put into the business to start with. Remember, most new businesses make a loss in their first year due to the expenses involved in starting a new company, so be realistic. Plan the initial outlays and costs carefully and make sure you know the limits to how much you can put into the company to get started.

The location of the business can also be included here and any rent that you will be required to pay can be outlined and the costs per square foot for the company premises. Then you can go on to make projections about the sales required to cover all of your fixed costs such as office and equipment rentals.

Next we move on to explaining the things which will earn your business money – the goods and services that you have to offer. In this section you must include descriptions of what you can offer your customers and the prices you will be charging. Outline what makes your goods and services special and the key aspects that will influence potential clients and convert them into paying customers. It is also a good idea to compare your pricing structure to your competitors. It may be that you offer the same products but cheaper, or with any additional features to make your products more appealing. You should explore the need for your products and services to be better than any of the competition. As a new business you may struggle to compete unless you have something that nobody else has. By bringing to the market something which is already selling well with another company that has established its brand in the marketplace, you might struggle to take a large enough section of the market to warrant starting a whole new company. If this is the case then you must compare your pricing to your biggest competitors and ensure that you are competitive.

In this section you can also include any products and services that you may offer in the future. Explain your product development processes and how you will be able to innovate and bring new products or services to the marketplace.

Next you need to carry out some market analysis to identify your potential customers . In this section of the business plan you need to include information about your ideal customers and what sort of people they will be. Think about the earnings of your potential clients, the type of lifestyles they will live and the products and services they expect from a business. This part of your plan is great for you to use figures about your market and show any growth projections for the sector in the future.

Explain market trends and analyse the need for your goods/services in this sector. Attempt to find some facts about the disposable income of your potential customers and target certain people who will be interested in what your company offers. Think about how you will be attracting your customers and the potential for growth over the first 3 years in operation. Make estimations about the number of people in the area where you will be offering your products and services to get a good idea of how many different potential clients you can attract. Having a good understanding of your target market will give you the tools to design marketing strategies and techniques to attract the maximum number of customers to your business.

Having outlined your market and explained who your products/services will attract, it is time to explain your techniques when doing this and show how you are going to market your company. Explain the key aspects of what you offer and the main selling points that should be tailored to suit the target clients that you have in mind. Products designed for the more affluent will need to be luxurious and have an exclusivity about them, whereas items that are for people with limited incomes will need to offer greater value for money. Try to understand a clear link between the market in which you will be operating, your potential clients and the main aspects of your business which you should focus on.

Ensuring that your business suits the needs of customers is essential to getting the most customers. For example, opening up a luxury spa in an area where there is high unemployment and typically lower incomes will encounter lots of issues as the potential customers (those within a 15-mile radius) will have no need for this service and may not be able to afford what you have to offer. You will need to come up with at least five ways of promoting your business that will appeal to your target market and attract clients. Remember all of the techniques and skills we discussed on marketing and try to link what you know about your potential clients to the advertising methods you will use.

Here you can also outline the potential sales forecasts and investments which you will make when promoting your goods and services. Come up with some realistic projections about the money to be spent on advertising and increasing awareness of your brand as well as any sales targets you may wish to set. Be conservative with your sales projections as it takes time for any business to get a good level of customers and building brand awareness does not happen overnight. Your sales in year 1 will normally be fairly low and you need to take this into account when projecting your income and the amount it will cost to set up your company.

The next thing to plan is the personnel involved in your business. This will include the owners and directors as well as any senior managers that are to be involved in the company. Explain the team structure and hierarchy of your new company and the number of employees you will be hiring. Knowing the team behind the company and their individual duties will let you outline the various skills that your team possesses and establish each person’s duties within the organisation.

Outlining the duties of each person and giving a brief job description is a good way for you to understand the team dynamic and responsibilities of each member. Most new companies make the mistake of hiring too soon, but with a clear plan of the business personnel that will be involved in your company you will be able to ensure each person is needed for the business to operate. Establishing a business will require you to be frugal in your approach and employing staff that are not needed can have a terrible impact on your profits and end up costing you tens of thousands of pounds a year.

Outline the wages of your employees and then come up with some totals for staffing costs that can be used when writing your executive summary.

Your financial plan will provide a clear breakdown of all the income and outgoings of the business that you expect. These will only be projected figures so will be likely to change in reality, but you should be able to predict fairly accurately using your knowledge of costs incurred and the pricing and potential customer base for your products/services.

Make projected figures for your fixed and variable costs as well as the profits you expect to earn from sales. This will then help you to create a break-even analysis for your company that will show the amount of money required to cover all of your outgoings. Remember that your first year will have fixed and variable costs as well as additional outgoings which come from setting up your company. You will also have a limited number of sales during the first 12 months as you build up your customer base, so the projected net profit for year 1 will be lower than any other year. Try to think about the most popular goods/services you offer and come up with an average sale price for your customers. This will then help you to identify the number of customers you need in your first year to break even.

Come up with some cash flow and profit and loss charts (look over our work in Unit 1.3 to help) to project how much money you can expect to see in the business each year. This will help you to come up with clear and concise predictions for how much money you will be making in your first three years.

Reformulating a business plan

If you do ever happen to make a slight error in judgement on your initial business plan this can always be altered and the plan changed as required. The chances of figures being completely correct in your first projections are very slim and there will be certain things that you miss or random payments to be made when setting up your business which you did not account for. This is the main reason why being conservative with your income projections and adding in a ‘safety net’ figure to your costings will help you to deal with these circumstances. Business plans should be flexible and are a working document, so chopping and changing them is fine. When doing this try to use what you already have to create a new plan for the next few years rather than just altering figures to make it look like you got the initial plan correct.

Business plans are working documents, so they should be altered and added to as time goes by to determine where your company is heading and how it will get there. Being understanding of the nature of business and the fact that you will not be able to predict certain outcomes will give you an edge and allow you to put in place certain measures to help if you ever do come up against any problems.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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GCSE Business Studies: How to Write a Business Plan

The best way to revise for gcse business studies..

A business plan is a crucial document for any entrepreneur or business owner. In this blog post, we'll take a look at some basic concepts and tips to help you get started with writing your own business plan as a GCSE business studies student.

Insights and Tips:

Purpose of a business plan: A business plan is a roadmap for the future of your business. It should clearly outline your goals and objectives, as well as the strategies and actions that will be taken to achieve them. A business plan should also include a detailed financial analysis and market analysis.

Executive summary: Start with a clear and concise executive summary that provides an overview of your business, including its mission, products or services, target market, financial projections, and competitive landscape.

Description of products or services: Include a detailed description of your products or services, including how they will meet the needs of your target market and any unique features or benefits they offer.

Market analysis: Conduct a thorough market analysis that includes information on your target audience, competitors, potential market size, and relevant trends or opportunities.

Financial analysis: Include a detailed financial analysis, including projected income and expenses, cost and revenue breakdown, sales forecast, and cash flow projection. This will provide a clear picture of your business's financial viability and help secure funding.

Action plan: Develop a clear action plan with specific, measurable, and achievable goals, along with the strategies and actions that will be taken to achieve them. This will help keep your business on track and ensure progress towards your goals.

Surprising Fact or Skill:

Did you know that having a business plan can increase the chances of success for a business? A study by the University of Oregon found that businesses with a written plan were more likely to succeed than those without one.

Counterintuitive Mantra:

The counterintuitive mantra for writing a business plan is to focus on the problem you're solving for your customers, rather than just the product or service you're offering. By understanding your customer's needs and pain points, you can develop a more effective and targeted business strategy.

Story from a Successful Individual:

Elon Musk, founder of Tesla and SpaceX, developed a detailed business plan for SpaceX when he founded the company in 2002. The plan included a detailed analysis of the rocket industry, potential customers, and technical requirements for building a rocket that could reach orbit. The plan helped secure funding from investors and has since led to multiple successful rocket launches and contracts with NASA.

Conclusion:

In conclusion, writing a business plan is an essential skill for any entrepreneur or business owner, and for GCSE business studies students. By understanding the purpose and components of a business plan and following a clear and structured approach, you'll be well on your way to writing a successful business plan of your own. Remember to focus on the problem you're solving, keep the plan updated, and review it regularly to reflect changes in the market and your business. For more resources on writing a business plan, check out the links below.

Further Reading:

Small Business Administration: https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan

Entrepreneur: https://www.entrepreneur.com/article/247575

How do you research Business Studies in GCSE.

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1.3 – Enterprise, Business Growth and Size

Entrepreneurship.

An entrepreneur is a person who organizes, operates and takes risks for a new business venture . The entrepreneur brings together the various factors of production to produce goods or services. Check below to see whether you have what it takes to be a successful entrepreneur!

• Self-confident
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• Hard working

Business plan

A business plan is a document containing the business objectives and important details about the operations, finance and owners of the new business.

It provides a complete description of a business and its plans for the first few years; explains what the business does, who will buy the product or service and why; provides financial forecasts demonstrating overall viability; indicates the finance available and explains the financial requirements to start and operate the business.

Some of the content of a regular business plan are:

• Executive summary: brief summary of the key features of the business and the business plan
• The owner: educational background and what any previous experience in doing previously
• The business: name and address of the business and detailed description of the product or service being produced and sold; how and where it will be produced, who is likely to buy it, and in what quantities
• The market: describe the market research that has been carried out, what it has revealed and details of prospective customers and competitors
• Advertising and promotion: how the business will be advertised to potential customers and details of estimated costs of marketing
• Premises and equipment: details of planning regulations, costs of premises and the need for equipment and buildings
• Business organisation: whether the enterprise will take the form of sole trader, partnership, company or cooperative
• Costs: indication of the cost of producing the product or service, the prices it proposes to charge for the products
• Finance: how much of the capital will come from savings and how much will come from borrowings
• Cash flow: forecast income (revenue) and outgoings (expenditures) over the first year
• Expansion: brief explanation of future plans

Making a business plan before actually starting the business can be very helpful. By documenting the various details about the business, the owners will find it much easier to run it. There is a lesser chance of losing sight of the mission and vision of the business as the objectives have been written down. Moreover, having the objectives of the business set down clearly will help motivate the employees . A new entrepreneur will find it easier to get a loan or overdraft from the bank if they have a business plan.

Government support for business startups

According to startup.com , “a  startup is a company typically in the early stages of its development. These entrepreneurial ventures are typically started by 1-3 founders who focus on capitalizing upon a perceived market demand by developing a viable product, service, or platform”.

Why do governments want to help new start-ups?

• They provide employment to a lot of people
• They contribute to the growth of the economy
• They can also, if they grow to be successful, contribute to the exports of the country
• Start-ups often introduce fresh ideas and technologies into business and industry

How do governments support businesses?

• Organise advice: provide business advice to potential entrepreneurs, giving them information useful in staring a venture, including legal and bureaucratic ones
• Provide low cost premises: provide land at low cost or low rent for new firms
• Provide loans at low interest rates
• Give grants for capital: provide financial aid to new firms for investment
• Give grants for training: provide financial aid for workforce training
• Give tax breaks/ holidays: high taxes are a disincentive for new firms to set up. Governments can thus withdraw or lower taxation for new firms for a certain period of time

Measuring business size

Businesses come in many sizes. They can be owned by a single individual or have up to 50 shareholders. They can employ thousands of workers or have a mere handful. But how can we classify a business as big or small?

Business size can be measured in the following ways:

• Number of employees: larger firms have larger workforce employed
• Value of output:  larger firms are likely to produce more than smaller ones
• Value of capital employed: larger businesses are likely to employ much more capital than smaller ones

However, these methods have their limitations and are not always accurate. Example: When using the ‘number of employees’ method to compare business size is not accurate as a capital intensive firm ( one that employs a large amount of capital equipment) can produce large output by employing very little labour (workers). Similarly, value of capital employed is not a reliable measure when comparing a capital-intensive firm with a labour-intensive firm. Output value is also unreliable because some different types of products are valued differently, and the size of the firm doesn’t depend on this.

Business growth

Businesses want to grow because growth helps reduce their average costs in the long-run, help develop increased market share, and helps them produce and sell to them to new markets.

There are two ways in which a business can grow- internally and externally.

Internal growth

This occurs when a business expands its existing operations . For example, when a fast food chain opens a new branch in another country. This is a slow means of growth but easier to manage than external growth.

External growth

This is when a business takes over or merges with another business . It is sometimes called integration as one firm is ‘integrated’ into the other.

A merger   is when the owner of two businesses agree to join their firms together to make one business.

A  takeover   occurs when one business buys out the owners of another business , which then becomes a part of the ‘predator’ business.

External growth can largely be classified into three types:

• Reduces number of competitors in the market, since two firms become one.
• Opportunities of economies of scale .
• Merging will allow the businesses to have a bigger share of the total market.
• Merger gives assured supply of essential components.
• The profit margin of the supplying firm is now absorbed by the expanded firm.
• The supplying firm can be prevented from supplying to competitors.
• Merger gives assured outlet for their product.
• The profit margin of the retailer is now absorbed by the expanded firm.
• The retailer can be prevented from selling the goods of competitors.
• Conglomerate integration allows businesses to have activities in more than one country. This allows the firms to spread its risks.
• There could be a transfer of ideas between the two businesses even though they are in different industries. This transfer o ideas could help improve the quality and demand for the two products.

Drawbacks of growth

• Difficult to control staff: as a business grows, the business organisation in terms of departments and divisions will grow, along with the number of employees, making it harder to control, co-ordinate and communicate with everyone
• Lack of funds: growth requires a lot of capital.
• Lack of expertise: growth is a long and difficult process that will require people with expertise in the field to manage and coordinate activities
• Diseconomies of scale: this is the term used to describe how average costs of a firm tends to increase as it grows beyond a point, reducing profitability. This is explored more deeply in a later section .

Why businesses stay small

Not all businesses grow.Some stay small, employ a handful of workers and have little output. Here are the reasons why.

• Type of industry : some firms remain small due to the industry they operate in. Examples of these are hairdressers, car repairs, catering, etc, which give personal services and therefore cannot grow.
• Market size : if the firm operates in areas where the total number of customers is small, such as in rural areas, there is no need for the firm to grow and thus stays small.
• Owners’ objectives : not all owners want to increase the size of their firms and profits. Some of them prefer keeping their businesses small and having a personal contact with all of their employees and customers, having flexibility in controlling and running the business, having more control over decision-making , and to keep it less stressful .

Why businesses fail

Not all businesses are successful. The main reasons why they fail are:

• Poor management : this is a common cause of business failure for new firms. The main reason is lack of experience and planning which could lead to bad decision making. New entrepreneurs could make mistakes when choosing the location of the firm, the raw materials to be used for production, etc, all resulting in failure
• Over-expansion : this could lead to diseconomies of scale and greatly increase costs, if a firms expands too quickly or over their optimum level
• Failure to plan for change : the demands of customers keep changing with change in tastes and fashion. Due to this, firms must always be ready to change their products to meet the demand of their customers . Failure to do so could result in losing customers and loss. They also won’t be ready to quickly keep up with changes the competitors are making , and changes in laws and regulations
• Poor financial management : if the owner of the firm does not manage his finances properly, it could result in cash shortages. This will mean that the employees cannot be paid and enough goods cannot be produced. Poor cash flow can therefore also cause businesses to fail

Why new businesses are at a greater risk of failure

•   Less experience: a lack of experience in the market or in business gets a lot of firms easily pushed out of the market
• New to the market: they may still not understand the nuances and trends of the market, that existing competitors will have mastered
• Don’t a lot of sales yet: only by increasing sales, can new firms grow and find their foothold in the market. At a stage when they’re not selling much, they are at a greater risk of failing
• Don’t have a lot of money to support the business yet: financial issues can quickly get the better of new firms if they aren’t very careful with their cash flows. It is only after they make considerable sales and start making a profit, can they reinvest in the business and support it

Notes submitted by Lintha

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18 thoughts on “ 1.3 – Enterprise, Business Growth and Size ”

I am SOOO surprised to use this website. My teacher lit uses this to make notes but he made it more complex by using those high fi words. But this, OMG it’s so ez when I read these notes it was so much easier than I thought I just love this THANKS SOOO MUCHHH!!!!!!

Like Liked by 1 person

thid is bestest nots for bussines studys thx

Wonderful information 🥰🥰 It really helped me a lot thanks for de info

What about value of sales ( for ways if measuring a business) ? Because the IGCSE textbook I use does talk about that..

Yes. You can add that as a measure of evaluating business size, but it too runs into the same limitations as the other measures.

okay, thank you !!

the absolute best

Like Liked by 2 people

HEy I would like if anyone here would be able to help me with business because im facing hella problems

you still have problems

yes i do too lol

If you are facing problem in Business Studies (IGCSE/O Levels), Feel free to contact me. My name is Afzal Shad and I have a website with same name. (Google: Sir Afzal Shad) and you will get my website to contact me.

Hope Admin of website won’t mind.

this one is really useful💓love this one

Thank you so much 🙂

Quite understandable 👌👌

exactly.. profit is NOT a measure of business size

Hey. In the Business Studies syllabus, it was mentioned that, and I quote “profit is not a method of measuring business size”, but it was mentioned here. I just wanted to point that out because I think that is an error that was published here. Thanks.

Well, Profit can also be a measure of business size but not alone. Most of the times we use a combination of sizes. For example, the Covered Area, the Capital Employed or even the Number of Employees can not be the perfect measure, if they are used alone.

We normally take combinations of Business Size to measure them. Using one won’t be an accurate measure.

Afzal Shad IGCSE /A Levels Business Teacher Google me: (Sir Afzal Shad)

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Business Plans - GCSE Business Studies Full Lesson

Subject: Business and finance

Age range: 14-16

Resource type: Lesson (complete)

Last updated

27 February 2024

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This lesson / resource is from Unit 1 - Understanding Business Activity and looks specifically at Business Plans .

I normally teach this in Year 10 and it has been designed for GCSE with the following learning objectives:

• Know what a Business Plan is and why a person might write one.
• Understand what is required in writing a business plan and the features of one.
• Assess the problems a business might have if they do not have a business plan

This download includes:

• Full lesson PowerPoint
• Round robin / search type activity
• Lesson plan

All necessary resources to run the lesson are included in this download and this links back to earlier topics (enterprise / Entrepreneurs and Added Value) and also to later topics such as Legal Structures / Marketing.

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All you need to know about taking a business studies GCSE!

What is business studies.

You might already know this, but Business Studies teaches all aspects of business, from operations to human resources, and things that have an effect on how well businesses perform, for example, the economy. Business Studies explains how the four pillars of business (marketing, human resources, finance and operations) work together to create a successful company. 

What is a Business Studies GCSE?

Unsurprisingly, Business Studies GCSE aims to test you how well you have grasped the different areas of a business and what can impact them. Not only will you learn about different areas of business, you’ll also learn how company structures can affect productivity or what type of employment contract best suits your staff. You’ll even learn about the different influences on a business from tech to ethical and environmental considerations!

So is Business Studies a good GCSE to take?

Short answer, yes. Longer answer, let’s get into it! Business Studies gives great foundational knowledge of what it’s like to work in a business and the factors that go into making a business successful or not. The great thing about business studies is that it’s universal - the terms and concepts don’t differ depending on who or where you are! You’ll also learn a lot of transferable skills, like leadership or how to be a team player. 

Doing a Business Studies GCSE is also a great way to improve your employability skills. In every business there will be different departments doing wildly different things, but having a good understanding of how a business functions means you can look at the business as a whole. This perspective is rarer than you think and it can help you bring new ideas to the table that benefit the business. 

How to revise for a Business Studies GCSE? 

The best way of knowing how to revise for an exam is to understand its structure; there's no point in learning formulas by heart if the questions are more essay-based. So let’s have a look at the format - the Business Studies GCSE is usually split into two exams, each with three parts:

• Part one - tests your knowledge and understanding of business concepts and issues 
• Part two - asks you to apply your knowledge to a variety of contexts (case studies)
• Part three - asks you to analyse and evaluate information to demonstrate your understanding of business activity and ability to make judgements and draw conclusions (another case study)

During the first part of the exam there will usually be some short, low-mark questions, which are definition/formula based. After the first section, it's on to the higher marks, where you’ll be given a case study and need to answer a mixture of high and low marked questions. 

One of our biggest tips is to know your strengths and weaknesses! If you're not much of a writer and you're getting worried about those longer answers, study the mark scheme and do as many past papers as you can get your hands on. If, on the other hand, you've got the longer marks covered, but can never remember definitions, make use of flashcards and get your friends and family to test you. 

When you’re knee-deep in your preparation for your Business Studies GCSE, you’ll probably realise that having your finger on the pulse can help your grades. Reading the news or listening to news-based podcasts is a great way to cement your learning. After all, if you can apply textbook learning to real-world events, you are pretty much there! 

As we said before, business is universal, so talking to your friends and family about business is a great way to ensure you've got those all-important concepts locked in. In the exam, you're likely to come across some case studies, and talking to friends and family about LinkedIn's new features or Spotify's latest marketing campaign is essentially like revising a case study out loud without even realising it! 

‍ What jobs can Business Studies GCSE get you?

Whilst no GCSE can guarantee you a job, Business Studies is great for opening doors to any sector. After all, every sector has businesses! With a business studies GCSE you could go on to do a business administration apprenticeship, or you could decide to do a business studies A level and/or related degree.

Once you’ve finished your Business Studies GCSE and you’re desperate to learn more, have a think about what areas of a business interest you most. Are you a people-person that loves to figure out what makes people tick? Think about HR! If you’re interested in the day-to-day runnings and always come up with a way to make things easier, why not look for jobs in operations? Another great thing about business is that it’s inclusive, for example, if you’re really creative but not great with numbers you could find a home in marketing.

‍ What is a Business Administration apprenticeship?

If you're not sure whether A levels or a university degree is right for you, why not consider a Business Administration apprenticeship? You'll get to combine learning with real-world work. The apprenticeship normally takes around 18 months to complete and is a great first step into any of the following business areas: 

• Human Resources
• Finance and accounting
• Secretarial
• Procurement
• Office administration
• Customer services

What’s next? 

So once you’ve chosen your Business Studies GCSE, what’s next? Consider how you like to work and what the best options are for you, there are a lot out there from BTEC’s to A levels, apprenticeships and degrees.

How can we help? 

We hope this article helped and you’re one step closer to working out whether a Business Studies GCSE is right for you. If you want to find out more about how to run a business, different areas within a business or even get a head start on what the Business Studies GCSE might involve - why not check out some business Virtual Work Experience programmes ?

Continue reading

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Why should you do a Higher Technical Qualification? The future prospects of Higher Technical Qualifications (HTQs)

What is the difference between the types of apprenticeships? Your guide to exploring opportunities

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• Revision notes >

GCSE Business Studies Revision Notes

GCSE Business Studies revision notes provide a quick reference guide, helping you to quickly access important information for each topic. If you’re looking to test your newfound knowledge, you can practise exam questions with our bank of past papers .

GCSE Business Studies Key Terms

What are methods of promotion, explain one benefit of providing induction training for employees (3 marks)., what is the difference between a public limited company and a private limited company, what is the difference between limited and unlimited liability, how can i effectively revise for business case studies in the gcse business studies exam.

Analyze case studies by identifying key issues, stakeholders, and possible solutions. Create detailed notes that summarize each case study and link these to relevant business concepts and theories.

What strategies can I use to understand financial statements and business calculations?

Practice interpreting balance sheets, income statements, and cash flow statements. Calculate financial ratios and use them to evaluate a company's performance. Solve business calculations regularly to reinforce your mathematical skills and understanding of financial concepts.

How can I improve my understanding of marketing and business strategy concepts for the GCSE Business Studies exam?

Studying real-world examples of marketing campaigns and business strategies will help to make sense of these concepts. Create mind maps or diagrams to visualize marketing principles, such as the marketing mix (4Ps). Practice analyzing market research data and identifying marketing opportunities.

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