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Assessing Business Start-Ups

Assessing Business Start-Ups. AS Business. Business Start-ups. 30% of businesses cease trading after 2 years. 1 in 6 new products succeed in the marketplace. Many businesses struggle to break even in the first couple of years of trading. 50% of businesses cease trading after 4 years.

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Assessing Business Start-Ups

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  1. Assessing Business Start-Ups AS Business

  2. Business Start-ups 30% of businesses cease trading after 2 years 1 in 6 new products succeed in the marketplace Many businesses struggle to break even in the first couple of years of trading 50% of businesses cease trading after 4 years 60% of new business owners said they faced major obstacles when starting up

  3. Marketing success?

  4. Success or failure? • Must generate enough profits to make it attractive • Satisfaction must be gained over other employment alternatives • The entrepreneur must be comfortable with the risks related to business start-ups

  5. Financial difficulties • Raising finance • how can businesses do this?? May involve: • High interest rates, if bank loans are used. • Collateral/security • Have to have finance for fixed capital as well as working capital • A lot of management time and effort

  6. Financial difficulties • Cash flow • Firms can be profitable but often still fail if they do not manage their cash appropriately. • Cash flow forecasts need to be prepared to indicate where/when money will be needed.

  7. Advantages of a large firm: Economies of scale Customer loyalty Low prices More bargaining power Advantages of a small firm: More personal and prompt service Meeting customers expectations Understanding the local market and buying habits Good relationships Competition and customer base

  8. Competition • To what extent do you think small businesses can compete against larger businesses within the same industry? Use examples in your answer. (15marks) • There will be two sides the think about when answering this question.

  9. Regulations and red tape • Employment law • Health and safety • Taxation • Consumer and environmental protection • Any other regulations

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