Assessing Business StartUps
AS Business
Business Start-ups
1 in 6 new products
succeed in the marketplace
50% of businesses cease
trading after 4 years
30% of businesses
cease trading after
2 years
Many businesses struggle to
break even in the first couple
of years of trading
60% of new business owners said
they faced major obstacles when
starting up
Marketing success?
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
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
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.
Competition and customer base
Advantages of a large
firm:
- Economies of scale
- Customer loyalty
- Low prices
- More bargaining
power
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Advantages of a small
firm:
More personal and
prompt service
Meeting customers
expectations
Understanding the
local market and
buying habits
Good relationships
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.
Regulations and red tape
Employment law
Health and safety
Taxation
Consumer and environmental protection
Any other regulations