Enterprise, Business Growth, and size

By: Michelle Lee

Objectives : In this chapter you will study about :

Entrepreneurs and Enterprise

Characteristics of successful entrepreneurs

Business plans

Contents of a business plan

How to measure business size

Why some businesses grow

External growth and Internal growth

Why some businesses fail

Entrepreneurs and Enterprise

An Entrepreneurs is someone who has an idea for a business and take the risk of setting up and running the business.

Enterprise meaning a project.

Characteristic of Successful Entrepreneurs

Innovative : good thinking up new ideas

Self-confident : have a strong belief in their own ability an ideas

Leadership skills : able to motivate other people (good decision maker)

Multi-skilled : able to do many tasks

Initiative : able to developed a good plan to achieve the objectives of a business

Risk taker : ready to take risks

Result driven : focus on achieving result

Self-motivated/determine : have the drive to keep going

Good at networking : have many friends

Business Plan Business plan : it’s a detailed written

document shows the purpose and aims of a business which is often used to persuade lenders/investors to finance a business proposal.

Contents of a business plan

The business : show the details of entrepreneurs, the idea of business, and managers/workers who will be recruited

The business opportunity : show the information about the products. It’s also includes market research

The market : shows the current size, potential for growth and competitors

The objectives : show that the business hopes to achieve

Financial forecast : show a cash flow forecast, projected sales, revenue, and profit for at least the first year of trading

Revenue : the amount a business earns from the sale of it’s products

How to measure the business size

There are several ways of measuring and comparing the size of business :

Capital employed

Market share

Number of employees

Value of output

Sales

Reason to grow business

Increase the profit

Increase the market share

Economies share :

Trading economies : buying raw materials

Financial economies : can have a greater access

Managerial economies : a business can hire/ employ specialist/professional manager

Technical economies : a business can purchase expensive machinery/equipment

External growth and Internal growth

External growth (take over/merger)

Horizontal integration

Forward integration

Backward integration

Conglomerate integration

Internal growth (organic growth)

Developing new products

Finding new market for their products

Increase the output

Why some businesses fail

Poor planning and lack of objectives

Poor cash management

Poor choice of location

Poor management

Failure to invest in new technologies

Poor marketing

Lack of finance

Competition