Small to Medium Enterprises
Identify two characteristics of an SME other than its number of employees.
Independently owned and operated; the owner makes the main decisions; the owner supplies most of the capital. Accept any two.
A business owner continues working after several unsuccessful attempts to attract customers. Which personal quality are they demonstrating?
Motivation, persistence or entrepreneurship.
What does SWOT stand for, and what planning activity is it used for?
Strengths, weaknesses, opportunities and threats. It is used to conduct a situational analysis.
Identify two roles of SMEs.
Providing goods and services, creating employment, meeting local needs, encouraging innovation and supporting larger businesses.
Identify three sources of information available to someone establishing an SME.
Accountants, solicitors, banks, government agencies, industry associations, business advisers and market research.
What is the formula for total revenue?
Total revenue = selling price × quantity sold.
Identify three economic contributions made by SMEs.
Employment, taxation revenue, contribution to GDP, regional development, exports, innovation and competition.
A person wants to operate under a recognised brand and receive training and ongoing assistance. Which establishment option is most suitable?
A franchise because it provides an established brand, business system, training and support.
What is the break-even point?
The level of sales where total revenue equals total costs, meaning the business makes neither a profit nor a loss.
Identify three factors that may contribute to SME success.
Effective management, sufficient finance, market research, skilled staff, customer service, suitable location and effective planning.
Identify three signs that an SME is successful.
Profitability, positive cash flow, repeat customers, increasing sales, business growth, employee retention or achievement of business goals.
A business has fixed costs of $30,000. Its selling price is $50 per unit and its variable cost is $20 per unit. Calculate its break-even point.
Contribution per unit = $50 − $20 = $30. Break-even point = $30,000 ÷ $30 = 1,000 units.
An SME has high sales but regularly struggles to pay its expenses. Explain why high sales do not necessarily mean the business is successful.
The business may have high costs, low profit margins or cash-flow problems. Sales revenue may also be received too late to pay immediate expenses.
Identify two legal considerations for an SME.
Legal: business name, zoning, health or other regulations.
A marketing campaign is expected to double customer orders. Explain how the business may need to reorganise two other resources or functions.
Operations: increase stock or production. Finance: provide funds for additional costs. Human resources: recruit or train staff. Accept any two with an explanation.