Size of Business

• Identify two problems while attempting to measue the size of a business.

  1.There are several ways

  2. There is no internationally agreed definition
• What are different ways to measure business size?

  Number of employees

  Revenue(or sales turnover)

  Capital employed

  Market capitalisation

  Market share
• How can market share be calculated?

  Market share = (total sales of business/total sales of industry)*100
• What are advantages of a small business


  1.Can be managed and controlled by the owner(s)- little risk of losing control

  2. Often able to adapt quickly to meet changing consumer needs- especially if the owner deals directly with customers

  3. Offer personal services to customers to help build customer loyalty

  4. Easy to know each worker - many people prefer to wok for small businesses

  5.If family owned, the business culture is often informal, employees are well motivated and family members perform multiple roles

  6. Can usually be started and operated with low capital investment
• Disadvantages of a small business


  1.May have limited access to capital

  2. the owner has to carry a large burden of responsibility and is usually unable to afford to employ specialist managers

  3. If the owner or important worker is absent or ill other employees may not have the necessary skills to operate the business

  4.May not be diversified, so there is a geater risk of external change having negative impact

  5. Few opportunities for economies of scale-average costs could be high.