Page 32 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 1 Understanding business activity

Preparing a business plan is not just something a business needs to do at
TOP TIP start-up. A business plan is also important for the planning and development
Don’t just learn the main features of existing businesses. An up-to-date business plan may also be needed when
of a business plan. It is important a business wants lenders or investors to provide finance for expansion or other

for you to know why the features long-term projects.
are important to new and existing

businesses. These plans are often known as the corporate plan and are often more long-term
than the business plan produced for a new business start-up.
CASE STUDY Mama Meals on Wheels

When Naisiadet Mason moved back to Kenya from working abroad she realised that no one delivered food from all
the restaurants in Nairobi. A few restaurants did have their own delivery service but this was limited to how close
customers’ homes were to the restaurants.
Naisiadet loves good food, as opposed to ‘junk food’, and thought that delivering meals from restaurants in
Nairobi direct to the homes of customers was a good business idea. She carried out market research and found that
only 5% of people in Nairobi could afford the services she was going to off er. These were mostly middle income earners

who get home tired after work and do not want to go to the trouble of making their own meals.
Naisiadet set up Mama Meals on Wheels in 2010 using her own savings to buy delivery motorbikes and other start-

up costs. The business has been successful and now employs fourteen workers. Grocery delivery has been added to
the service Mama Meals on Wheels offers to its customers. Naisiadet puts the success of the business down to off ering

good customer service. ‘Quality on time delivery every time’ is the business’s motto.
However, despite the early success of her business, Naisiadet realised that not having a business plan when she set
up her business may have been a mistake.
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Source: adapted from http://www.youtube.com/watch?v=AmR8L0MHxD0 and www.mamamealsonwheels.com

TASK
a Mama Meals on Wheels is in the tertiary sector. Identify the other two sectors.
b Identify two reasons why Naisiadet might be described as an entrepreneur.
c Identify and explain two benefits to Naisiadet of researching the market for her proposed business.
d Do you think it was a mistake for Naisiadet not to have a business plan for her business? Justify your answer.

Why and how governments support business start-ups
Small businesses are important to most economies throughout the world. In the
UK, for example, in 2012:

■ There were 4.8 million businesses.
■ More than 99% of these businesses were small or medium-sized businesses,
employing fewer than 250 people.
■ There were 4.6 million micro-businesses (96% of all businesses), employing fewer
than ten people.

Governments are keen to encourage new start-up businesses because of the benefi ts
they bring to the economy. Th ese benefi ts include:

■ Job creation – although small firms may not individually employ many workers,
together they employ a very large percentage of the working population.