Page 33 - Cambridge IGCSE Business Studies

3: Enterprise, business growth and size
An example of a small business
KEY TERM
Business start-up: a newly
formed business. They usually
start small, but some might grow
to become much bigger.
ACTIVITY 3.1
Use newspapers, magazines, library resources or the internet to research the assistance the government provides to start-
up businesses in your country.
Why do you think governments should provide financial and other support to start-up businesses in your country?
TEST YOURSELF
■ The entrepreneurs who start up new
businesses bring ideas for goods and services
that increase the variety of products available.
This helps to create a greater consumer
choice in the market.
■ The more businesses there are in the
marketplace the greater the competition.
Competition usually results in lower prices
and better quality of goods and services.
■ Small businesses often provide specialist
goods and services to consumers which
larger businesses are less interested in
supplying because they are only interested
in mass marketing. Also, these smaller
businesses often provide the goods and
services needed by the larger firms in the
industry, for example a small firm that
produces electronic components used by
large computer manufacturers.
■ Start-up businesses begin life as a small business, but some will grow and become
the larger businesses of the future. The country will benefit from the advantages
larger businesses bring to the economy.
■ Some start-up and smaller businesses often have much lower costs
than larger businesses and can pass this on to the consumer through lower prices. 31
Many governments provide financial and other support to new business start-ups.
These vary from country to country and even within a country the support may
vary depending on the activity of the business and its location.
The most common types of government support include:
■ grants and interest free or low interest loans
■ lower taxation rates on profits in the early years
■ rent-free premises for a certain period of time
■ free or subsidised training for workers
■ information, advice and support from specialist agencies.
1 Identify two characteristics of an entrepreneur.
2 Identify and explain two features of a business plan.