NEW
Font size
WorksheetsStarting up a business
Total questions: 6
Worksheet time: 3mins
Why is a service business easier to start up than a manufacturing business?
It needs less capital to set up the business.
It is more aware of what its customers want.
It has no difficulty finding trained staff.
It depends on personal recommendation.
New service sector businesses may face a cash flow problem because they
have to reduce prices in order to attract customers.
cannot always get a big enough loan from their bank.
have used most of their capital to set up the business.
may not have an immediate demand for their service.
Variation in demand is not usually a problem for manufacturers because they
need less cash once the initial investment has been made.
know that there is a steady market for their product.
can use off-peak periods to build up stocks of their product.
are able to reduce their prices to encourage sales in off-peak periods.
The phrase “market-oriented approach” (lines 53-54) means that service providers must
promote their business through advertising.
be aware of their customers’ changing needs.
keep a tight control over their cash flow situation.
take care to maintain a balance between costs and profits.
Why do manufacturers suffer when customer demand disappears?
They cannot respond quickly to changes in the market.
They make most of their money in peak periods like Christmas.
They might have a lot of stock that they cannot sell.
They have to keep to very strict budgets.
Manufacturers trade with higher profit margins because
their initial investment is higher so they need a higher return.
their customers are unaware of the costs involved in manufacturing.
their costs include a much higher budget for advertising and promotion.
their products are generally more expensive to make.
