Jonathon is a sole trader. He owns a shop selling office equipment including printers. To encourage sales Jonathon allows customers 4 weeks to pay for the office equipment. Jonathon thinks his business is likely to remain small. He knows managing cash flow is important for his business and he has prepared a cash flow forecast. An extract is shown in Table 2.1. Outline two reasons (other than finance) why Jonathon's business is likely to remain small. Reason 1: Reason 2: .......................................................................................................................................

Business
IGCSE&ALevel
CAIE
Exam No:0450_s25_qp_13 Year:2025 Question No:2(c)

Answer:

Award 1 mark for each relevant reason (max 2).
Award 1 mark for each relevant reference to this business (max 2).

Points might include:
- Owner's objectives / not want the responsibility for managing a larger business / to keep control of the business [k] as a sole trader [app]
- Low demand / (small) size of market [k] in the shop [app]
- A few large businesses control the market / market domination [k] for office equipment [app]
- Lacks knowledge / skills / experience (to expand) [k] such as how to manage cash flow [app]
- Wants to maintain close relationship with its customers / provide a personal service [k]
- To remain flexible / able to respond quickly to changes in consumer tastes [k]
- Type of industry / market / product / service [k]

Other appropriate responses should be credited.

Knowledge points:

1.3.1.1. Characteristics of successful entrepreneurs
1.3.1.2. Contents of a business plan and how business plans assist entrepreneurs
1.3.1.3. Why and how governments support business start-ups, e.g. grants, training schemes
1.3.2.1. Methods of measuring business size, e.g. number of people employed, value of output, capital employed (profit is not a method of measuring business size)
1.3.2.2. Limitations of methods of measuring business size
1.3.3.1. Why the owners of a business may want to expand the business
1.3.3.2. Different ways in which businesses can grow, e.g. internal/external
1.3.3.3. Problems linked to business growth and how these might be overcome
1.3.3.4. Why some businesses remain small
1.3.4.1. Causes of business failure, e.g. lack of management skills, changes in the business environment, liquidity problems
1.3.4.2. Why new businesses are at a greater risk of failing

Solution:

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