Educational Slides

1. Size and Type of Business
In this session we will be covering:
• Micro Businesses
• SME’s – Small to Medium Enterprises
• Large Businesses
• Start-ups and Existing Businesses
1
Welcome

2. • Due to the economic climate over the past few years, it has changed the shape and nature
of how businesses are set up and sustained
• With the move away from traditional high street businesses to more internet based
businesses, organisations that used to employ hundreds of people can now be staffed
with less people but still provide the same level of service
• There are still large business organisations and these also have a valid place in the
business world
• You are going to look at different sizes of business and how they operate
Introduction

3. • A micro business is a very small business employing nine people or less. Most micro
businesses only employ the person who owns it, with zero employees.
• Most micro business owners are primarily interested in earning a living to support
themselves and their families.
• There are around 5.7 million businesses in the UK, Of this, 96%
of them were micro-businesses.
• Micro businesses typically have a turnover of less than £2million.
• The number of companies without any employees at all has grown between 2000-
2018. This tells us more people are turning their backs on the traditional 9-5 jobs and
starting their own personal ventures – everything from plumbers and freelancers and
entrepreneurs and small eCommerce stores
Micro Business

4. There are a number of advantages and opportunities that come with managing a micro
business.
• Working for a small organisation means you will likely take on various roles. It will
keep the job interesting.
• There is a greater sense of satisfaction, especially if it is a
successful family business.
• Being “micro” give the owner a strong emotional and financial commitment to the
company, and they are prepared to "go the extra mile" to make it a success.
• Decisions can be made faster as there is no senior management team that need to
approve decisions.
Check out the following video:
•
Micro Business

5. There can also be negative aspects to owning a micro business:
• Micro organisations can be so small that there is little opportunity for promotion,
because there are no roles to be promoted to!
• It may be difficult to keep yourself and a small number of staff motivated if there is
no career progression incentive.
• This may also affect the rates of pay and benefits, where they would not be as high
than if you worked in a large company.
• You don’t have the back up of other departments such as human resources or the IT
department. You may have to devote a lot of your own personal time if there are
issues.
• Check out the following video:
Carry out Activity 1 on the Activity Sheet – Management & Leadership LO1 on the VLE
Micro Business

6. GOOD BAD
STAFFING Dedicated staff, close to the
business and want it to be
successful
If one of the 2 staff members is sick,
there is no one to cover
RESOURCES Less resources required as less
staff
Resources may be more expensive to
buy in small quantities
CUSTOMERS Customers will get a personal
service, keeping customers loyal
If the staff are busy, high standards of
customer service may slip
TECHNOLOGY Small team can be highly trained
in using the required technology
Limited number of staff = limited
number of technologies
SUCCESS Success felt and celebrated on a
personal level, each employee
feeling that they are responsible
Success can be difficult to achieve with
a small number of staff
Micro Business

7. Small and medium enterprises can be classed under the same heading, however:
• A small business typically employs between 10 and 50 staff.
• A medium enterprise typically employs between 50 and 249 staff.
• SME’s typically have a turnover of less than £50million.
• We will look at both types separately.
SME

8. • As small enterprises are not excessively large, they can quickly adapt to changes that
are required in the marketplace.
• Decision making is relatively quick as there is less hierarchy in place that slows down
the decision-making process.
• If the business owner sees that there is an opportunity to challenge a competitor,
they can do it without obtaining approval from a board of directors.
• Employee job descriptions can be flexible as well, allowing an employee to branch
out beyond their duties and impress.
• A smaller company encourages team camaraderie with the input of every employee
critical to the success of the business.
• Cross training of tasks naturally happens as one employee covers for another during
vacations, illnesses and family leave.
SME

9. • Medium Enterprises, although employing more staff tend to have many of the same
values as a smaller enterprise.
• Often as they have grown from being very small and only employing a few people to
building on their success and becoming larger over a time.
• SMEs often become actively involved in the community, because they view
themselves as members of the community and care about the people who live there.
SME

10. • Customer are important to an SME. A competitive advantage for the SME is that
customer interaction with the management team takes place on a regular basis. The
business owner knows what customers specifically want through their emails, phone
calls, reaction to company's blog and social media platforms. The SME can meet the
customers' needs with additional products, a change in pricing or enhancements in
customer service.
• Private SMEs do not have to report their revenues, expenses, income and debt to
anyone outside the business other than through the tax forms they submit. This gives
the SME an advantage if it wants to attack a new market niche without giving
competitors prior knowledge of its strategy.
Carry out Activity 2 on the Activity Sheet – Management & Leadership LO1 on the VLE
SME

11. SME
GOOD BAD
STAFFING Greater number of staff = more
expertise
More potential issues that would have to
be dealt with
RESOURCES Benefit from economies of scale –
cheaper to buy more
Bulk buys require to be stored. Need to
be paid for quickly
CUSTOMERS Varied expertise to deal with
customers
Customers may lack the personal service
they are looking for. Communication
more difficult.
TECHNOLOGY Certain departments trained in
different technologies
No-one is an expert, knowledge is general
SUCCESS Rewards for staff and incentives
available
Recognition for success is diluted, staff
directly involved may not get thanked

12. • Large businesses tend to be well established and have greater amounts of funds and
resources. They tend to have 250 employees +.
• They have a large customer base and from those
Customers, can enjoy more repeat business, which
produces higher sales and profits.
• Larger companies usually have stronger brand recognition or awareness, more
potential customers will have an awareness of the company's brand name and
products.
• Most large companies start out as smaller organizations. They build their brand
recognition through personal selling, advertising and public relations. An advantage
of having stronger brand recognition is that customers will usually think of those
companies first when making purchase decisions. Hence, companies with greater
brand awareness generally sell more products in the marketplace.
Large Business

13. • They have greater numbers of employees or human resources. This allows them to
pool their resources to accomplish more work.
• They also typically have taller organizational structures. For example, these firms will
often group their organizations by various functions, including marketing, finance,
engineering and information technology.
• Larger companies, in turn, have greater amounts of talent within their separate
departments. Work can then be done more efficiently and with greater amounts of
expertise.
Check out the following video:
Large Business

14. • Another advantage of having a larger company is economy of scale. Suppliers often
provide price breaks for businesses, wholesalers and retailers that can buy products
in higher quantities. For example, a manufacturer may sell widgets for £1 per unit.
The unit cost may be reduced to 90 pence for orders over 100, and 75 pence for
orders over 250. Larger organisations usually have more financial resources to take
advantage of these price breaks.
• Large companies also can afford to offer workers higher salaries and better benefit
packages. They may wield these advantages to attract the most-talented employees
in the workforce.
Carry out Activity 2 on the Activity Sheet
– Management & Leadership LO1 on the VLE
.
Large Business

15. Large Business
GOOD BAD
STAFFING More staff available to work longer
hours
Less motivated staff if there is lack of
support from senior managers
RESOURCES Greater pool of resources available One size fits all – all staff get same
resources no matter what their role is
CUSTOMERS Dedicated department to deal with
customer service
Complaints dealt with generically with no
personal service
TECHNOLOGY Additional superior technology
available to staff
Only certain departments trained in
certain technologies
SUCCESS Bigger profits to be made Staff not aware of success and are not
given adequate reward

16. • A start-up business is one which is completely new, it is just starting up and trying to
establish itself.
The owners have to take many factors into account prior to start up:
• Finance
• Staffing
• Product or Service
• Marketing
• Ideally an entrepreneur will come up with a business idea that should then be made
into a business plan.
Start-up Business

17. • This business plan should assist the entrepreneur in getting finance (if required).
• It should also map out the direction that the company will go in.
• Many start-up business ideas come from hobbies or from an issue that needs to be
addressed.
• The current trend is for online businesses and this is an area of huge growth.
Check out the following video:
Start-up Business

18. • A successful business can be any size, provide any product or service and have
varying amounts of staff and resources.
• All existing businesses must be able to provide what the customer needs, when they
need it and at the best price.
• They must be aware of what their customer wants and all operations in the
organisation should be focused on providing it.
• If they are not providing the best products and/or service, customers will find
another organisation that does.
Existing Business

19. End
Well done. You have completed this session.
In this session we have covered:
• Micro Businesses
• SME’s – Small to Medium Enterprises
• Large Businesses
• Start-ups and Existing Businesses
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