When people start up businesses they automatically take a risk on whether they will gain or lose the money put into the business. The idea is that they will do well and make a profit. With all the fixed costs paid then there will be some profit left. I think that any person starting of a small business is taking a risk. Many questions go through their mind like whether who the customers are, how strong competition is and what prospects there are for growth.

If all goes well then there are many different paths you could take to expanding your ideas for the business. I looked into ways that firms could expand their businesses, which are doing well. Case study John Mackenzie recently opened up a fish and fish shop in Wheathampstead and he said ” Wheathampstead is a street that is dying out and nowadays many of the shops in the village are closing down due to lack of business. I took a very big risk in fact opening a fish and chip shop right on the high street.

The first day I opened it I had queues right outside the shop and had to shut early because I ran out of fish. I am doing very well with the business and attracting more customers. The product you sell has to be good and you want the demand for it to be very big. Since the shop has opened the other business around me are also doing well. The off license next door to me is doing well as people go in there to buy drinks after they have bought their fish and chips. I hope to expand the shop if business keeps going good.

” John is a perfect example of someone taking a risk and making the right decision. Sometimes profit maximisation may not, however be the aim of all firms. In larger firms the managers and directors who run the firm may far be more interested in their own rewards than in the rewards of the shareholders. Directors and managers may be far more interested in receiving bigger salaries, large company cars and spending more time eating expense-paid lunches, than in the earning maximum profits for the shareholders.

They do actually have to make profit otherwise they’d lose their jobs. But making enough profit to keep shareholders happy, profit satisfying can be very different from making maximum profits. Advertising When you do well then you can afford to spend more on advertising. The more well you are doing the more it deserves to be known by many people as possible. If sales are already doing well then the product is obviously very good so you will just have to persuade new customers into buying the product.

Advertising brings different types of people to try new products. Budgens the local supermarket has continued to sell fresh food, friendly service and value for money for over a century. It now operates over 210 stores ranging in format from supermarkets to forecourt stores. As a company Budgens covers 25 countries including London with over 800,000sq ft of sales space, 6000 staff and serves over 78 million customers a year. This is a typical example of a small business turning into a very large company and still doing very well.