Entrepreneurship and Small Retail Business
Entrepreneurship and Small Retail Business tests whether you can turn a retail idea into a workable plan. Questions cover market research, legal basics, costing, pricing, break-even, cash flow, and customer acquisition.
Core rules
- Test demand before buying stock: who is the customer, what problem is solved, who competes, and what price is acceptable.
- Separate fixed costs (rent, salaries) from variable costs (packaging, delivery, card fees).
- Contribution per unit = selling price − variable cost per unit.
- Break-even units = fixed costs ÷ contribution per unit.
- Keep business cash separate from personal cash and record sales, purchases, and expenses.
Worked example
A small shop has monthly fixed costs of ₹60,000. It sells a product at ₹200 with variable cost ₹120. Contribution = ₹80 per unit. Break-even = ₹60,000 ÷ ₹80 = 750 units per month. If the owner expects to sell 900 units, the margin of safety is 150 units. At 900 units, contribution is ₹72,000, so profit before tax is ₹12,000. This shows the sales volume needed before the shop covers fixed costs.
Marks traps
Do not treat sales revenue as profit. Do not ignore working capital tied up in stock. Do not price below total cost and assume volume will fix it. Do not forget licences that apply to the trade, such as food safety registration for food sales or local shop registration where required.