Pearson Edexcel have published a GCSE Business Studies mock Paper 1 (Investigating Small Business) here.

We have come up with some suggestions for covering the longer answers in section A.

SECTION A

1(c) Explain one drawback to a business of having low levels of cash

(3 marks available)

When answering a question about the drawbacks of having low levels of cash in a business, it’s important to consider the potential negative impacts on the company’s financial stability and ability to operate effectively. Here are some tips to keep in mind when answering this type of question:

1.      Identify the specific drawback: Start by clearly identifying the particular drawback that you will be discussing in your answer. For example, you might choose to focus on the fact that having low levels of cash can make it difficult for a business to invest in growth opportunities.

2.      Explain the impact: Once you have identified the drawback, provide a clear explanation of how it can impact the business. In the case of limited cash reserves, you might explain that the business may struggle to make necessary investments in areas such as marketing, research and development, or equipment upgrades. This can limit the company’s ability to grow and compete effectively in the marketplace.

3.      Provide examples: To support your explanation, provide examples of how low levels of cash can create problems for a business. For instance, you might mention a company that missed out on a valuable opportunity to expand into a new market due to limited funds, or a business that was forced to delay important investments because it didn’t have the cash available.

4.      Offer potential solutions: Finally, it can be helpful to offer some potential solutions or strategies that a business could use to address the drawback you have identified. For example, you might suggest that a business could seek outside financing, implement cost-cutting measures, or explore alternative revenue streams to increase its cash reserves and improve its financial stability.