08 Explain two ways in which Toddles could become profitable. Recommend which way Toddles should use...... [6]

[BASEL Moderator]

Toddles is a children’s nursery. It is a tertiary sector business which provides childcare for children aged 2–5 years. It is a sole trader business. The business employs 4 full-time workers, who are all fully trained and well-motivated. Each employee looks after 3 children. Last year, Toddles made a loss. ‘I don’t understand it, we have fantastic employees and a good location’ said the owner. ‘I need to find ways to make the business profitable.

08 Explain two ways in which Toddles could become profitable. Recommend which way Toddles should use.
Justify your answer. [6]

Possible KN Points:
Ways to increase sales:
• Advertising
• Lower/increase prices
• Widen target market/increase ages accepted

Ways to cut costs:
• Move location
• Employ fewer workers
• Make each worker look after more children