Accounting - Starting a business

Question 1

What are the three options when looking to get into business?

Answer 1

You can either start a new business, purchase an existing business or buy a franchise

Question 2

What are the advantages of starting your own business?

Answer 2

• Control over the business
• No need to pay for goodwill with the customers
• Freedom to set customer expectations

Question 3

What are the disadvantages of starting your own business?

Answer 3

• High risks and high chance of failure
• Limited resources and high start-up capital necessary
• No established customer base (People don’t know about you)

Question 4

What are the advantages of purchasing an existing business?

Answer 4

• Established customer base
• Existing systems, processes and resources
• There is potential for immediate income

Question 5

What are some of the disadvantages of purchasing an existing business?

Answer 5

• Business’s success might’ve relied on the old owners
• High cost, since you are buying a business that already has income
• Previous owner’s reputation, paying extra for this
• Hard to make changes to the processes, systems that are already in place

Question 6

What is meant by “buying a franchise”?

Answer 6

It means purchasing a license to use a proven business model and receive support from a franchisor.

Question 7

What are the advantages of buying a franchise?

Answer 7

• Established brand
• Proven systems and processes
• Support from the franchisor
• Customer loyalty

Question 8

What are the disadvantages of buying a franchise?

Answer 8

• Limited control over the business
• High Cost
• Strict guidelines in place
• Competition from other franchises

Question 9

What is meant by “Ethical Consideration”?

Answer 9

The social and environmental consequences of a financial decision.