CH 3: Establishing A Business

Question 1

Identify the factors that influence the location of a business.

Answer 1

1. Sources of raw materials
2. Availability of labour
3. Proximity & access to the market
4. Availability & cost of
   o Transport facilities
   o Power & water
   o Site & buildings
5. Availability of capital
6. Attitudes, regulations and tariffs of local authorities
7. Existing business environment
8. Social environment
9. Climate
10. Central government policy
11. Personal preference

Question 2

What are the different forms of ownership in South Africa?

Answer 2

1. Sole proprietorship
2. Partnership
3. Close corporation
4. Company
5. Business trust
6. Co-operative society
7. Joint ventures

Question 3

What would one consider when choosing a form of ownership?

Answer 3

1. Legal/juristic personality
2. Limited liability
3. Degree of control/management
4. Potential for capital acquisition
5. Legal formalities & regulations
6. Taxation
7. Ease with which business or entrepreneur’s interest can be transferred

Question 4

What 3 options are available for someone wanting to own a business?

Answer 4

1. Enter into a franchise
2. Buy an existing business
3. Establish a business from scratch.

Question 5

What are the 8 components of a business plan?

Answer 5

1. Cover page & executive summary
2. Venture description
3. Product-and-services plan
4. Marketing plan
5. Management plan
6. Operating plan
7. Financial plan
8. Supporting materials

Question 6

What does banks consider when determining eligibility for financing?

Answer 6

1. Capital
2. Collateral
3. Character
4. Condition

Question 7

What is the minimum number of directors allowed in a public company?

Answer 7

3

Question 8

When you register a public company, which to documents do you need to submit?

Answer 8

Memorandum of Incorporation and Notice of Incorporation

Question 9

Is a business with a legal personailty dependant on its members?

Answer 9

No