Establishment Of A Business

Question 1

Reasons /benefits for starting a business

Answer 1

Financial independence -it means having sufficient money or income to live a comfortable life.

Self-fulfilment and self-actualistation - self fulfillment is accomplishing one’s hopes , dreams or desires through one’s efforts

Self-actualization- the realization or fulfilment of one’s talents and potentialities

Increased income
Increased control of working life

Question 2

Steps followed when establishing a business

Answer 2

Conceptualising. Coming up with an idea
Research.
Identification of resources
Creation of a business plan
Acquisition of funds
Operation of the business

Question 3

What is feasibility study

Answer 3

A feasibility study is an analysis of how successful a proposal to start a business is likely to be

Question 4

Two forms of data collection

Answer 4

Primary data: is collected by the entrepreneur
Secondary Data: is Informations that have been collected by someone else but useful to the entrepreneur

Question 5

External sources of finance

Answer 5

Bank loan -a loan is the transfer of money by one party to another with an agreement to pay it back

Bank overdraft -lets you borrow money through your current account by taking out more money than you have in the account

Share capital

Question 6

Short term plans

Answer 6

Are those that are undertaken daily or weekly

Question 7

Long term plan

Answer 7

Are those that establish the course of the business over three to five years long period

Question 8

Medium-term plan

Answer 8

are those effected for one or two years include implementing procedures that increase the effectiveness of the business.

Question 9

elements of a business plan

Answer 9

Executive Summary
Operational plan
business opportunity
marketing plan
financial forecast

Question 10

the first and last stage in planning a business is divided into three

Answer 10

short term plan
medium-term plan
long term plan

Question 11

With what a business must be registered with?

Answer 11

Registrar of Companies
a certificate of registration.

All businesses must be valued added or consumption tax-registered.

Question 12

Value added tax

Answer 12

it is a tax added to most products and services sold by VAT-registered businesses.

Question 13

Fiscal policy

Answer 13

Fiscal policy is the use of government spending and taxation to influence the economy.

Question 14

A government fiscal policy has impacts on:

Answer 14

-Every individual in the nation
- Businesses

Question 15

Government’s fiscal policy influence:

Answer 15

-the cost of borrowing
-the size of tax bills
-the amount of money on average consumers can spend
-businesses

Question 16

Consumer protection laws

Answer 16

they are a form of government regulation that is aimed at protecting consumers.

Question 17

Advertising Standards Authority

Answer 17

it sets out rules that regulate(control) advertising, thus ensuring that they are legal, honest, and truthful

Question 18

Consumer protection agencies are independent organizations, they are financed by:

Answer 18

-charitable donations
-contribution from members
-government grant
- the sale of consumer-related literature

Question 19

consumer protection agencies function:

Answer 19

-they provide testing facilities and publish relative information
- they aim to promote consumer awareness of issues in the marketplace
- they provide help and guidance when things go wrong

Question 20

things that form the basis of environmental policies

Answer 20

-factories are encouraged to locate outside of city centres

-Builders are encouraged to use more environmentally friendly materials

encouragement is given to use recyclable material

———-Consumer protection efforts raise awareness

Question 21

Industrial inertia

Answer 21

A business, once established, will often decide to stay in its original location even though the original factors no longer exist.

Question 22

Define Collateral

Answer 22

The term collateral refers to the things put as security for repayment of a loan.

For example various types of properties owned. (Land , vehicles,buildings, savings) blablabla

Question 23

The location of a business will be influenced by

Answer 23

It’s customers
The government
Availability of resources
Competition

Question 24

Why is a business plan important?

Answer 24

It helps you set clear goals and guidelines for how you will manage your business.

Question 25

What is the major decision those forming a business have to take

Answer 25

Where to locate