(Stage 10) - Buying a buisness

Question 1

How can you prepare to run the family business?

Answer 1

1) Tell others of your interest in being involved in the family business
2) Take responsibility for your personal development - by working there and getting a diploma in a related field
3) Gain experience outside of the family business
4) Build relationships - with individuals who are part of the family business current network ( customers, suppliers, lawyers etc)
5) Avoid family feuds - Work WITH other members of the family, not against them.

Question 2

Five marketing considerations that should concern potential buyers:

Answer 2

1) The company’s trading area
2) Population demographics
3) The trend and size of the market
4) Recent changes in the market
5 )Future market patterns

Question 3

What qualities or characteristics the successors may need to possess (1-5)

Answer 3

1) Knowledge of the business
2) Honesty
3) Good health, energy and perceptiveness
4) Genuine enthusiasm
5) A personality compatible with the requirements of the business

Question 4

What qualities or characteristics the successors may need to possess (6-10)

Answer 4

1) A high level of perseverance
2) Stability, maturity, and aggressiveness
3) Problem-solving skills
4) The ability to plan and organize
5) The ability to help other people to develop

Question 5

Advantages of buying an existing business:

Answer 5

1) Potentially lower risk - proven entity
2) A good past history increases the likelihood of a success
3) Proven location for successful operation
4) Product or service that is already being produced, distributed and sold
5) An established clientele
6) Established financial relationships
7) Can be acquired at a good price

Question 6

Disadvantages of buying an established business:

Answer 6

1) The physical facilities may be out of date
2) The union/management relationship may be poor
3) Present personnel may be unproductive
4) Poor location
5) Inventory may contain a large amount of “dead stock”
6) Inherit ill will that may exist with customers or suppliers
7) A high percentage of the assets may be in poor-quality accounts receivable
8) The financial condition of the business