Starting a business Flashcards
What is the legal structure of your report?
- sole trader
- partership
- private company
- public company
- incorporated association
What is a sole trader?
a business that is owned and operated by one person
What is a partnership?
a business owned and operated by between two and twenty people
What is a private company?
an incorporated businesses with between two and fifty private shareholders
What is a public company?
a company that has sold all or a portion of itself to the public via an initial public offering.
What is your first heading?
legal structure
What is your second heading?
Buying an existing business or starting from scratch?
What does it mean when you buy an existing business?
Existing businesses are already operational and may have a strong customer base and set of suppliers or policies and procedures.
Advantages of buying an existing business are?
- Cheeper (don’t need to renovate, add furniture already provided)
- Already having loyal customers generates instant income.
- A good business history increases the likelihood of business success.
- Stock has already been acquired and is ready for sale.
- Equipment is available for immediate use.
- Existing employees can provide valuable assistance.
Disadvantages of buying an existing business are?
- The existing image of the business may be difficult to change, especially if the business had a poor reputation.
- The success of the business may have been due to the previous owner’s personality and contacts which may be lost when the business is sold.
- It may be difficult to assess the value of goodwill with the likelihood of paying more than the business is worth.
- Some employees may resent any change to the business operation.
What is your fist subheading for: Buying an existing business or starting from scratch?
Buying an existing business
What is your second subheading for: Buying an existing business or starting from scratch?
Starting a business from scratch
What does it mean when you start your business from scratch?
starting a business with various pieces and incorporating each piece into the business to make one cohesive, successful business.
Benefits of starting a business from scratch?
- The owner has the freedom to set up the business exactly as he wishes.
- The owner’s objectives can be matched more closely to the business.
- The owner is able to determine the pace of growth and change.
- The owner has more flexibility to select the location, target market, range of products and level of customer service.
- There is no goodwill for which the owner has to pay.
- If funds are limited, it is possible to begin on a smaller scale.
Disadvantages of starting a business from scratch?
- There is a high risk and a measure of uncertainty.
- Without a previous business reputation, it may prove difficult to secure finance.
- Time is needed to develop a customer base, employ staff and develop lines of credit from suppliers.
- If the start-up period is slow, then profits may not be generated for some time.
