Chapter 3.2 - 3.3
Items used by the business that come from natural environment.
What is natural resources?
Funds contributed by the business owners to start and then expand the business.
What is equity?
The monetary value attached to the reputation of a particular business.
What is goodwill?
A business that has separate legal existence apart from its owner(s).
What is incorporated?
The owners of a company who are entitled to a share of its profits.
What are shareholders?
Person that is not directly employed by the business but has been contracted to perform certain tasks.
What is a subcontractor?
Bank overdraft, bank bills and trade credit.
What are examples of short-term borrowing?
Recognition of a gap in the market and development of new goods or services.
What are the common reasons for setting up a new business?
When the business owner is personally responsible for all the debts of his or her business.
What is unlimited liability?
A legal document that provides details about investment in the company.
What is a prospectus?
It is difficult for the owner to keep work and home life separate, may feel isolated from other people and miss social interaction.
What are the disadvantages of home-based business?
Raise finance with few fees, allows the business owner to connect to potential customers and receive feedback, as well as gain some guidance on how to improve the business or product.
What are advantages of crowdfunding?
The owner has the freedom to set up the business exactly as he or she wishes and can determine the pace of growth and change.
What are benefits of setting up a new business?
Less costly to operate than a company, shared responsibility and workload and business can keep going when one partner dies.
What are the advantages of a partnership?
Has no maximum number of shareholders and no restrictions on the transfer of shares or raising of money from the public via share offers.
What is a public company?
Visibility, cost, proximity to customers and suppliers, proximity to competitors and complementary business.
What are factors affecting choice of business location?
The amount of the repayments and frequency at which they must be made
Some employees may resent any change to the business operation and the existing image and policies of the business may be difficult to change, especially if the business has a poor reputation.
What are the disadvantages of purchasing an existing business?
Difficult to operate if sick, difficulty in raising finance for expansion and need to carry all losses.
What are the disadvantages of a sole trader?
Proprietary Limited
What is the meaning of Pty Ltd?
Products that are aimed at the same customers.
What are complementary businesses?
Terms of finance, business structure, overall cost, flexibility and level of control.
What are factors affecting the choice of finance?
There is a high risk and a measure of uncertainty and without a previous business reputation, it may prove difficult to secure finance.
What are the costs of setting up a new business?
How long the partnership will exists for, the amount of money each partner contributes, the duties of each partner and methods of resolving disputes.
What are included in a partnership agreement?
Limited liability, easy transfer of ownership, company tax rate lower than person income tax rate and growth potential.
What are advantages of company form of business ownership?