Business Start up
What is the start-up stage of a business?
The stage when a business begins trading after meeting legal and financial requirements.
What is a micro business?
A very small business with few employees and low turnover.
Name one business pathway option.
New business, existing business, franchise.
What does ABN stand for?
Australian Business Number.
What is equity finance?
Money invested by owners or investors into a business.
What is debt finance?
Borrowing money from an external lender.
Name one macro factor that influences a start-up business.
What does SME stand for?
Small-to-Medium Enterprise.
What is one advantage of buying an existing business?
Existing customers, staff, equipment and reputation.
What is GST and what percentage is it?
Goods and Services Tax; 10%.
Name one source of equity finance for a start-up business.
Self-funding, family/friends, crowdfunding, venture capitalists.
Name one example of short-term debt finance.
Overdraft, credit card, loan, leasing.
Why is strategic planning important during the start-up stage?
Helps businesses manage finances, risks and growth.
Name two factors used to classify business size.
Number of employees and turnover/revenue.
What is a franchise?
A business arrangement where a franchisee operates under an established brand.
Why must businesses comply with the Fair Work Act 2009?
To ensure fair pay, conditions and workplace rights.
What are retained profits?
Profits reinvested back into the business.
Why is long-term debt finance usually used?
To purchase non-current assets kept for more than one year.
Explain one challenge faced by businesses in the start-up stage.
Limited sales, cash flow issues, high uncertainty, or securing finance.
Why might governments classify businesses as SMEs?
To create policies and support programs for smaller businesses.
What is one responsibility of a franchisor?
Provides training, marketing, policies and procedures.
Name two types of business insurance and explain their purpose.
Public liability insurance (third-party protection), professional indemnity insurance (malpractice protection), product liability insurance (product-related injuries).
Why is equity finance often preferred by start-up businesses?
No interest repayments are required.
Explain one disadvantage of debt finance for a start-up business.
Interest must be repaid regardless of business performance.
Describe how internal and external factors can influence the success of a start-up business.
Internal factors (staff, resources) and external factors (PESTLE) influence decisions and success.
Explain how the size of a business can affect its induction and training processes.
Larger businesses usually require more formal and extensive induction and training programs.
Compare the risks of opening a new business and buying an existing business.
New businesses have higher risk due to limited history; existing businesses have lower risk because they already have customers and operating systems.
Explain why complying with legal and regulatory requirements is important for a start-up business.
Compliance avoids fines, protects stakeholders, allows legal operation and builds trust with customers and investors.
Explain how equity finance can support business growth.
It provides funds for expansion, new products, more staff, or new locations.
What is the difference between short-term and long-term debt finance?
Short-term debt is usually repaid within 12 months with higher interest rates; long-term debt is repaid over several years and is used for larger purchases.