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15 Cards in this Set
- Front
- Back
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What are the advantages of establishing a new Business? |
Owner is free to make all decisions. Less expensive to establish than an existing business. No goodwill to pay for. |
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What are the disadvantages of establishing a new Business? |
Harder to obtain debt finance due to no existing records. Can take long to time to build customer base. Existing and potential clients are unknown. |
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What are the advantages of buying an existing business? |
No improvement changes needed. Loyal customers already exist. Existing trained staff. Total cost is known. |
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What are the disadvantages of.buying an existing business? |
Inefficient systems and operations are difficult to change. Existing employees can resist change. |
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What is buying a franchise? |
A business where a franchisee pays for the right to use an established business's trade name and formula. |
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Advantages of buying a franchise? |
Reduced risk of failure. Expert advice from Company Supplier and materials established Eastbound obtain capital Sell a well established product. |
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Disadvantages of buying a Franchise? |
Ongoing fees to franchiser Less independence Competition between franchises |
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What is voluntary cessation? |
Assets of the business are sold pay debts due to voluntary or willing closure. |
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What is involuntary cessation? |
Forced closure due to financial difficulty. |
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Why does voluntary cessation occur? |
Retirement Change of lifestyle Loss of enthusiasm Declining profits |
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Why does involuntary cessation occur? |
Declining sales Creditors must be paid. |
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What is the process of cessation for sole traders of partnerships? |
Bankruptcy and then voluntary or involuntary cessation. |
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What is the process's of cessation for a company? |
Voluntary administration when the business is experiencing financial difficulty l, and then liquidation to sell everything and pay back creditors, and then voluntary or.involuntary cessation. |
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What is liquidation? |
If a business cannot continue operating, it goes into liquidation. This occurs when. An independent and qualified person takes control of the business with the intention of selling all its assets to pay creditors. |
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Problems for stakeholders during cessation |
Creditors may not recover money owned. Employees.lose jobs. Customers must look elsewhere. |
