Business Growth Unit 2 Topic 1 Establishing a business

What are three business pathway options for a start-up business?

• Open a new business, buy shares in an existing business or enter into a franchise agreement

• Open a new business, enter into a franchise agreement or become a CEO in an existing business

• Open a new business, buy an existing business or enter into a franchise agreement

Which of the following are advantages of opening a new business?

• The owner has full control over business decisions like location, branding and signage, employees

• There is little if any historical data regarding finances

• The market for the business is already established

• The owner can enter a new niche market

When buying an existing business part of the purchase price usually includes goodwill. What does this mean?

• The previous owner will help the new owner as they take over

• The staff from the existing business will be very helpful to the new owner

• Customers will come in and welcome the new owner on their first day

• The value of the business's reputation

What is the correct definition for a franchisor?

• The company that sets up the franchise arrangement and grants the licensing rights

• The person who is granted the license to run a franchise

What is the correct definition for a franchisee?

• The company that sets up the franchise arrangement and grants the licensing rights

• The person who is granted the license to run a franchise

Two types of tax that a business is affected by

• ABN

• GST

• Income tax

• ATO

Financial objectives include

• Profitability

• Liability

• Liquidity

• Solvency

• Insurance

What is the difference between an accountant and a financial advisor?

Sources of equity finance include

• Owner self-funding

• Bank overdraft

• Business mortgage

• Venture capitalists

• Family and friends