Establishment of a business

A business which has 1-19 employees and/or annual turnover of less than $10 million is classified as:

• Medium

• Small

• Micro

• Large

Which one of the following is not a feature of 'opening a new business' as a pathway option:

• All decisions are made by the business owner(s)

• The level of risk is high with minimal historical data

• The owner(s) has no control over the goods or services that are offered

• It is a suitable pathway for entering a new niche market

Boost Juice, Subway and Harvey Norman are examples of which pathway option:

• Buy an existing business

• Open a new business

• Enter into a franchise agreement

'Goodwill' refers to:

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

• A monetary value that reflects the reputation of a business

• A smaller section of a larger market segment, focusing on a selected group of customers

• A classification for a business which has 1-4 employees

A feature of 'buying an existing business' pathway option is:

• The business name, location, layout, equipment, staff, suppliers and stock are already established

• The business owner owns the business under the guidance and licensing of the large business's head office

• The business owner only needs to focus on attracting new customers to the business

• The level of risk is high

Which one of the following statements is false:

• Once business ideas have been tested and affirmed, a business proceeds to the start-up stage.

• Internal environmental factors and external operating factors are introduced at the start-up stage.

• There is a low level of risk in the start-up stage.

• The start-up stage is when the business begins trading, after meeting all legal requirements and sourcing its finance.

Which of the following questions are related to internal factors influencing financial decisions for a start-up business (select 2)?

• How will the owner acquire financial knowledge and skills?

• How do suppliers want to receive payments?

• How will staff be trained in minimising business costs?

• How do competitors receive payments in their business?

The strategic planning at the start-up stage is heavily influenced by external macro environmental factors (PESTLE) - particularly the legal environment.

• True

• False

Which one of the following questions should a start-up business owner ask regarding the 'legal factors' in a PESTLE analysis?

• What sustainable business practices can the business adopt?

• What registration and licensing requirements exist for the business at federal, state and local levels?

• What is the potential for automation within the business?

• Are there any key exchange rates or interest rates that impact on the business?

When seeking finance as part of opening a new business, the business owner(s) would prepare a feasibility report and business plan for the bank and potential investors.

• True

• False