Unit 1 - Bus Man - Buying existing/start new - 3.5

Goodwill is....

• having the goodwill to be a good business owner

• monetary value attached to the physical items in the business

• monetary value attached to the reputation of the business

• monetary value attached to the skill and knowledge of the owner

Which is NOT an advantage of purchasing an existing business?

• sales to existing customers generate instant income

• existing employees can provide knowledge

• stock has already been acquired

• some employees may resent the change in ownership

Which is a cost of purchasing an existing business

• seller may provide advice

• success may be due to previous owner's personality

• equipment is available for immediate use

• proven track record makes it easier to obtain finance

When purchasing an existing business it is essential for the potential owner to know why the business is for sale.

• False

• True

How many previous years financial records should you examine before purchasing an existing business?

• 4 years

• 1 year

• 2 years

• 3 years

Which is a cost of setting up a new business?

• high risk and a measure of uncertainty

• owner has freedom to do as they wish

• no goodwill

• if funds are limited you can start on a smaller scale

Time to develop a customer base is a cost of setting up a new business

• True

• False

IF start up period is slow profit will be?

• Fast

• Slow

Which is a benefit of starting a new business

• without reputation it may be difficult to secure finance

• time is needed to develop a customer base

• high risk and uncertainty

• no goodwill

A Franchise is....

• buying an existing business

• starting from scratch

• neither of the above