Entrepreneurship Chpt 7 study guide

What is one of the advantages of buying an existing business?

• The need to find new suppliers

• The lack of established procedures

• The existing business already has the necessary equipment, suppliers, and procedures in place

• The requirement to train the seller

What might the seller of a business do for a new owner as an advantage of buying an existing business?

• Request additional funding

• Train the new owner

• Increase the business expenses

• Remove all existing equipment

Imagine you're considering purchasing 'Cafe Delight', a coffee shop that has been in operation for the past five years. What does the existence of prior records of revenues, expenses, and profits for 'Cafe Delight' provide?

• A challenge for the new owner to start from scratch

• A disadvantage due to outdated records

• An advantage due to proven business viability

• A requirement for immediate business restructuring

Why are many businesses for sale according to the slide?

• They have too many employees.

• They are not making a profit.

• They have excess capital.

• They are expanding too quickly.

What is something negative that may be inherited when buying an existing business?

• A well-established brand.

• Serious problems.

• Immediate profit.

• New equipment.

What is one of the disadvantages mentioned about buying an existing business?

• No need for marketing.

• Staff problems may exist.

• It is always cheaper than starting a new business.

• The business will have no competition.

What is required when buying an existing business?

• Minimal effort.

• No investment.

• Capital.

• A new business plan.

What is the first step in buying a business according to the slide?

• Meet with business sellers or brokers to investigate specific opportunities.

• Visit during business hours to observe the business in action.

• Write specific objectives about the kind of business you want to buy, and identify businesses for sale that meet your objectives.

• Conduct a market analysis to determine the value of the business.

What is the third step in buying a business as mentioned on the slide?

• Conduct a thorough financial audit of the business.

• Meet with business sellers or brokers to investigate specific opportunities.

• Visit during business hours to observe the business in action.

• Finalize the purchase agreement and close the deal.

When buying an existing business, for how many years of operations should you ask the owner to provide complete financial accounting?

• At least the past one year

• At least the past two years

• At least the past three years

• At least the past five years