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Disadvantages business location may be undesirable

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Disadvantages:Business location may be undesirable, image of the business will be difficult to change,employees are inherited rather than chosen, difficulties in changing the way the business is run, may be liabilitiesfor past business contracts, inventory and equipment may be obsolete, financing costs could drain cash flow andthreaten survival of business.
CHAPTER 3: ESTABLISHING A BUSINESSThe Sole ProprietorshipAdvantages:Simple to create. Least expensive way of starting a business. The owner has total decision-makingauthority. There are no special legal restrictions. It is easy to discontinue.Disadvantages:The owner is personally liable without limitation. Limited diversity in skills available. The ownerhas limited access to capital. There is a lack of continuity.The PartnershipAdvantages:Ease of formation, diverse skills of partners, legal (juristic) and natural persons may be partners,increased opportunity for capital, minimal legal formalities and regulation.Disadvantages:The personal liability of partners, difficulty in disposing of an interest (partnership terminates ifchange in membership), potential conflict between partners, lack of continuity.The Close CorporationAdvantages:Separate legal (juristic) personality, members have limited liability, increased opportunity for capital,management relatively simple, continuity.Disadvantages:Membership is limited to ten, juristic persons may not be members, no new close corporationsmay be registered, certain close corporations are subject to accountability criteria under Companies Regulations.The CompanyAdvantages:Legal (juristic) and natural persons may be shareholders/members of companies, there are norestrictions on the number of shareholders who may invest in companies, shareholders/members have limitedliability, ability to raise large amounts of capital, separation of ownership and control, continuity, transferability ofshares.Disadvantages:a high degree of legal regulation, high operational costs.The Business TrustAdvantages:Ease of formation, natural and legal (juristic) persons may be parties to a trust, limited liability,extreme flexibility, no legal regulation, continuity.Disadvantages:Limited access to capital, potential for conflict between partners.Co-operative societies:They strive to achieve certain economic advantages for their members through joint actionon the behalf of members.Developing a business plan for new businessThe most important components of a business plan:executive summary, general description of the venture,product-and-services plan, marketing plan, management plan, operating plan, financial plan and supportingmaterials.Business location factors:Sources of raw materials, availability of labour, access to the market, availability andcost of: transport facilities, power and water, a site and buildings, availability of capital, regulations and tariffs oflocal authorities, central government policy, existing business environment, social environment, climate, personalpreferences.

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Term
Fall
Professor
N/A
Tags
Business, Management, MBO, business trust

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