TUTORIAL week 3:

 What contributions do small business make to our society:

- Provide jobs
- Inject considerable amounts of money into the local economy (33%)
- Supply chains (acts as a distributed to larger organisations)
- Take risks that larger firms would avoid
- Provide specialised goods and services

 What are the advantages of buying a business rather than starting one from
scratch?
- When you buy a business, you generally purchase an established customer base,
functioning business systems, a proven product or service and a known location.
- You don’t have to go through the painful period of building a reputation,
establishing a clientele, finding suppliers, and hiring and training employees.

 What are the advantages and disadvantages of owning a franchise?

- A franchisee has the advantage of:
(a) Wide name recognition
(b) Obtaining mass advertising
(c) Financial help
(d) Training & support
- Disadvantages:
(a) Involves considerable start-up expense
(b) Monthly royalty payments to the franchisor
(c) Constraints on the franchisee’s independence.

 What are the key reasons for most-small business failure?

- Management incompetence
- Lack of industry experience
- Inadequate financing

 What is a business plan?

- Proposed business venture
- It conveys the company’s goals
- Highlights how the management plans to achieve those goals
- Shows how customers will benefit from the company’s goods or services.

 Discuss the principal sources of small-business private financing available in

Australia
- Seed Money:
Funds borrowed by the business from the family, which must be repaid
(including interest) over a fixed period of time.
- Banks loans and mortgages:
Longer term and sit as a non-current liability in your balance sheet.
- Microlenders:
 Organisations, often not-for profit, that lend smaller amounts of money to
business owners who might not qualify for conventional bank loans.
- Venture capital
Long-term finance (usually equity finance) provided by certain institution to small
and medium sized businesses in order to exploit relatively high-risk
opportunities.
- Business angels:
Wealthy individuals who have been successful in business. They are usually
willing to invest through a shareholding, in a start-up or developing stage of a
business’s life in smaller amounts than banks or venture capitalist.
- Credit cards and personal lines of credit:
Although they tend to be extremely risky and one of the most expensive forms of
financing, credit cards are also widely available and sometimes the only source of
funding an entrepreneur has.

TUTORIAL week 4: