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Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning • Employing people • Developing the business organisation • Moving into new markets or products Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning ADVANTAGES • Increase skills base • Increase volume of trade DRAWBACKS • Risk of making poor decisions • Costs money • Involves paperwork Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Need to delegate but to retain control and to remember the overall objectives of the business • Employing professional managers • Communication issues • Growth in bureaucracy - risks Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning • Borrowing to finance expansion • Amalgamating businesses to create expansion • Takeovers Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning • Extracting cash • Managing cash within the business • Exit strategies Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning • Business entity concept: separation of business from its proprietor • Sole traders extract money in the form of drawings • Directors may receive a salary • Shareholders may receive dividends Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning • Keep profits to fund future growth • Spare cash in the business should be put to good use • Cash position needs careful management Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning • When do I want to retire/leave? • Who should take on the business? • Preparation for transition to new management? • Can I sell my stake in the business? – Is it saleable? – Who is likely to buy it? Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Goodwill Intangible factors affecting business valuation For example: • Customer loyalty • Brand name Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning • Unavoidable • Can be minimised but not eliminated • Financial analysis helps managers understand the consequences of their decisions Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning