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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