Questions and Answers
What components should be included in the executive summary of a business plan?
The executive summary should include company information, market opportunity, and financial data.
What is the purpose of the Bulk Transfer law in a business sale?
It protects the buyer from being held responsible for the seller's debts.
How can the reality test help determine the feasibility of a business idea?
The reality test assesses industry growth, market niches, potential customers, market size, and competition to ensure strong demand.
What must a seller provide to the buyer regarding creditors in a business sale?
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What are the three tests used to evaluate a business idea and their primary focus?
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Define a restrictive covenant in the context of buying a business.
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What is involved in the due diligence process when purchasing a business?
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Describe the purpose of a SWOT analysis in a business plan.
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What key elements should be included in a marketing plan?
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What financial documents should a buyer review during the acquisition process?
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Study Notes
Bulk Transfer Law
- Protects buyers from assuming debts of a business they purchase.
- Seller must provide a list of all creditors to the buyer.
- Buyer and seller are required to itemize all property included in the sale.
- Buyer must retain this creditor list for six months.
- Written notification to each creditor is mandatory at least ten days before taking possession or making payment.
Restrictive Covenant
- Also known as a non-compete agreement, it restricts a seller from competing with the buyer in a specified time frame and geographic area.
Due Diligence Process
- A thorough investigation of a business for sale to uncover strengths, weaknesses, opportunities, and threats (SWOT analysis).
Acquisition Process Steps
- Identify potential business candidates.
- Sign a disclosure statement.
- Prepare and review a letter of intent.
- Conduct the buyer’s due diligence investigation.
- Draft and negotiate the purchase agreement.
- Initiate the transition phase post-acquisition.
Assessing Financial Soundness
- Review income statements and balance sheets from the past 3-5 years.
- Analyze income tax returns and cash flow.
- Evaluate owner's compensation, including relatives.
Writing a Business Plan
- Create a clear vision and mind map; conduct SWOT analysis.
- Develop three strategic initiatives and execute a force field analysis.
- Confirm business feasibility, consider target audience, and maintain a professional presentation.
Business Plan Components
- Essential sections: Cover Page, Executive Summary, Market Analysis, Products/Services, Marketing Plan, Operations Plan, Management Team, Financial Plan, and more.
Marketing Plan Essentials
- Summarize the marketing strategy and utilize the marketing mix.
- Outline objectives, action plans with budgets, and evaluate strategies regularly.
E-Commerce Features
- Mass customization and personalization based on customer needs and preferences.
- Online availability of services 24/7 and extended distribution channels.
- Focus on reduced transaction costs in reaching customers.
Mobile Commerce (M-Commerce)
- Encompasses business transactions conducted via mobile devices.
- Involves purchasing goods, services, and payment processing through mobile platforms.
Advantages of M-Commerce
- Enhances customer satisfaction, offers cost savings, and opens new business opportunities.
Financial Statements for Small Businesses
- Critical to review monthly financial records, including income statements and balance sheets.
- Monitor accounts receivable/payable and payroll commitments.
Ratio Analysis
- Calculates and compares critical financial ratios.
- Liquidity Ratios are vital; includes current ratio and quick ratio measures of asset liquidity.
Hiring and Human Resource Management
- Critical task for small business success, particularly in service sectors.
- Personal interviews are crucial for candidate assessment.
Employee Evaluation in Hiring
- Assess candidates for attitude, skills, communication ability, and overall fit for the role.
Job Analysis
- Gathers comprehensive information on job roles including descriptions and specifications.
- Serves as the foundation for all HR-related activities.
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Description
Test your knowledge on Bulk Transfer laws that protect buyers in business purchases. This quiz covers the responsibilities of both buyers and sellers, as well as important procedures regarding creditor notifications and property listings.
