Advanatages and Disadvatages of Business Decisions

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Franchisee

AD

  • A well know name
  • A successful and proven business idea
  • Training and financial support
  • Marketing, Advertisment and promotion
  • Buying is done centrally by Franchisor
  • Expensive equipment can be leased from Franchisor

DIS

  • They have to pay the Franchisee for the rights - may be very expensive
  • They have pay part of the profit or agreed sum
  • They have strict rules set to run the business
  • It may be difficult to sell the business
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Franchisor

AD

  • Someone else runs their buisness, so less expenses such as wages
  • They get paid for the rights, and they get a share of the profits
  • The more franchises there are, the faster the business name can spread
  • The risk is reduced

DIS

  • They have to support all franchises
  • They provide the idea, but have to share all rewards
  • A bad reputation can be gained from one bad franchise
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Sole Trader

AD

  • Freedom  and control on all business decisions
  • All the profit is yours
  • It is a more simple process to set up the business

DIS

  • There is alot of risk
  • Long hours will need to be worked to reach objectives
  • Expertise is needed in all feilds
  • Unlimited liability
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Partnerships

AD

  • More owners being more capital to invest at start-up
  • Partners can bring more ideas and expertise to a partnership
  • Partners can cover for each other's holidays/sick days

DIS

  • Partners still have unlimited liability
  • Each partner is liable for decisions
  • There is a risk of conflict between partners
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Bank Loans

AD

  • You are garunteed the money
  • You only have to pay back the amount you borrowed and the interest
  • The interest is usually lower than overdrafts

 

DIS

  • They can be difficult to get, as the bank may say no
  • You have to keep up with the repayments
  • Charge may have to be paid if you decide to repay the loan early
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Overdraft

AD

  • They are quick and easy to set up
  • They're felixable

 

DIS

  • The interest rate is usually high
  • The bank can demand back the money at any time
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Part Time Staff

AD

  • Can save the business money
  • More flexible to handle workloads
  • A better work/life balance for the staff
  • Wide range of skills

DIS

  • It can be difficult to find staff
  • The staff can be less dedicated/loyal
  • May not have as much as experience
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Break Even Analysis

AD

  • It is easy to do
  • Its quick
  • Business can forecast how variations in sales will affect costs, revenue and profit
  • Can help persuade the bank to give them a loan

 

DIS

  • If the data is worng, then the results will be worng too
  • Tells you the break even output
  • Assumes the variable costs are steady, which may not be the case
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