Factors that financial institutions consider when approving finance:
1.the quality of the business plan,
2.the collateral available to secure the loan
3.the capacity of the business to repay the loan p 12 Doyle
Part B
The business name: Outback jacks bar & grill in Whitford city shopping centre.
The business location: Whitford city shopping centre because it is a very popular shopping centre which a lot of people go to and Taylor’s reputation will make the business heaps popular.
2. The five initial steps to registerer a business
Registerer for, charge and collect the goods and service tax:
Registerer your business name: A business name is simply a name or title under which a person, or other legal entity, trades. When setting up your business, if you choose to operate as a sole trader, partnership or a trust, and not as a company, then you will have to register your business name in the state or territory in which you’ll operate. If your business name includes your, or your partner’s, first
Applying for trademark: A registered trade mark under the Trade Marks Act 1995” gives you the exclusive legal right to use, license and sell your intellectual asset in Australia. The owner of a trademark can apply for its registration. The registration period initially lasts for 10 years and can be continued indefinitely providing that you pay renewal fees.
Registerer your business name: With a company name you have the advantage of holding exclusive rights to that name in Australia, without having to register in each state.
Registerer your trademark: Having a registered trade mark can be your most valuable marketing tool. It gives you the exclusive right in Australia to establish a brand identity and legally stop imitators. Unlike a business name, a registered trademark can provide legal protection for your brand and enable you to stop others from trading with it.
3.The type of small business ownership for Taylor ( advantages and disadvantages)
Sole trader: it is a business that is owned by a person, who does business for himself and is engaged in the operation of a business by him or herself, a sole trader can either run the business or either operate the business in a specific area.
Advantages of a sole trader
-You don’t need to share profits amongst others.
-There won’t be a clash of ideas and you can put the ideas you want in to the business
A business operated by a sole trader is easier and less expensive to establish than a company.
Disadvantages of a sole trader
-A sole trader is liable to all of the debts that the business have, if the business property doesn’t cover cant cover the debts then the sole trader is has to pay these debts off with their personal property such as their house.
-One person may not have enough money to start or expand a business
-A sole trader has limited sources of advice when making business decisions
-The business may have to be closed or be sold if the sole trader has a serious illness
-Any losses made cannot be shared with other owners
-It would be hard for the sole trader to have to take annual holidays unless if he has family members who have the necessary skills to run the business.
4. Identification of the GST requirements for the chosen business:
A business that has the annual sales of 75000 or more must registerer with the Australian taxation office to collect GST and must charge GST on the products that it sells unless these products are free from GST.
ABN number helps the Australian Taxation office ensure that the business pays the right amount of tax
5.Benefits of Taylor purchasing a existing business:
There’s a savings in time, energy, and money when buying an pre-existing business. The Long and normally hard process of researching and creating business plans and models has already been done for you. Also, if there is financing needed for your purchase, it would be easier to obtain since a lenders are more likely to finance a business with a proven track record.
One of the major advantages to purchasing an existing business is that you get the benefit of the customer base, name recognition and other goodwill of the existing business.
You may get a set of experienced and capable employees, eliminating or reducing the need for you to interview and hire a lot of new employees.
You could get the advantage of favourable credit terms from suppliers who have a long-standing relationship with the business. In addition, suppliers may have a good understanding of the specifications for goods supplied and the other needs of the business.
If the business has a good record of paying trade creditors, you will get the benefit of that.
If you are purchasing the business in an asset deal (rather than buying a company) and have carried out good due diligence, you should be able to protect yourself from any liabilities associated with the business prior to your period of ownership.
An existing business will likely have the equipment and/or vehicles and other capital items required for the operation of the business – although it will be important to agree on the value of such of items for purposes of the depreciation that will be available to you, as buyer.
When making a new business, you will have to make do with heavy duty machinery which is very bad for the environment and also all the smoke from the machinery is bad for the environment and also the building can also it clears the plants and trees that provide fresh air and nutrients good for the environment.
6. The sources of finance available to Taylor for purchasing the business:
Bank Overdraft: When you are able to borrow more money then you actually have in your bank account
Short term Finance
This refers to money that is needed to finance activities that are usually going to last less than one year. Such finance is generally used to manage the day-to-day operations of a business.
Long term Finance
This refers to finance that is needed over a long period of time - certainly over a year and possibly over many years. It tends to be used for financing the setting up of businesses and for expansion of existing businesses
Personal savings
Equity funding is personal money invested into a business. Many people use their savings, an inheritance, or sell an asset to fund their business start-up
Loans from family and friends
Raising finance from family and friends can be rewarding for both parties: you get the finance to start or expand your business, while your family and friends have the satisfaction of helping you while earning interest on their spare cash
Creditor funding
Many businesses use their trade creditors to finance their business activities . Put simply, this means that you buy something, sell it at a profit, and then pay your suppliers with income from the sale.
Bank loans
Banks want to make loans to businesses, which are solvent and profitable. They are generally risk averse, and consider lending to one-person operations or new businesses without solid track records as high risk.
Grants
Government assistance for small business can take many forms, most commonly by way of free or low cost advisory services, information, and guidance.
7.Factors that could affect weather or not Taylor’s application is approved or not
Equity: They will see your assets and see if they are probable for future economic benefits they will see cash at bank, and land and building and other assets etc.
They will also see your liabilities like the loans from the banks and how much you owe them and the interest rate accounts payable or creditors, GST payable, bills and bank overdrafts,
Business plan: If his business look promising enough that he will be able to pay back the loan, what part of the economy they aim to target, the quality of the business plan, .the collateral available to secure the loan, the capacity of the business to repay the loan
