Question:1

What are the forms of businesses? Discuss their advantages and

disadvantages.
Forms of business
There are three common types of businesses—sole
proprietorship, partnership, and corporation—and each comes with
its own set of advantages and disadvantages.
Sole proprietorship
A sole proprietor business is established, owned, financed and
controlled by a single person who is known as sole trader or sole
proprietor.
Such a business run by sole trader or sole proprietor is known as sole
trade or sole proprietorship.

Advantages:
Easy to Form:
Proprietary concerns can be formed easily and quickly. Very few legal
formalities need to be fulfilled. There is no need to go for any registration
or enter into an agreement with someone. One can form it and dissolve it
quickly.
Effort-Reward Relationship:
Proprietary ventures give a kick in the belly. You can burn the candle of
energies and make money. You take the risk and get rewarded. The
effort-reward relationship often excites people to chase creative ideas
and turn them into successful ventures.
iii. Full Control:
The owner has full control over everything. He is answerable to no one
else. He decides everything in the best interests of the business. Right
or wrong, he takes charge of the situation.
iv. Quick Decisions:
Proprietors can put things in order quickly if something goes wrong. If
opportunities come his way, he can exploit them readily. He can give a
fat discount to a loyal customer on the spot if he feels that such a step
brings in additional revenues in future. Small businesses are known for
their quick and effective decisions.
v. Economical and Efficient Operations:
The owner can put resources to best use. He can take steps to eliminate
wastages of all kinds. He can control the cost of running the show.
vi. Personal Touch:
The owner can bring his skills, knowledge and expertise to the table. He
can play with his ideas and get them going. He can convert his dreams
into concrete realities. He can make things happen. He can use his
brilliance to good advantage.
vii. Keep the Business Simple, Dynamic and Flexible:
The owner can cut everything according to the cloth available. If there is
demand, he can increase the scale and reach. If the demand is sluggish
he can limit orders, reduce stocks and take measures to save every
penny. He can run the show in sync with changing customers’ tastes and
preferences.
viii. Keep the Secrets Close to Heart:
The proprietor need not share business secrets with any one. He need
not place all his cards on the table at any point of time.
ix. Society Gains as a Whole:
Small ventures benefit society a lot. Ownership is diffused. If the venture
turns successful, it generates employment. Customers get what they
want in nearby places.
Disadvantages of Sole Proprietorship:
Sole proprietorship suffers from the following drawbacks or cons:
i. Small Size:
By its very nature, proprietary concerns cannot grow big. They have
limited means. They cannot expand operations in a big way. As a result,
they do not enjoy the economies of scale. Customers, in the final
analysis, do not gain from such miniscule concerns in the long run.
ii. Limited Shelf Life:
You never know when a big Mall will come nearby and kill all small
players. Small businesses have limited life spans. They exist for a while
and disappear within no time if customers turn into mall rats (shopping
always from big malls).
iii. Lacks Professional Skills and Talent:
The proprietor lacks professional skills, talent and expertise. He has
limited knowledge and does not have the ability to gauze competition,
changes in fashions and customer tastes and preferences, trends in
economy etc. He cannot run the show in a professional way.
iv. See the Big Picture:
His overall knowledge of market, competition, products, tastes of
customers, changes in fashions and trends, general trends in economy,
danger from global firms etc.—is relatively poor. As a result he might
take inappropriate decisions in a hurry, looking at things from a narrow
perspective.
v. Unlimited Liability:
If the small business owner fails, he has to swallow all losses. The
liabilities of a firm might eat away the accumulated wealth of the owner
almost instantaneously. The risk of unlimited liability forces many a sole
proprietor not to expand operations beyond a point.
vi. Growth Prospects:
Business cannot go beyond a point for a variety of reasons—limited
capital, owner lacks needed skills and competencies required to run the
show on a large scale, unlimited liability compels many owners to remain
small etc. The proprietary concern, therefore, does not grow to an
optimum level and enjoy the economies of scale.

Partnership
A business run by two or more person is called partnership.

Advantages of a business partnership

The business partnership offers a lot of advantages to those who choose
to use it.
1Less formal with fewer legal obligations
One of the main advantages of a partnership business is the lack of
formality compared with managing a limited company.
The accounting process is generally simpler for partnerships than for
limited companies. The partnership business does not need to complete
a Corporation Tax Return, but you’ll still need to keep records of income
and expenses. A partnership tax return must be submitted to HMRC and
each partner will need to file their own self assessment tax return
including details of their profits from the partnership (as well as any other
income).
Unlike a limited company, you don’t need to complete a confirmation
statement and the plethora of other possible Companies House forms
that a limited company may need to submit will never be required for the
partnership. There are also fewer records to maintain: in particular, a
business partnership does not need to maintain a set of statutory books
like a limited company has to.
Unless a formal partnership agreement has been drawn up, a
partnership business can easily be dissolved at any time: this gives each
partner the freedom to choose to leave if they wish to.
2Easy to get started
The partners can agree to create the partnership verbally or in writing.
There’s no need to register with Companies House and registering the
business partnership for taxation with HMRC is quite simple. The
partners will also individually need to register for self assessment, which
they can do online.
Although it will take longer and incur additional cost, it’s usually sensible
to put in place a partnership agreement. This documents how the
partnership will work, the rights and responsibilities of partners and what
would happen in various possible situations, including if the partners
fundamentally disagree or someone wants to leave.
3Sharing the burden
Compared to operating on your own as a sole trader, by working in a
business partnership you can benefit from companionship and mutual
support. Starting and managing a business alone can feel stressful and
daunting, particularly if you’ve not done it before. In a partnership, you’re
in it together.
4Access to knowledge, skills, experience and contacts
Each partner will bring their own knowledge, skills, experience and
contacts to the business, potentially giving it a better chance of success
than any of the partners trading individually.
Partners can share out tasks, with each specialising in areas they’re best
at and enjoy most. So if one partner has a financial background, they
could focus on maintaining the company books, while another may have
previously worked extensively in sales and therefore take ownership of
that side of the business. As a sole trader, by contrast, you’d have to do
all of this yourself (or manage someone you employ to do some of it).
5Better decision-making
Compared with operating on your own, in a partnership the business
benefits from the unique perspective brought by each partner. In
business, very often two heads really are better than one, with the
combined conclusion of debating a situation far better than what each
partner could have achieved individually.
6Privacy
Compared to a limited company, the affairs of a partnership business
can be kept confidential by the partners. By contrast, in a limited
company certain documents are available for public inspection at
Companies House and a company’s shareholders can choose to inspect
various registers and other documents the company is required to keep.
7Ownership and control are combined
In a limited company, ownership and day to day management of the
business is split between shareholders and directors (although they’re
often the same people). That can mean that directors are constrained by
shareholder preferences in pursuing what they see as the best interests
of the business.
By contrast, in a business partnership, the partners both own and control
the business. As long as the partners can agree how to operate and
drive forward the partnership, they’re free to pursue that without
interference from any shareholders. This can make a partnership
business potentially more flexible than a limited company, with the ability
to adapt more quickly to changing circumstances.
8More partners, more capital
The more partners there are, the more money there may be available
from their combined resources to invest into the business, which can
help to fuel growth. Together, their borrowing capacity is also likely to be
greater.
9Prospective partners
As a sole trader, while you can employ staff, it’s not really possible to
bring someone on board to manage the business alongside you.
Employees will always believe you’ll be the one running the business
and good people may be demotivated if they feel, as far as their own
career is concerned, there’s “nowhere to go”.
By contrast, it’s usually possible to admit a new partner into a general
partnership. Good staff may be attracted to the business with the
incentive that they could become a partner, either when they join or at
some point in the future.
10Easy access to profits
In a business partnership, the profits of the business are shared between
the partners. They flow directly through to the partners’ personal tax
returns rather than initially being retained within the partnership. In
a limited company, by contrast, profits are retained by the company until
paid out, whether as salaries under PAYE or, with the approval of
shareholders, as dividends.
Disadvantages of a business partnership
While there are lots of benefits of a partnership business, this model also
carries a number of important disadvantages.
1The business has no independent legal status
A business partnership has no independent legal existence distinct from
the partners. By default, unless a partnership agreement with alternative
provisions is put in place, it will be dissolved upon the resignation or
death of one of the partners. This possibility can cause insecurity and
instability, divert attention from developing the business and will often
not be the preferred outcome of the remaining partners.
Even if a partnership agreement is in place, the remaining partners may
not be in a position to purchase the outgoing partner’s share of the
business. In that case, the business will likely still need to be dissolved.
2Unlimited liability
Again because the business does not have a separate legal personality,
the partners are personally liable for debts and losses incurred. So if the
business runs into trouble your personal assets may be at risk of being
seized by creditors, which would generally not be the case if the
business was a limited company.
The partners are jointly and severally liable. As one partner can bind the
partnership, you can effectively find yourself paying for the actions of the
other partners. If your partners are unable to settle debts, you’ll be
responsible for doing so. In an extreme example where you only own
10% of the partnership, if your partners have no assets you might end up
having to settle 100% of the debts of the partnership and need to sell
your possessions in order to do so.
3Perceived lack of prestige
Like a sole trader, the partnership business model often appears to lack
the sense of prestige more associated with a limited company.
Especially given their lack of independent existence aside from the
partners themselves, partnerships can appear to be temporary
enterprises, although many partnerships are in fact very long-lasting.
This appearance of impermanence, and the fact that the partnership’s
financials cannot be independently checked at Companies House, can
appear to present more risk. Because of this, some clients (more so in
certain industries) will prefer to deal with a limited company and even
refuse to transact with a partnership business.
4Limited access to capital
While a combination of partners is likely to be able to contribute more
capital than a sole trader, a partnership will often still find it more difficult
to raise money than a limited company.
Banks may prefer the greater accounting transparency, separate legal
personality and sense of permanence that a limited company provides.
To the extent that a partnership business is seen as higher risk, a bank
will either be unwilling to lend or will only do so on less generous terms.
Several other forms of long-term finance are not available to
partnerships. Most importantly, they cannot issue shares or other
securities in exchange for investment in the way a limited company can.
5Potential for differences and conflict
By going into business as a general partnership rather than a sole
trader, you lose your autonomy. You probably won’t always get your own
way, and each partner will need to demonstrate flexibility and the ability
to compromise.
There will be the potential for differences, large or small, with other
partners. These might relate to:

 The strategic direction in which the business should go (or how to

get there)
 How to handle any number of discrete business issues that may
arise
 Different views on how partners should be rewarded when they put
different amounts of time, skills and level of investment into the
business
 Ambition. Some may want to dedicate every waking moment to
growing and developing the business, while others may want a
quieter life
Differences might not be evident immediately. Over time, partners’
preferences, personal situations and expectations may change so the
fact they are aligned at the start is far from a guarantee that cracks won’t
appear later.
Disagreements and disputes can not only harm the business but also
damage the relationship between the individuals involved. Conflict can
be a major distraction, absorbing the partners’ time, energy and money.
That’s why is generally advisable to draft a partnership agreement
(sometimes called a deed of partnership) when forming the
business partnership. This document ensures the partners’ respective
rights and responsibilities are enshrined, and that there is a common
understanding of the procedures to be followed in the case of disputes. If
the partnership needs to be dissolved, the partnership agreement will
also detail what then happens.
6Slower, more difficult decision making
Compared to running a business as a sole trader, decision-making can
be slower as you’ll need to consult and discuss matters with your
partners. Where you disagree, time will be spent negotiating to build
agreement or consensus. Sometimes this might mean opportunities are
missed. More often, it will frustrate a partner who has been used to
making all the decisions for their business.
7Profits must be shared
At a basic level, while a sole trader retains all the profits of their
business, those of a partnership are shared amongst the partners. By
default, under the Partnerships Act 1890, profits are shared equally,
although that position can be amended by a partnership agreement.
Sharing profits equitably can raise difficult questions. How do you value
different partners’ respective skills? What happens when one partner is
seen to be putting in less time and effort into the partnership, but still
taking their share of the profits? It’s easy for resentment to occur if there
doesn’t appear to be a fair balance between effort and reward.
8Personally demanding
Although there’s at least one other person to share the worry and
workload with, in a partnership business the partners still essentially are
the business. It can absorb a lot of time and energy and disrupt your
work/life balance, particularly where you end up covering for other
partners who don’t have such a strong work ethic. By contrast, in a
limited company it’s easier for the owners of the business – its
shareholders – to appoint directors to manage the business, at least on
a day to day basis.
9Taxation
Historically, if the business made more than a certain level of profit,
individuals could incur less tax by withdrawing a combination of salary
and dividends under a limited company than they could via partnership
drawings. But since changes to the taxation of dividends, this difference
is far less marked.
However, a limited company still often presents more tax planning
opportunities than a business partnership. With the profits earned by the
partnership translated to income on the individual partners, they’re
subject to income tax in the financial year in which they are made. Profits
can’t be retained in the partnership to be drawn as income in a later
year, when a partner’s income (and potentially their marginal tax rate)
may be lower.
The tax-efficiency of different business structures depends on your
personal circumstances. You should always consult a tax professional,
who can offer advice based on your personal circumstances.
10Limits on business development
Several of the other disadvantages we’ve looked at combine to restrain
the growth of most partnerships. That won’t worry a lot of businesses
with modest expansion expectations. But for any business looking to
achieve massive growth, a combination of unlimited liability, lack of
funding opportunities and a lack of commercial status in the eyes of the
world is hardly the perfect recipe for success.
The lack of legal personality becomes important here too. Without it, the
business cannot own property, enter into contracts or borrow in its own
right, difficulties which will become harder to work around as the
business grows.
Options for the partners eventually to exit the business and profit from it
can be complicated, particularly if it’s possible for the departure of one
partner at an earlier date to destroy the business. While it’s possible for
one or more partners to sell their share of the partnership business, exit
strategies can be easier to manage within a limited company structure.

Corporation
A corporation is a legal entity, organized under state laws, whose
investors purchase shares of stock as evidence of ownership in it.
The advantages of the corporation structure are as follows
Advantages

 Limited liability. The shareholders of a corporation are only

liable up to the amount of their investments. The corporate
entity shields them from any further liability, so their personal
assets are protected.
 Source of capital. A publicly-held corporation in particular can
raise substantial amounts by selling shares or issuing bonds.
  Ownership transfers. It is not especially difficult for a
shareholder to sell shares in a corporation, though this is more
difficult when the entity is privately-held.
 Perpetual life. There is no limit to the life of a corporation, since
ownership of it can pass through many generations of investors.
 Pass through. If the corporation is structured as an S
corporation, profits and losses are passed through to the
shareholders, so that the corporation does not pay income
taxes.
What are the Disadvantages of a Corporation?

The disadvantages of a corporation are as follows:

 Double taxation. Depending on the type of corporation, it may

pay taxes on its income, after which shareholders pay taxes on
any dividends received, so income can be taxed twice.
 Excessive tax filings. Depending on the kind of corporation, the
various types of income and other taxes that must be paid can
require a substantial amount of paperwork. The exception to this
scenario is the S corporation, as noted earlier.
 Independent management. If there are many investors having
no clear majority interest, the management team of a
corporation can operate the business without any real oversight
from the owners.

Question:2
What are the problems faced by an entrepreneur in starting business?
Or
What are the challenges being faced by an entrepreneur? Or
Problems In starting a new business.
1. Abandoning another career

If you’re going to dedicate yourself to starting and nurturing a business to

success, it’s going to be nearly impossible to simultaneously manage
another career. You might be able to manage the infancy of your
business on the side, during weeknights and weekends, but if you want
a chance of growing significantly, invariably you’ll have to quit your day
job.

Walking away from a promising, steady long-term opportunity for

something unpredictable is scary -- especially if you’ve never run a
business before. Unfortunately, there’s no easy way to address this. Just
think through your decision logically, and don’t ignore your instincts.

2. Financing

Experienced entrepreneurs don’t have it easy when it comes to funding

a new business, but they do have a few advantages over newcomers.
They might have a pool of capital from a business they previously sold or
a steady stream of revenue they can use to fund a new business’s cash
flow.

Even if their first business went under, they’ve likely made investment
contacts and client connections necessary to give them a leg up in a
new enterprise. As a new entrepreneur, you’ll be starting from scratch,
which means you’ll need to start networking like crazy and thinking
through all your possible funding options before landing on one.

3. Teambuilding

This is especially hard if you’ve never run or managed a team before,

but even if you have management experience, picking the right team for
a startup is stressful and difficult. It’s not enough to find candidates who
fill certain roles -- you also need to consider their cost to the business,
their culture fit and how they’ll work as part of your overall team. Such
considerations are exceptionally hard when you’re under the pressure of
filling those positions as soon as possible.
4. Being the visionary

As the founder of your startup, you’ll be expected to come up with the

ideas. When a competitor emerges, it will be your responsibility to come
up with a response plan. When your team hits an impenetrable obstacle,
your job will be to come up with an alternative plan to move forward.

This demands on-the-spot creative thinking -- which should be an

oxymoron, but entrepreneurs rarely have the luxury of time. The less
experience you have, the more pressure you’ll feel from this, and the
harder time you’ll have coming up with acceptable plans.

5. Dealing with the unknown

How long will your business exist? How profitable will your business be?
Will customers like your product? Will you be able to give yourself a
steady paycheck? None of these questions has a solid, reliable answer,
even in startups based on great ideas with all the resources they’d
theoretically need.

That unknown factor means your job stability is going to plummet, and
many of your long-term plans will remain in flux as new developments
emerge. Dealing with this volatility is one of the hardest parts of
emerging as a new entrepreneur.

6. Loneliness

It’s a rarely mentioned problem of entrepreneurship, and many new

business owners aren’t prepared for it until it happens. Being an
entrepreneur is lonely. It’s a singular position, so you won’t have
teammates to rely on (completely). You’ll be working lots of hours, so
you won’t see your family as often. And your employees will be forced to
remain at a bit of a distance.

7. Rule-making

It’s fun to be the boss until you have to enforce something. Sooner or
later, you’ll have to come up with the rules your business follows, from
how many vacation days your workers get to what the proper protocol is
when filing a complaint about a coworker. These details aren’t fun to
create, and they aren’t fun to think about, but they are necessary for
every business.
8. Decision-making

Believe it or not, this is probably the most stressful challenge on this list.
New entrepreneurs are forced to make hundreds of decisions a day,
from big, company-impacting decisions, to tiny, hour-affecting ones.
Decision fatigue is a real phenomenon, and most new entrepreneurs will
experience it if they aren’t prepared for the new level of stress.

If you can work your way past these major obstacles, you’ll be well on
your way to establishing yourself as an entrepreneur. That isn’t to say
they won’t continue to nag at you as the years go on, or that new and
varied challenges won’t arise to take their place, but you’ll be prepared
to handle yourself in those most volatile and impactful first few months
-- and that puts you far ahead of the competition.

Question:3
What are the advantages and disadvantages of buying an existing
business?

The Pros of Buying an Existing Business

1. The Product or Service is Already Market Tested

When you buy an existing business, you’ll already have a good idea of

how well the market has reacted to the products or services offered. For
example, if you buy an established restaurant that’s already a popular
spot, you’ll know that local customers enjoy the food. Due to this, you
can be fairly confident that these patrons will continue to visit the
establishment.

Due to this, it’s important to conduct your due diligence; knowing that the
product or service is well-received should play a part in your final
decision. If you’re researching businesses for sale, take into account
whether or not they’re already a successful business.

2. You’ll Significantly Reduce Startup Time

Not only are the products or services from an existing business already
market tested, but you’ll also be in the position to start selling quickly.
For example, if you’re starting from scratch and want to open a retail
store, you’ll need to purchase inventory, find suppliers, hire employees,
and find a location before you open your doors to customers.
In comparison, many of the following tasks will already be established
when buying an existing business:

 Staff members will already be trained.

 There will be pre-existing relationships with suppliers.
 Protocols and procedures will be set.
 There will be a significant knowledge base to draw upon.

When you buy a business, the previous owner will have already done
much of the work for you. Of course, you may need to hire additional
staff members, remodel the location (or look for new real estate), and
upgrade equipment, to name a few examples. Still, many tasks will
already be completed for you as the business buyer, allowing you to
focus on improving aspects of the business and making it your own.

3. The Brand Is Established

Brands are vital for establishing and expanding your customer base and
market presence. Starting a new brand in a crowded marketplace isn’t
an easy task, as existing business owners will already have an
advantage over you. Many entrepreneurs struggle to grow their brands
and draw attention to their products or services, especially during the
startup phase.

Still, over time your business’s brand should gain momentum. If you buy
an established business, however, you’ll often inherit its brand and
market share, which can save you considerable time and money.

4. It’s Easier to Secure Business Financing

It’s often easier to obtain additional working capital, especially traditional

financing, to purchase an existing business. If you need a loan to buy a
business, it may be easier than getting a loan for your startup venture. In
addition, the application process may not be as strenuous because the
lender can review the existing business’s finances.

For example, a working capital lender will be able to look at revenues,

profits, and other financial statements to determine the viability of your
business. This can reduce risks for lenders, and if the existing business
is healthy, it will increase the likelihood that they’ll provide you with a
small business loan.
5. Access to the Business’s Customer Base

Since this business has already been up-and-running, there should be

an existing customer base that will still make purchases under your
ownership. As a startup owner, it can be hard to spread the word about
your new business, so it can be beneficial to buy a business that people
know about.

The Cons of Buying an Existing Small Business

1. You’ll Get What You Paid For

Few business owners are going to sell a flourishing business for a cheap
purchase price. If a business is thriving, the previous owners will likely
demand a hefty price, which is understandable. Due to this, you should
closely compare the startup costs versus the cost of buying an existing
business. In the long run, you might save money by establishing your
own business and brand, but it’ll ultimately depend on the quality of the
existing business.

On the other hand, if you buy a cheap business, there’s a risk that the
brand is tainted, or that markets have rejected the product or service.
Resuscitating a bad brand or a struggling business can be very difficult.
In such cases, you should ask yourself if the business is worth acquiring
even at a very affordable price.

2. Significant Changes May Be Necessary

You may purchase a business hoping that it’s essentially a turnkey

establishment but end up dealing with a wide range of issues. It’ll be
hard to examine how well the business is operating until you get behind
the wheel yourself.

Some warning signs to watch out for:

 Staffing problems, such as disgruntled employees or frequent

turnover.
 Equipment that is outdated or prone to issues.
 Unreliable suppliers
 Existing debt or cash flow issues.

Unfortunately, as you try to implement changes, you may end up

creating new problems. For example, employees may resist policy
changes and even quit. To avoid these issues, we suggest trying to find
out as much about the existing business as possible, so that you don’t
regret your decision.

3. You Could Get Scammed

In addition to existing issues, you may get scammed by unscrupulous

sellers. It’s possible that the previous business owner misrepresented
financial data, glossed over needed repairs, or didn’t provide a complete
picture of the overall operations. In this situation, you may have legal
recourse, but legal fees can quickly add up. To avoid getting scammed,
review all legal documents with your lawyer, and conduct considerable
research prior to buying an existing business.

4. It Can Be Challenging to Make It “Your” Business

When you buy an existing business, you’re stepping into someone else’s
vision. Most likely, you’ll have to work to make it your own, and make
changes that reflect your goals. For example, you may want to offer new
products/services, or change up the décor.

Unfortunately, these changes can cost time and money. In some cases,
the business may never feel like it’s truly yours because you didn’t start it
initially. If you worry that this could be a possibility, you might be better
off waiting until you’re able to start your own company.

5. The Business Might Have a Bad Reputation

If the business has experienced PR issues; it could hurt your sales going
forward. From bad customer service to legal troubles, these mistakes
might damage your entrepreneurial career, even if you didn’t open the
business when they occurred.

If patrons already associate the business with negativity, they might not
change their mind because there’s a new owner (or, they might not even
find out about this). Even if there are other benefits to buying an existing
business, purchasing one with a less-than-stellar reputation won’t make
them worth it.

Question: 4
What are the advantages and disadvantages of franchising?
Advantages and disadvantages of franchising

Buying a franchise can be a quick way to set up your own business

without starting from scratch. There are many benefits of franchising but
there are also a number of drawbacks to consider.

Ten advantages of franchising

 The risk of business failure is reduced by franchising. Your

business is based on a proven idea. You can check how
successful other franchises are before committing yourself.
 Products and services will have already established a market
share. Therefore there will be no need for market testing.
 You can use a recognised brand name and trade mark. You
benefit from any advertising or promotion by the owner of the
franchise - the 'franchisor'.
 The franchisor gives you support - usually as a complete
package including training, help setting up the business, a manual
telling you how to run the business and ongoing advice.
 No prior experience is needed as the training received from the
franchisor should ensure the franchisee establishes the skills
required to operate the franchise.
 A franchise enables a small business to compete with big
businesses, more so than an independent small business, due to
the pool of support from the franchisor and network of other
franchisees.
 You usually have exclusive rights in your territory. The franchisor
won't sell any other franchises in the same territory.
  Financing the business may be easier. Banks are sometimes
more likely to lend money to buy a franchise with a good
reputation.
 You can benefit from communicating and sharing ideas with,
and receiving support from, other franchisees in the network.
 Relationships with suppliers have already been established.

disadvantages of franchising

 Costs may be higher than you expect. As well as the initial costs

of buying the franchise, you pay continuing management service
fees and you may have to agree to buy products from the
franchisor.
 The franchise agreement usually includes restrictions on how
you can run the business. You might not be able to make changes
to suit your local market.
 You may find that after some time, ongoing franchisor
monitoring becomes intrusive.
 The franchisor might go out of business.
 Other franchisees could give the brand a bad reputation, so the
recruitment process needs to be thorough.
 You may find it difficult to sell your franchise - you can only sell it
to someone approved by the franchisor.
 All profits (a percentage of sales) are usually shared with the
franchisor.
 The inflexible nature of a franchise may restrict your ability to
introduce changes to the business to respond to the market or
make the business grow.

Short questions
1. Succession planning
Succession planning is a strategy for passing on leadership roles
—often the ownership of a company—to an employee or group of
employees. Also known as "replacement planning," it ensures that
businesses continue to run smoothly after a company's most
important people move on to new opportunities, retire, or pass
away
 2. High knowledge industries
Knowledge industries are those industries which are based on
their intensive use of technology and/or human capital. While most
industries are dependent in some way on knowledge as inputs,
knowledge industries are particularly dependent on knowledge and
technology to generate revenue

3. SMEDA
Small and Medium Enterprises Development Authority is an
autonomous institution of the Government of Pakistan under
Ministry of Industries and Production. SMEDA was established
in October 1998 for encouraging and facilitating the
development and growth of small and medium enterprises in
the country.
4. SMEs
Small and medium-sized enterprises or small and medium-
sized businesses are businesses whose personnel numbers fall
below certain limits.
5. Difference between innovation and creativity
The primary difference between creativity and innovation
is that the former refers to conceiving a new idea while the
latter involves converting that idea into a marketable
commodity. Creativity is the act of conceiving something new,
whether a variation on an existing theme or something wholly
original Competitive advantage
6. Limited liability partnership
A limited liability partnership is a partnership in which some or
all partners have limited liabilities. It therefore can exhibit
elements of partnerships and corporations. In an LLP, each
partner is not responsible or liable for another partner's
misconduct or negligence
7. C corporation S corporation
 The C corporation is the standard (or default) corporation
under IRS rules. The S corporation is a corporation that has
elected a special tax status with the IRS and therefore has
some tax advantages. Both business structures get their
names from the parts of the Internal Revenue Code that they
are taxed under.
8. Buy and sell agreement
A buy and sell agreement is a legally binding contract that
stipulates how a partner's share of a business may be
reassigned if that partner dies or otherwise leaves the
business. Most often, the buy and sell agreement stipulates
that the available share be sold to the remaining partners or
to the partnership
9. Stages of product life cycle
 Introduction.

 Growth. ...

 Maturity. ...

 Decline
10. Estate planning
Estate planning is the preparation of tasks that serve to manage an
individual's asset base in the event of their incapacitation or death.
The planning includes the bequest of assets to heirs and the settlement
of estate taxes. Most estate plans are set up with the help of an attorney
experienced in estate law
11.Reengineering
Business process reengineering (BPR) is the practice of rethinking and
redesigning the way work is done to better support an organization's
mission and reduce costs. Organizations reengineer two key areas of
their businesses. First, they use modern technology to enhance data
dissemination and decision-making processes
12. Consumerism
the protection or promotion of the interests of consumers.
13. Operational planning
Operational planning is what happens when a team or department
draws from a company-wide strategic plan and puts it under a
microscope. It's future-oriented: it maps out department budgets and
goals to propel the success of the strategic plan 
14. Successful entrepreneurs
Bill gates
Steve jobs
Mark Zuckerberg