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Qualifications Cambridge National Enterprise & Marketing

Topic Area 5: Factors to consider when starting up and running an enterprise

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Which statement best describes a sole trader?
Business owned and run by one person
Which is a key feature of a partnership?
Owners share responsibility and decision making
What distinguishes an LLP from a normal partnership?
Owners have limited financial liability
Which is true about a private limited company (Ltd)?
Business is a separate legal entity
What best describes a franchise?
Business licensed to use established brand
What does unlimited liability mean for owners?
Owners may use personal assets for debts
Which best explains limited liability?
Owners risk only invested money
Which is a typical advantage of being a sole trader?
Owner has total control over decisions
How are profits typically handled in a partnership?
Profits are shared among the partners
Why might a new business choose to be a private limited company?
Easier to raise money by selling shares
Which businesses often use LLPs?
Professional firms like law and accountancy
Which is a common disadvantage of buying a franchise?
High start up fees and ongoing royalties
How does decision-making usually work in a franchise?
Franchisor controls key decisions franchisee follows
Which is an internal source of finance?
Owner's personal savings used by business
Which finance need is typical for expansion?
Buying new premises and equipment
A key feature of friends and family finance is that it may be:
Given as a gift or as a loan
Which describes a bank loan accurately?
Repaid in monthly instalments with interest
Which is a disadvantage of crowdfunding?
Campaign costs time and money
Why might a business be ineligible for a grant?
Its activities do not meet public goals
What is a disadvantage of using a business angel?
Giving away part of the business
Why can bank loans be risky for owners?
Banks can take assets as security
What happens if a crowdfunding target is not met?
Investors' money is usually returned
A common feature of friends and family loans is that they are often:
Informal and lacking paperwork
An advantage of using own savings is that it:
Has no interest or fees
Which source is suitable for a business needing working capital?
Bank loan repaid over time
A main advantage of crowdfunding is that it can:
Access a large pool of investors
Which source commonly provides repayable loans with interest?
High street banks and lenders
What is a key limitation of grants from local councils?
Limited grant amounts and availability
Why might a business choose a business angel?
Investment plus strategic business advice
Which support is best for legal contract advice?
A qualified commercial solicitor
What advantage do accountants offer entrepreneurs?
Preparation of statutory year end accounts
What is a common drawback of using a solicitor?
High professional legal fees
What is true about charities supporting entrepreneurs?
Targeted help but funding is limited
Which source often understands the local market well?
Local council enterprise departments
What type of support is most appropriate for VAT returns?
A qualified business accountant
What is a risk of taking funds from business angels?
Loss of ownership stake
How can government bodies limit usefulness of support?
Support shaped by government priorities
Why might friends and family be less reliable advisors?
Biased and unqualified advisory input