Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Employing people Developing the business organisation Moving into new markets or products

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning ADVANTAGES Increase skills base Increase volume of trade DRAWBACKS Risk of making poor decisions Costs money Involves paperwork

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Need to delegate but to retain control and to remember the overall objectives of the business Employing professional managers Communication issues Growth in bureaucracy - risks

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Borrowing to finance expansion Amalgamating businesses to create expansion Takeovers

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Extracting cash Managing cash within the business Exit strategies

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Business entity concept: separation of business from its proprietor Sole traders extract money in the form of drawings Directors may receive a salary Shareholders may receive dividends

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Keep profits to fund future growth Spare cash in the business should be put to good use Cash position needs careful management

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning When do I want to retire/leave? Who should take on the business? Preparation for transition to new management? Can I sell my stake in the business? –Is it saleable? –Who is likely to buy it?

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Goodwill Intangible factors affecting business valuation For example: Customer loyalty Brand name

Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN © 2005 Thomson Learning Unavoidable Can be minimised but not eliminated Financial analysis helps managers understand the consequences of their decisions