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UNIT 1. The Small Business.

Introduction.

TEXT A.
Would you like to be the proprietor of a one-man business?
One-man businesses exist in many industries, but are probably most common in the retail trades.
Imagine that you want to start a business as a shop owner. When you have decided what sort of retail shop you want to open, you will have to find the finance that you need.
A lender is unlikely to offer you money to start the business unless you can provide some security for the loan. That is, you should have some asset that your creditor can turn into cash if your business fails and you are unable to repay the money that you have borrowed.

Exercise 1.
Choose the correct alternatives. If you need help, look at the clues given in the box.
When a bank (a) lends/borrows you money to start a business, it asks you for some (b) finance/security. In other words, it asks for rights over part of your (c) assets/loan. If your enterprise fails and you are unable to repay the loan, the bank can then sell this property. This (d) security/loan protects the bank against financial loss. Some people offer their houses as security when they (e) lend/borrow large sums of money.

CLUES:a. Look at Text A, the 5th sentence.
b. Look at the last sentence of this exercise.
c. Look at Text A, the last sentence.
d. The bank makes the loan. Does this protect the bank?
e. Compare this sentence with the first sentence.

Exercise 2.
The words on the left come from Text A. Which of the words or phrases on the right is closest in meaning?

a. proprietor 1. customer
2. shop assistant
3. owner
b. retail shop1. supermarket
2. place for storing goods when they came from the factory
3. shop that sells directly to the customer
c. security1. something valuable given as a guarantee of repayment
2. freedom from want
3. money that is lent
d. asset1. shop
2. property
3. finance
e. creditor1. a person or organization that borrows money
2. a person or organization that lends money
3. a person or organization that owns a retail shop
CLUES:b. Look at the focus section which follows.
c. Look at Exercise 1, sentences 4 and 5.
d. Look at Exercise 1, sentence 2.
e. Look at c above.

 

Focus: Explaining meanings.

We can explain the meaning of words in several ways. Study these examples.

Many commodities are distributed to retail shops, i.e. shops that sell directly to consumers.
or Many commodities are distributed to retail shops, that is, to shops that sell directly to consumers.
or Many commodities are distributed to retail shops, or shops that sell directly to consumers.
or Many commodities are distributed to retail shops - in other words, to shops that sell directly to consumers.
or Many commodities arc distributed to retail shops (shops that sell directly to consumers).

This can be shown by a diagram:

NEW INFORMATION:
retail shops

MEANING:
i.e. shops that sell directly to consumers

 

Exercise 3.
Look at the following information. Which items give new information and which explain the meaning? Match each item on the left with one on the right.

a. In Britain, most firms belong to the private sector,
b. Firms in the public sector are 'nationalized',
c. A small number of firms are under joint ownership,
d. Small firms are often sole traders,
e. Between two and twenty people can form a partnership.
 
1. in other words, they are owned by single proprietors.
2. i.e. a company in which the partners provide all the capital and share the profits.
3. that is, they are financed by private individuals.
4. or state owned.
5. i.e. they are jointly owned by private individuals and by the state.

 

CLUES:Your answers to Exercise 4 will help you.
a. Do you think firms in the private sector are owned by the public authority (i.e. the state) or by individuals?
b. Your answer to a. should help you.
c. Joint ownership refers to ownership by public and private sectors.

Exercise 4.
If you are working on your own, complete passage 1 with the phrases given after it.
If you are working with a friend, one of you completes passage 1. and the other complete passage 2. Write the completed passages in your notebook.


PASSAGE 1 .
Business firms in Britain may be described by their ownership, and there are three classes (a) ____ of firms. Firstly, (b) ____, that is, they are financed by private companies and individuals, (c) ____, that is, they are state owned. Thirdly, (d) ____, i.e. they are owned by private individuals in association with the state.
Of the private firms, some are sole traders, in other words (e) ____. Some are partnerships, that is, (f) ____ between two and twenty partners who provide the capital and share the profits, (g) ____, or companies to which a large number of people contribute a share of the stock or capital.

PASSAGE 1 PHRASES
1. they are owned by a single proprietor
2. many firms are private
3. lastly, some are joint stock companies
4. (or groups)
5. they are owned by
6. secondly, some firms are Public Corporations
7. some firms are under joint ownership.

CLUES:If you are working on your own, check your answer by completing passage 2.

PASSAGE 2
Business firms in Britain may be described by their ownership, (h) ____ (or groups) of firms. Firstly, many firms are private, (i) ____. Secondly, some firms are Public Corporations, (j) ____. (k) ___, some firms are under joint ownership, i.e. (l) ____.
Of the private firms, (m) _____ they are owned by single proprietors. Some are partnerships, that is, they are owned by between two and twenty partners who provide the capital and share the profits. Lastly, some are joint stock companies, (n) ____ contribute a share of the stock or capital.

PASSAGE 2 PHRASES
1. Thirdly
2. or companies to which a large number of people
3. and there are three classes
4. that is, they are state owned
5. they are owned by private individuals in association with the state
6. some are sole traders, in other words
7. that is, they are financed by private companies and individuals.

CLUES:Compare the completed passages 1 and 2. The two passages should be the same.

 

Exercise 5.
Sr Gonzalez borrows $100 with which to start a small retailing business. In the first week, he buys ten tins of paint at $10 each. He sells all ten tins at $15 a tin. He repays $10 to his creditor. He then decides to spend what remains of the money he has taken in sales on a new stock of paint, at the same cost per tin.

a. How many tins does he now buy? 10 tins/14 tins/15 tins
In the second week he sells all his new stock of paint at the same sale price. He repays a further $10 to his creditor. Again he decides to invest what remains of his take on buying new stock.
b. How many tins can he buy now? 15 tins/20 dns/21 tins.

 

A friend, Sr Rodriguez, also borrows $100 to start a retailing business. In the first week, he buys ten tins of paint at $10 each and sells five tins at $18 a tin.
He repays $10 to his creditor and reinvests what remains of his take on new stock, at the same cost per tin.

c. How many tins does he buy? 7 tins/8 tins/9 tins.
In the second week he reduces his sale price and sells seven tins at $16. He repays $12, and again reinvests what remains of his take on new stock.
d. How many tins does he buy now?
e. How many tins does he now have in stock?
At the end of the third week, Sr Gonzalez has sold all his stock at $15 a tin.
Sr Rodriguez again reduces his price, and he too sells all his stock, at $16 a tin.
f. Copy this chart into your notebook and complete it.

 

SR GONZALEZ

SR RODRIGUEZ

quantity of tins sold in the weektake from sales in the weekquantity of tins sold in the weektake from sales in the week
after first week

10

1 $ ...

5

6 $ ...

after second week

2 ...

3 $ ...

7

7 $ ...

after third week

4 ...

5 $ ...

8 ...

9 $ ...

g. After three weeks, who has sold most tins of paint?
h. After three weeks, who has the most liquid capital for reinvestment (that is, who has the most money with which to buy new supplies of paint)?

CLUES:a, b, c, d. Simple mathematics gives you the answers.
e. Remember that he only sold five tins in the first week.
f. Check your answers to a-e.
g. Check your answer to f, and count the number of tins that each shopkeeper has sold.
h. Remember that both shopkeepers sold all their stock in the third week.

 

Reading.

Exercise 6.
Read this sentence and decide which of the alternatives should follow.
a. There is one great advantage to starting a one-man business.
1. The amount of capital required depends on the stock of goods.
2. Relatively little capital is needed.
3. One-man businesses exist in many industries.

Now read this incomplete paragraph. Decide at which point (*) the phrases below should be fitted.
b. There is one great advantage to starting a one-man business (*). Relatively little capital is needed, and this can usually be provided by one man (*). The amount of capital required depends on the stock of goods (*), and on its rate of turnover, (*). Usual sources of new capital for a one-man business are personal savings, bank loans and overdrafts (*), and trade credit (*).
1. (i.e. an agreement to delay payment on goods until after they have been sold again).
2. that is, on the rate at which it is sold and so returns the working capital in liquid form for reinvestment.

CLUES:a. b gives you the answer.
b1. If a manufacturer trusts you to pay him at a later date than the date of supply, he gives you credit.
b2. Look at Exercise 5, h.

 

TEXT B.

There is one great advantage to starting a one-man business. Relatively little capital is needed, and this can usually be provided by one man. The amount of capital required depends on the stock of goods, and on its rate of turnover, that is, on the rate at which it is sold and so returns the working capital in liquid form for reinvestment. Usual sources of new capital for a one-man business are personal savings, bank loans and overdrafts and trade credit (i.e. an agreement to delay payment on goods until after they have been sold again).
One-man businesses exist in many industries but are probably most common in the retail trades. The single owner may himself provide all the labour, or else he may employ workers, or rely on family labour (which is often paid only a nominal wage).

Exercise 7.
Decide which explanation of the words in italics is best.
a. The bank manager gave me an overdraft,
1. in other words, he allowed me to withdraw (take out) more money from my bank account than I had previously paid in.
2. in other words, he made me pay more money into my account before he would allow me to make any more withdrawals.
3. in other words, he made me take my money to another bank.

b. My wife sometimes helps me in the shop when I am busy. I pay her a nominal wage,
1. that is, I pay her a normal wage.
2. that is, I pay her more than I would normally pay an employee.
3. that is, I pay her a wage that is much less than normal.

CLUES:a. Look at Text B, line 5, 'bank loans and overdrafts'. An overdraft is very similar to a bank loan.
b. My wife lives with me and the profits from the shop pay our living expenses. Do you also expect me to pay her a generous wage for the hours she helps me?

Exercise 8.
Decide which of the following the small shopkeeper has to do. Write them in your notebook.
a. advertise in foreign newspapers
b. find cheap premises in an area where his customers can park their cars
c. find premises which are in good condition
d. hire a full-time legal advisor
e. compete with international corporations
f. compete with other small businessmen
g. find someone to look after the business when he is sick or takes a holiday
Now look at the points which you have written down. Which of those points do you think will cause him problems?

Exercise 9.
Write out the following sentences in the order that makes best sense.
a. The New Town market is to be demolished to make way for the council's $30 million town hall and the stallholders have been served with notices to be prepared to move out by July.
b. A storm is brewing over the municipal council's decision to resite more than 100 stallholders who are now trading in the New Town market.
c. No permanent site has been found for them and they are to be located temporarily in an unused market building behind the Old Town bus station.

TEXT C.
This text is an adapted extract from a local newspaper.

Storm over council's decision.

A storm is brewing over the municipal council's Decision to resite more than 100 stallholders who are now trading in the New Town market.
The New Town market is to be demolished to make way for the council's $30 million town hall and the stallholders have been served with notices to be prepared to move out by July.
No permanent site has been found for them and they are to be located temporarily in an unused market building behind the Old Town bus station.
This has incurred the wrath of not only the affected stallholders but also those at the present Old Town market, which is situated just across the road from the bus station.
Customers
The stallholders from both markets feel their business would be badly hit by the council's decision.
Those now in New Town fear losing their customers of 15 years. And those in the Old Town market are concerned about the competition from the "New Towners" when they move in next to them.
This, however, is only one of the problems that the move is likely to cause.
Another is the lack of parking facilities at vacant premises where those from New Town are to be resited. Moreover, this market building is in a dilapidated condition.
The building, the original market, has been vacant since the construction of the present Old Town market several years ago. Many people have begun questioning the wisdom of the council's decision to move out the New Town market stallholders without providing them with a permanent site.

The New Straits Times (Kuala Lumpur) 2 March 19...

Exercise 10.
The words or phrases on the left come from Text C. Which of the words or phrases on the right is closest in meaning within the context (i.e. within that part of the text which comes before and after)?

a. A storm is brewing1. there is likely to be trouble
2. bad weather is approaching
b. resite1. rebuild
2. move to a new situation
c. stallholders1. people who work in supermarkets
2. people who own market booths (that is, small shops in a market)
d. served with notices1. given publicity
2. given official warning
e. incurred the wrath off1. made angry
2. demanded tax from
3. calmed the anger of
f. dilapidated condition1. well-maintained condition
2. old-fashioned condition
3. damaged condition.

 

CLUES:a. Does Text C say anything else about bad weather?
b. Look at paragraph 3.
d. Does Text C say anything else about publicity?
e. Look at paragraphs 5 and 6. Do you expect the stallholders to feel pleased or angry by the council's decision?
f. Look at the last paragraph. What condition do you expect the vacant (unoccupied) building to be in? Remember that old-fashioned buildings are not always in bad condition.

Exercise 11.
Look back at your answers to Exercise 8. Which of the problems that you found are faced by the small businessman described in Text C?

CLUES:Look at paragraphs 5, 6, 7 and 8.

 

Exercise 12.
Which of the following diagrams illustrates the council's plan?

CLUES:First think about the positions of the buildings. Then decide where the stallholders are now, and where the council wants to resite them.

 

Exercise 13.
Are there many one-man shops in your country? What do they sell? What problems do they have? Discuss the answers with your teacher.

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