TABLE OF CONTENTS What is the current trading status of the business sole trader, partnership, co-operative or limited company? Is this satisfactory at present? Is it likely to be satisfactory for future needs? If not, what alternative options exist that might meet the needs of the business? For example, a sole trader or partnership that has been operating successfully in a small local wholesaling business, but now wishes to expand, may need to reconsider its status. If the expansion is to be substantial, e.g. opening new branches or substantially increasing the number of credit customers, this could leave the owners vulnerable to substantial exposure and risk from bad debts in the future. Limited liability status might reduce the extent of the exposure, although it might also reduce the borrowing capacity of the owners unless they are willing to offer personal assets as security against borrowing. The trading status may also be affected by interpersonal factors, e.g. partners who wish to develop the business in differing directions. Alternatively, it may be that a sole trader is looking to take a partner on board to inject capital into the business, or to assist with its expansion and development by increasing production capacity.
The capacity of the business for future expansion is usually thought of in terms of available finance and the ability to expand the markets. However, even if these factors are available, the...
