The Business pi answer key

4
1 c) 2 e) 3 a) 4 b) 5 d)
5
1 The main differences are: the owner of Gourmet to Go is younger, and 
has a degree in Business Studies. He also has experience of the food 
industry. The owner of the Soup Kitchen appears to have no business 
background.
The mission statement of Gourmet to Go is more ambitious than Soup 
Kitchen’s. They also aim to sell more products.
Soup Kitchen plans to sell locally, probably mostly to students. Gourmet 
to Go are prepared to provide sandwiches for all sorts of events.
Gourmet to Go have more staff than Soup Kitchen.
Gourmet to Go have more start-up capital but would like to borrow 
much more money than Soup Kitchen.
2 It’s 
diffi cult to say which company is more likely to succeed. Soup 
Kitchen has one owner and must make enough money to support 
this person and pay back the bank loan so it’s quite possible that the 
company could succeed in doing this.
Gourmet to Go must support one full-time and three part-time staff. 
They are in a good location and they could well and become the market 
leaders.
7 The stock markets
7.1 About business
 Keep it in the family
1
1 Asking for money from friends may be an option for small family 
companies. On the other hand, ‘never mix business and friendship’. 
2 The bank has systems in place and has a traditional role in helping set up 
new businesses; however, rates of interest can be high. 
3 Venture capitalists may provide the money needed, but usually demand 
too high a share in the eventual profi ts. 
A company can fi nd money for new projects or ideas by:
borrowing the money from banks, asking venture capital groups to invest 
in the company, issuing bonds or other fi xed-interest papers, going public 
and offering shares in the company to the public, selling part of the 
company, fi nding new partners who can bring money into the company.
2
Advantages
Disadvantages
Bank loan
- fi xed interest rates for a 
fi xed number of years
- no surprises
- not always prepared to 
lend money to new or small 
companies 
- loan may have to be 
secured
Venture 
capital
- prepared to lend to small 
start-up companies
- want 2% for management 
fee + 20% of the profi ts
Shares
- no interest to pay
- can be taken over
- listed companies have to 
pay a lot to meet fi nancial 
reporting standards