Purchasing a sole trader business

Bookworm55 Registered Posts: 479
I'm working on a case study question at the moment, and I'm having an odd mental block. Simply, there is a sole trader who is considering stopping running her business and selling it to one of her employees. I'm to create a report advising the employee (not the current owner-manager).

But for some reason it feels wrong to sell a sole trader business. Because the business is inseperable from the owner-manager. Is it just a question of terminology and what the employee would actually be buying is the assets of the business: the property, the plant and equipment, the stock (ps- this is a garden centre)? If so, is it simply a case of the assets becoming part of the buyers assets and the business continuing to be a different sole trader?

It's also complicated by the funds for this being joint loans (the employee and his wife). Does this mean that it would have to become a partnership, or could it continue as a sole trader- the employee becoming the new owner-manager and the wife a creditor. I'm also considering the possibility of limited company status and the tax implications; profits versus income, allowances etc.

The case study actually has quite a wide scope, and there's room for all sorts of things to talk about. Marketing, budgeting future sales, overheads and profits etc. I'm planning on including a section where I talk about Michaels Porter's "Five Forces" model and "Generic Competitive Strategies" model, which talks about where the business is coming from and what could be ne with it.

Does anyone have any suggestions for me, as I'm feeling a little stuck and would like someone to bounce ideas off of?

I'm particularly unsure about the budgeting for the next five years aspect as I have little data to go on. Turnover and profits have been roughly constant over the last five years, but I have only got detailed financial information from this year. The only thing I have about the future is that a large housing development (ie source of customers as it's a local business) is to be built in the area.


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