Deal With Credit Issues

Income and corporation taxes are levied on income or profit. In the disposal of a business, proceeds from the sale of trading assets such as stock are included in the trading income of the business for the year in which they are sold and corporation tax might be payable on any profit resulting from the sale.

Income tax could apply to a business vendor in many other areas too numerous to mention in a book such as this. You should, as a part of your exit planning, review with your advisors the likely impact the sale of your business will have on your personal income tax, particularly with regard to the proposed timing of the sale. Early advice will give you the time to plan for the optimum outcomes. Also, it is difficult, and often illegal, to backtrack on transactions after they have been processed, so it is necessary to get it right the first time.

The competitiveness of the market affects pricing decisions. Where few direct competitors exist there may be a greater
degree of latitude for pricing decisions. The nature of the competition also has an influence, as some competitors may be vulnerable to lower prices, chiefly if their costs prevent them lowering prices any further.

Other competitors may be open to claims of poor value or quality. In this case, a higher price accompanied by appropriate advertising could reinforce perceptions of premium value and quality. An important rule is to target one competitor or a group of competitors, attacking them with the most appropriate pricing strategy.

The economic influences on pricing include monopoly and the extent of competition. Antitrust legislation aims to stop abuses of market power by big companies and to prevent mergers or acquisitions that would create a monopoly. Supply and demand affect pricing, because generally when supply exceeds demand prices will fall. The converse is also true: when demand exceeds supply prices will rise. One sales technique is often to stimulate demand by creating a perception of scarcity. Linked to this concept is price elasticity of demand, which highlights how the volume of demand is influenced by changes in price.