Question 1

Explain the difference between an inside board member and an outside board member. Which one is more preferable?

Accepted Answer

An inside board member is one who is a founder, employee, family member, or retired manager of the firm, whereas an outside board member is someone with no direct connection to the business. Which type of board member is better is a matter of opinion and circumstance; research has not provided any clear results on this issue. In general, however, outside directors are beneficial for succession planning and for raising capital. They can often bring a fresh point of view to the strategic planning process, along with expertise that the founders may not possess. Insiders have the advantage of complete knowledge about the business; they are generally more available and have demonstrated their effectiveness in the particular positions they occupy in the business. Typically where the entrepreneur/CEO has power to configure the board, the board will be small and composed primarily of insiders, particularly family members and co-founders. But there are political ramifications when the board members report to the CEO; insiders may not always be objective and independent. They also may not have the broad expertise from outside the company that is necessary to effectively guide the growth of the business.

Question 2

What are some reasons why startups fail?

Accepted Answer

Some of the weaknesses that founding teams exhibit that can slow or derail startup and early growth processes include putting formal hierarchical structure on the startup before it's time, pretending there are sales from beta customers, suffocating under opportunity overload, and believing that engineers can do marketing.

Question 3

What are the primary considerations to take into account before asking a family member or close friend to be a partner?

Accepted Answer

Following are the primary considerations to take into account before asking a family member or close friend to be a partner:Friends or family members should possess real skills and expertise that the business needs to be successful. 
They should have the same work ethic as the entrepreneur. 
When there are disagreements, consider using a trusted third party to referee. 
If there are family members on the startup team, there should be outsiders on the advisory board and/or board of directors so that the company will have the benefit of objective input to the business. 
The relationship with family and friends should be treated as a business relationship. The relationships and duties of all should be clearly spelled out in writing, and everyone should understand how disagreements will be settled. As much as possible, the activities of the business should not be brought home at night.

Question 4

Empirical research has provided evidence that firms founded by _____ are generally more successful than those founded by _____.

Accepted Answer

A)  heterogeneous teams; individuals 
B)  females; males 
C)  individuals; heterogeneous teams 
D)  homogeneous teams; heterogeneous teams 
E)  males; females 
A)  heterogeneous teams; individuals 
B)  females; males 
C)  individuals; heterogeneous teams 
D)  homogeneous teams; heterogeneous teams 
E)  males; females

Question 5

List and briefly describe the five factors that are significant in founding team composition.

Accepted Answer

Following are the five factors that are

Question 6

Attorneys can provide a wealth of support for a new venture, which includes all the following EXCEPT

Accepted Answer

A)  assisting the entrepreneur in complying with federal, state, and local laws. 
B)  preparing financial statements. 
C)  advising about and preparing documents for the acquisition of intellectual property rights and for licensing agreements. 
D)  negotiating and preparing contracts. 
E)  apprising the entrepreneur of the latest tax reform legislation and helping minimize the venture's tax burden. 
A)  assisting the entrepreneur in complying with federal, state, and local laws. 
B)  preparing financial statements. 
C)  advising about and preparing documents for the acquisition of intellectual property rights and for licensing agreements. 
D)  negotiating and preparing contracts. 
E)  apprising the entrepreneur of the latest tax reform legislation and helping minimize the venture's tax burden.

Question 7

Using a(n) _____ lets you adjust how equity is split among co-founders to reflect changes in conditions.

Accepted Answer

A)  initial public offering (IPO) 
B)  binding contract 
C)  dynamic agreement 
D)  advisory board 
E)  static agreement 
A)  initial public offering (IPO) 
B)  binding contract 
C)  dynamic agreement 
D)  advisory board 
E)  static agreement

Question 8

Which of the following types of board member would be needed for a business in the maturity stage?

Accepted Answer

A)  Someone who can give advice on feasibility 
B)  A turnaround specialist 
C)  Someone who can provide strategic advice 
D)  A catalyst for innovation 
E)  Someone with resource expertise 
A)  Someone who can give advice on feasibility 
B)  A turnaround specialist 
C)  Someone who can provide strategic advice 
D)  A catalyst for innovation 
E)  Someone with resource expertise

Question 9

Most entrepreneurs avoid hiring employees as long as possible, because employees are the single biggest expense in the business.

Accepted Answer

A) True 
 B)False

Question 10

The intense effort required of a startup can be shared when the entrepreneur uses a

Accepted Answer

A)  creditor. 
B)  business agent. 
C)  stockholder. 
D)  founding team. 
E)  board of directors. 
A)  creditor. 
B)  business agent. 
C)  stockholder. 
D)  founding team. 
E)  board of directors.

Question 11

Choosing a good attorney is a time-consuming but vital task that should be accomplished immediately after startup.

Accepted Answer

A) True 
 B)False

Question 12

In a wholly owned or closely held corporation, there really is no distinction between the functions of a board of directors and those of a board of advisors.

Accepted Answer

A) True 
 B)False

Question 13

What role does a mentor board play for an entrepreneur?

Accepted Answer

A personal mentor board is made up of in

Question 14

When choosing people to serve on the board of directors, an entrepreneur should consider those who have all of the following EXCEPT

Accepted Answer

A)  significant, successful experience in the industry. 
B)  expertise in finance, capital acquisition, and possibly initial public offerings (IPOs). 
C)  exploitative behavior. 
D)  experience running a company at the level the entrepreneur wants to grow to next. 
E)  honesty and integrity, to engender a sense of mutual trust. 
A)  significant, successful experience in the industry. 
B)  expertise in finance, capital acquisition, and possibly initial public offerings (IPOs). 
C)  exploitative behavior. 
D)  experience running a company at the level the entrepreneur wants to grow to next. 
E)  honesty and integrity, to engender a sense of mutual trust.

Question 15

Provide some reasons why a team approach to starting a business is preferable over a founder who wishes to go at it alone.

Accepted Answer

A growing body of research supports a te

Question 16

Which of the following represents the easiest and quickest way to find partners to start a new venture?

Accepted Answer

A)  Lure them away from existing businesses. 
B)  Turn to friends and family members. 
C)  Place an online ad. 
D)  Ask a co-worker. 
E)  None of these are correct. 
A)  Lure them away from existing businesses. 
B)  Turn to friends and family members. 
C)  Place an online ad. 
D)  Ask a co-worker. 
E)  None of these are correct.

Question 17

If a new venture is a corporation, a board of directors is required and is elected by the shareholders.

Accepted Answer

A) True 
 B)False

Question 18

Entrepreneurs often suffer from a lack of opportunities.

Accepted Answer

A) True 
 B)False

Question 19

When choosing a banker, the entrepreneur planning a new venture should seek out an officer with a rank of assistant vice president or higher.

Accepted Answer

A) True 
 B)False

Question 20

An accountant can help a growing business in all of the following ways EXCEPT

Accepted Answer

A)  setting up control systems for operations. 
B)  performing the day-to-day recording of transactions. 
C)  advising the entrepreneur on compliance with regulations related to financing and credit. 
D)  setting up control systems for the payroll. 
E)  setting up the company's books and maintaining them on a periodic basis. 
A)  setting up control systems for operations. 
B)  performing the day-to-day recording of transactions. 
C)  advising the entrepreneur on compliance with regulations related to financing and credit. 
D)  setting up control systems for the payroll. 
E)  setting up the company's books and maintaining them on a periodic basis.

Explain the difference between an inside board member and an outside board member. Which one is more preferable?

What are some reasons why startups fail?

What are the primary considerations to take into account before asking a family member or close friend to be a partner?

Empirical research has provided evidence that firms founded by _ are generally more successful than those founded by _.

List and briefly describe the five factors that are significant in founding team composition.

Attorneys can provide a wealth of support for a new venture, which includes all the following EXCEPT

Using a(n) _____ lets you adjust how equity is split among co-founders to reflect changes in conditions.

Which of the following types of board member would be needed for a business in the maturity stage?

Most entrepreneurs avoid hiring employees as long as possible, because employees are the single biggest expense in the business.

The intense effort required of a startup can be shared when the entrepreneur uses a

Choosing a good attorney is a time-consuming but vital task that should be accomplished immediately after startup.

In a wholly owned or closely held corporation, there really is no distinction between the functions of a board of directors and those of a board of advisors.

What role does a mentor board play for an entrepreneur?

When choosing people to serve on the board of directors, an entrepreneur should consider those who have all of the following EXCEPT

Provide some reasons why a team approach to starting a business is preferable over a founder who wishes to go at it alone.

Which of the following represents the easiest and quickest way to find partners to start a new venture?

If a new venture is a corporation, a board of directors is required and is elected by the shareholders.

Entrepreneurs often suffer from a lack of opportunities.

When choosing a banker, the entrepreneur planning a new venture should seek out an officer with a rank of assistant vice president or higher.

An accountant can help a growing business in all of the following ways EXCEPT

Understanding Entrepreneurship

Preparing for the Entrepreneurial Journey

Creating Opportunity

Analyzing the Industry and Market

Developing and Testing a Business Model

Prototyping and Validating a Solution

Protecting the Startups Assets

Calculating Startup Capital Requirements

Preparing a Business Plan

Designing an Entrepreneurial Organization

Planning Startup Operations

Choosing the Legal Form of Organization

Developing a Startup Marketing Plan

Incorporating Ethics and Social Responsibility Into the Business

Funding Startup and Growth

Planning for Growth and Change

Filters

Exam 8: Building the Founding Team

Explain the difference between an inside board member and an outside board member. Which one is more preferable?

What are some reasons why startups fail?

What are the primary considerations to take into account before asking a family member or close friend to be a partner?

Empirical research has provided evidence that firms founded by _____ are generally more successful than those founded by _____.

List and briefly describe the five factors that are significant in founding team composition.

Attorneys can provide a wealth of support for a new venture, which includes all the following EXCEPT

Using a(n) _____ lets you adjust how equity is split among co-founders to reflect changes in conditions.

Which of the following types of board member would be needed for a business in the maturity stage?

Most entrepreneurs avoid hiring employees as long as possible, because employees are the single biggest expense in the business.

The intense effort required of a startup can be shared when the entrepreneur uses a

Choosing a good attorney is a time-consuming but vital task that should be accomplished immediately after startup.

In a wholly owned or closely held corporation, there really is no distinction between the functions of a board of directors and those of a board of advisors.

What role does a mentor board play for an entrepreneur?

When choosing people to serve on the board of directors, an entrepreneur should consider those who have all of the following EXCEPT

Provide some reasons why a team approach to starting a business is preferable over a founder who wishes to go at it alone.

Which of the following represents the easiest and quickest way to find partners to start a new venture?

If a new venture is a corporation, a board of directors is required and is elected by the shareholders.

Entrepreneurs often suffer from a lack of opportunities.

When choosing a banker, the entrepreneur planning a new venture should seek out an officer with a rank of assistant vice president or higher.

An accountant can help a growing business in all of the following ways EXCEPT

Understanding Entrepreneurship

Preparing for the Entrepreneurial Journey

Creating Opportunity

Analyzing the Industry and Market

Developing and Testing a Business Model

Prototyping and Validating a Solution

Protecting the Startups Assets

Calculating Startup Capital Requirements

Preparing a Business Plan

Designing an Entrepreneurial Organization

Planning Startup Operations

Choosing the Legal Form of Organization

Developing a Startup Marketing Plan

Incorporating Ethics and Social Responsibility Into the Business

Funding Startup and Growth

Planning for Growth and Change

Filters

Empirical research has provided evidence that firms founded by _ are generally more successful than those founded by _.