Question 1

The majority of small businesses that change owners are still in business five years later,about ________ the rate of start-up survival.

Accepted Answer

A) Double 
B) Triple 
C) Four times 
D) Fifty times 
E) None of the above 
A) Double 
B) Triple 
C) Four times 
D) Fifty times 
E) None of the above

Question 2

Which of the following is a way of looking at earnings valuation?

Accepted Answer

A) Future earnings under new ownership 
B) Future earnings under current ownership 
C) Past earnings under new ownership 
D) All of the above 
E) None of the above 
A) Future earnings under new ownership 
B) Future earnings under current ownership 
C) Past earnings under new ownership 
D) All of the above 
E) None of the above

Question 3

A firm that has two or more members of the same family managing and/or working in it and that is owned and operated for the benefit of that family's members is called a ________.

Accepted Answer

A) Family business 
B) Mob business 
C) Domestic business 
D) Household business 
E) None of the above 
A) Family business 
B) Mob business 
C) Domestic business 
D) Household business 
E) None of the above

Question 4

Examples of poor fit include ________.

Accepted Answer

A) Personality 
B) Lifestyle 
C) Work environment 
D) All of the above 
E) None of the above 
A) Personality 
B) Lifestyle 
C) Work environment 
D) All of the above 
E) None of the above

Question 5

Cash flow valuation uses projected future cash flows and the ________ to arrive at a figure.

Accepted Answer

A) Time value of money 
B) Nominal value of money 
C) Value of investment 
D) Future customer demand 
E) All of the above 
A) Time value of money 
B) Nominal value of money 
C) Value of investment 
D) Future customer demand 
E) All of the above

Question 6

Buying a successful business can help an entrepreneur in all of the following ways except ________.

Accepted Answer

A) Reducing risk 
B) Issues of location 
C) Customer development 
D) Product or service delivery 
E) All of the above are helpful. 
A) Reducing risk 
B) Issues of location 
C) Customer development 
D) Product or service delivery 
E) All of the above are helpful.

Question 7

No matter what the price,in negotiation you must always close the deal with the purchase of your targeted business.

Accepted Answer

A) True 
 B)False

Question 8

Employees are not a particularly valuable part of an acquisition.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following can jump start the ownership process?

Accepted Answer

A) Buying a business you already understand 
B) Starting in a new industry 
C) Not understanding the business 
D) Experiencing a business for the first time 
E) All of the above 
A) Buying a business you already understand 
B) Starting in a new industry 
C) Not understanding the business 
D) Experiencing a business for the first time 
E) All of the above

Question 10

It is difficult to fall in love with the idea of owning a business and overlook the pitfalls and problems.

Accepted Answer

A) True 
 B)False

Question 11

With a family business,much like the acquisition of any going concern,there is a chance to build upon its strengths and to turn around problematic aspects.

Accepted Answer

A) True 
 B)False

Question 12

How would you execute due diligence? What areas could you do yourself? In what areas would you need help,and who would you recruit to assist you?

Accepted Answer

Due diligence is the exercise of reasona

Question 13

With a family business,much like the acquisition of any going concern,there is a chance to build upon its ________ and to turn around ________ aspects.

Accepted Answer

A) Strengths,problematic 
B) Strengths,awkward 
C) Gifts,problematic 
D) Strengths,tricky 
E) None of the above 
A) Strengths,problematic 
B) Strengths,awkward 
C) Gifts,problematic 
D) Strengths,tricky 
E) None of the above

Question 14

A legal document enumerating the type of information that is to remain confidential is called a ________.

Accepted Answer

A) Nondisclosure agreement 
B) Disclosure agreement 
C) Nondisclosure letter 
D) Noncompete agreement 
E) None of the above 
A) Nondisclosure agreement 
B) Disclosure agreement 
C) Nondisclosure letter 
D) Noncompete agreement 
E) None of the above

Question 15

Discuss some of the potential pitfalls of buying an existing business that might be detrimental to your business idea.

Accepted Answer

There are numerous hazards in purchasing

Question 16

Discovery of potential problems when buying a business is the responsibility of the ________.

Accepted Answer

A) Buyer 
B) Seller 
C) Legal authorities 
D) Employees 
E) Customers 
A) Buyer 
B) Seller 
C) Legal authorities 
D) Employees 
E) Customers

Question 17

You must consider the fit of the business you are buying to your personal habits and interests.

Accepted Answer

A) True 
 B)False

Question 18

What methods discussed in the text would you use in finding leads on existing businesses? Which methods would work the best? Why?

Accepted Answer

While student responses may vary as to o

Question 19

Which of the following is not a method to determine the value of a business?

Accepted Answer

A) Worth of stockholders' equity 
B) Asset valuation 
C) Earnings valuation 
D) Cash flow valuation 
E) Sentimental valuation 
A) Worth of stockholders' equity 
B) Asset valuation 
C) Earnings valuation 
D) Cash flow valuation 
E) Sentimental valuation

Question 20

It is appropriate to interview all of the following except ________.

Accepted Answer

A) Former suppliers 
B) Customers 
C) Employees 
D) Family members 
E) All of the above are appropriate to interview. 
A) Former suppliers 
B) Customers 
C) Employees 
D) Family members 
E) All of the above are appropriate to interview.

Exam 3: Finding Opportunity in an Existing Business

The majority of small businesses that change owners are still in business five years later,about ________ the rate of start-up survival.

Which of the following is a way of looking at earnings valuation?

A firm that has two or more members of the same family managing and/or working in it and that is owned and operated for the benefit of that family's members is called a ________.

Examples of poor fit include ________.

Cash flow valuation uses projected future cash flows and the ________ to arrive at a figure.

Buying a successful business can help an entrepreneur in all of the following ways except ________.

No matter what the price,in negotiation you must always close the deal with the purchase of your targeted business.

Employees are not a particularly valuable part of an acquisition.

Which of the following can jump start the ownership process?

It is difficult to fall in love with the idea of owning a business and overlook the pitfalls and problems.

With a family business,much like the acquisition of any going concern,there is a chance to build upon its strengths and to turn around problematic aspects.

How would you execute due diligence? What areas could you do yourself? In what areas would you need help,and who would you recruit to assist you?

With a family business,much like the acquisition of any going concern,there is a chance to build upon its ________ and to turn around ________ aspects.

A legal document enumerating the type of information that is to remain confidential is called a ________.

Discuss some of the potential pitfalls of buying an existing business that might be detrimental to your business idea.

Discovery of potential problems when buying a business is the responsibility of the ________.

You must consider the fit of the business you are buying to your personal habits and interests.

What methods discussed in the text would you use in finding leads on existing businesses? Which methods would work the best? Why?

Which of the following is not a method to determine the value of a business?

It is appropriate to interview all of the following except ________.

Entrepreneurs Recognize Opportunities

Franchising

The Business Plan: Road Map to Success

Creating Business From Opportunity

Exploring Your Market

Developing the Right Marketing Mix and Plan

Pricing and Credit Strategies

Integrated Marketing Communications

Marketing Globally

Smart Selling and Effective Customer Service

Understanding and Managing Start-Up, fixed, and Variable Costs

Using Financial Statements to Guide a Business

Cash Flow and Taxes

Financing Strategy: Debt, equity, or Both

Addressing Legal Issues and Managing Risk

Operating for Success

Location, facilities, and Layout

Human Resources and Management

Leadership and Ethical Practices

Franchising, licensing, and Harvesting: Cashing in Your Brand

Filters

With a family business,much like the acquisition of any going concern,there is a chance to build upon its and to turn around aspects.