Exam 1: The Foundations of Entrepreneurship

Most startup companies can expect to need ________ capital than they anticipate.

Corporate downsizing has spawned a generation of entrepreneurs known as "corporate castoffs."

Research has isolated a set of characteristics that can predict who will succeed as an entrepreneur.

About 75 percent of the businesses in the U.S. can be considered "small" businesses.

Of the 27 million businesses in the U.S., about 40 percent are family owned and managed.

Establishing prices that will generate the necessary profits means that business owners must understand how much it costs to make, market, and deliver their products and services.

Entrepreneurs are characterized by ________.

Research shows that the top-performing ________ percent of small companies create 67 percent of the net new jobs in the economy.

The primary cause of small business failure is lack of capital.

Diversity may be considered a characteristic of entrepreneurs, as they don't fit any statistical norm.

Entrepreneurs who repeatedly start businesses and grow to a sustainable size before striking out again are known as ________ entrepreneurs.

Because they have college degrees, a working knowledge of business, and years of management experience, both corporate castoffs and corporate dropouts who become entrepreneurs will most likely increase the small business survival rate.

Social entrepreneurs use their skills to create profitable businesses and also achieve economic, social and environmental goals for the common good.

Mini Case 1-1: Hudson's Dilemma Bill Hudson was a real craftsman when it came to being a machinist. Bill had learned almost all that he knew from Hugo Huffman, his first and only employer. Bill Hudson was married and had three young children. He was 33 years old and had worked for Hugo ever since he finished his tour in the Army. In 12 years, Bill had polished his skills under the watchful and critical eye of Hugo Huffman. Hugo was quick to recognize Bill's talent for the trade. Bill had a positive attitude about learning and displayed a drive for perfection that Hugo admired. Hugo's Machine Shop was a successful small business. Its success was based mostly on the reputation for quality that had been established over its 42 years in operation. Hugo had come to this country with his new wife, Hilda, when he was in his late twenties. Now the business was a success, but Hugo remembered the early years when he and Hilda had to struggle. Hugo wanted the business to continue to produce the highest quality craftsman products possible. On a Friday evening, he called Bill into his office at closing time, poured him a cup of half-day-old coffee, and began to talk with him about the future. "Bill, Hilda and I are getting old and I want to retire. It has been 42 years of fun but these old hands need a rest. In short, Hilda and I would like you to buy the business. We both feel that your heart is in this craft and that you would always retain the quality that we have stood for." Bill was taken back by the offer. He, of course, knew Hugo was getting older, but had no idea Hugo would retire. Bill and his wife, Anna, had only $4,200 in the bank. Most of Bill's salary went for the normal costs of rearing three children. Hugo knew Bill did not have the money to buy the business in cash, but he was willing to take a portion of the profits for the next 15 years and a modest initial investment from Bill. Bill had, for the past four years, made most of the technical decisions in the shop. Bill knew the customers and was well respected by the employees. He had never been involved in the business side of the operation. He was a high school graduate but had never taken business courses. Bill was told by Hugo that even after deducting the percentage of the profits he would owe under the sales agreement, he would be able to almost double his annual earnings. Bill would have to take on all the business functions himself because Anna had no business training either. -Which entrepreneurial characteristics does Bill have that may be important to his success? Which characteristic could lead to his failure?

Small companies that operate globally from their inception are referred to as ________.

Which of the following was not identified as one of the suggestions for small business success?

Successful entrepreneurs recognize that their most valuable asset is their time, and they learn to manage it effectively to make themselves and their companies more productive; having passion about their businesses, products, and customers enables them to stay motivated.

Small companies are incubators of new sales ideas, products and services and create ________ times more patents per employee than large companies.

In addition to the opportunity to create their own destiny and enjoy what they do, entrepreneurs also benefit from the ability to ________.

Entrepreneurs choose to enter their particular business fields because they have an interest in them and enjoy those lines of work. They have often made their hobbies their business.