Deck 1: Small Business: an Overview

Question 1

Small businesses create more than 50 percent of all private U.S. gross domestic product (GDP).

Answer 1

True

Question 2

In the late 1950s and early 1960s, a major paradigm shift occurred in business. This paradigm shift was called the management concept.

Answer 2

False

Question 3

A manufacturer with fewer than 500 employees is classified as a small business.

Answer 3

True

Question 4

Until the early 1800s, much of the U.S. economy was based on agriculture.

Question 5

A company with over $200 million in annual revenue like Boston Beer Company can be classified as a small business because it has relatively little impact on its industry.

Question 6

The industry that employs the largest number of people in small business is the finance and insurance industry

Question 7

The Small Business Administration (SBA) estimates that there are over 220 million small businesses in the United States.

Question 8

Economy of scale is the lowering of costs through production of larger quantities.

Question 9

The manufacturing industry employs the greatest number of people in small business.

Question 10

The common size standard for a service or retail business to be classified as a small business is $6 million in average annual sales.

Question 11

Alexis de Tocqueville was impressed by the way America was being built by large industrial companies.

Question 12

According to the Small Business Administration, 52 percent of all small businesses are home based.

Question 13

The Small Business Administration (SBA) estimates that there are 25.8 million small businesses in the United States.

Question 14

In the construction industry 90 percent of the companies are classified as small businesses.

Question 15

According to Figure 1.1, almost all businesses are small businesses.

Question 16

Of all U.S. companies exporting goods, few are classified as small businesses.

Question 17

According to Figure 1.2, a majority of businesses in the education service sector are small.

Question 18

Over 99 percent of all businesses are classified as small.

Question 19

The marketing concept was a paradigm shift that focused on new advertising media.

Question 20

There are several definitions for small business; however, the most common criterion is the number of employees working for that business.

Question 21

The ability to remain flexible and innovative is an inherent factor in the favor of small businesses.

Question 22

The Kauffman Foundation shows that interest in entrepreneurship on campuses is high, with almost 2,000 colleges offering courses on the subject.

Question 23

Computers are an invention that small business has contributed to society.

Question 24

A symbiotic relationship exists between small business and big business.

Question 25

Service innovation involves offering a new or altered service for sale.

Question 26

Creative destruction refers to the failure of small businesses due to fault of their own.

Question 27

Of all U.S. businesses, almost 50 percent are Hispanic-owned.

Question 28

The number of small businesses has more than doubled in the last 30 years.

Question 29

Big businesses need small businesses.

Question 30

Census and Bureau of Labor Statistics data show that self employment rose over 12 percent from 1995 to 2004.

Question 31

The stronger and more sustainable the competitive advantage, the better the chance of winning and consequently keeping customers.

Question 32

Asian-owned businesses totaled over 1.1 million, generating over $326 billion of annual revenue.

Question 33

Compared to non-Hispanic white business owners, minority groups in the United States have larger shares of women business owners.

Question 34

Diversity in the workplace is changing the way our nation and our businesses operate.

Question 35

Small business is able to react less quickly to new and changing markets than is large business with its increased economies of scale.

Question 36

Although small businesses tend to enjoy a higher profit margin due to their economies of scale, large businesses are often better at distribution.

Question 37

Outsourcing refers to the practice of reducing the size of a firm's workforce.

Question 38

According to SBA reports, Hispanic-owned businesses generate the most annual revenue of all U.S. minority-owned businesses.

Question 39

Women owned more than 50 percent of U.S. businesses in 2001.

Question 40

Most small businesses use market research as the primary means of learning about customers.

Question 41

The lifeblood of any new business is cash/sufficient startup capital.

Question 42

What percentage of businesses in the service sector are small?

A) 71 percent
B) 51 percent
C) 31 percent
D) 11 percent

Question 43

Lack of marketing experience is one of the major problems faced by small business owners.

Question 44

The importance of classifying a business as small does not lie in which of the following areas?

A) Determining whether or not the business qualifies for a bank loan
B) Determining whether or not the business qualifies for a government set-aside program
C) Determining whether or not the business qualifies for Small Business Administration assistance
D) Determining whether or not the business qualifies for a government agency purchase

Question 45

Ronald Meese is the owner and operator of Meese Mining. To be considered a small business for crediting purposes, what is the maximum number of employees that Ronald can employ?

A) 50
B) 100
C) 200
D) 500

Question 46

The number of people who make small business their primary occupation is which of the following?

A) 2 million
B) 6 million
C) 12 million
D) 25 million

Question 47

The industry that employs the greatest number of people in small business is which of the following?

A) Construction
B) Manufacturing
C) Retail businesses
D) Services

Question 48

William Smith works for an automobile company that generates an annual revenue exceeding $200 million, but accounts for less than one percent of the global automobile market. Based on this information, the company that William works for would be considered a

A) Conglomerate
B) Corporation
C) Small business
D) Franchise

Question 49

Most new businesses do not survive past their first year.

Question 50

The __________ sector of the U.S. economy makes up about 60 percent of total U.S. jobs.

A) Manufacturing
B) Agricultural
C) IT
D) Service

Question 51

What percentage of businesses had a payroll with fewer than 500 people?

A) 10 percent
B) 25 percent
C) 75 percent
D) 98 percent

Question 52

External factors beyond a small business owner's control are to blame for most business failures.

Question 53

The text defines a business as small if it has any of the following characteristics except which of the following?

A) Less than 100 employees
B) Little impact on the industry
C) Independent operations, financing, and ownership
D) A major impact on the industry

Question 54

Although Small Business Administration (SBA) standards allow up to 500 employees in some types of businesses, the most common limit is

A) 10
B) 50
C) 100
D) 200

Question 55

What percentage of net new jobs do small businesses create annually?

A) From 10 to 25 percent
B) From 40 to 50 percent
C) From 60 to 80 percent
D) From 85 to 100 percent

Question 56

Which of the following NAICS industry categories has the lowest percentage of small businesses?

A) Finance/insurance
B) Health/social services
C) Real estate/rental/leasing
D) Construction

Question 57

Industry classification codes that are based on annual sales revenue or number of employers are abbreviated as

A) NAICS
B) SIC2
C) NAIA
D) NCAA

Question 58

Economist Joseph Schumpeter called the replacement of existing products, processes, ideas, and businesses with new and better ones creative destruction.

Question 59

According to the opening Vignette, Elon Musk is an example of a

A) Franchiser
B) Serial entrepreneur
C) Corporate business owner
D) First-time entrepreneur

Question 60

The most common cause of business failure is inadequate management and financing.

Question 61

Outsourcing is a method by which larger businesses

A) Hire more employees
B) Hire other businesses to provide goods/services instead of doing it themselves
C) Hire more management specialists
D) Work fewer hours

Question 62

SBA 8(a) certification provides preference in bidding on federal and state contracts to

A) Women only
B) Minorities only
C) Women and minorities
D) First-generation Americans

Question 63

What startup business of the 1960s used flatter organizational structure, improved customer service, and more flexibility to knock Sears out of its role of world's largest retailer?

A) K-Mart
B) Woolco
C) Wal-Mart
D) Target

Question 64

According to the Census Bureau Survey of Business Owners, ___________ constitute 88.3 percent of the U.S. self-employed population.

A) Women
B) White Americans
C) White Non-Americans
D) Minorities

Question 65

John Deere relies on hundreds of vendors to produce component parts for its farm equipment. This illustrates which secret of small business success?

A) Small businesses have competitive advantage over large businesses
B) A symbiotic relationship exists between small and large businesses
C) Small businesses perform more efficiently than larger ones
D) Small business are able to innovate more easily than larger ones

Question 66

According to the report "Dynamics of Minority-owned Employer Establishments 1997-2001," of all U.S. businesses, what percent are owned by Hispanic Americans?

A) 2.8 percent
B) 5.8 percent
C) 15.5 percent
D) 25.2 percent

Question 67

According to the report "Women in Business, 2006," women-owned businesses represent what percentage of all nonfarm operations?

A) About 10 percent
B) About 28 percent
C) About 97 percent
D) About 50 percent

Question 68

Which of the following is a valid tactic for weathering an economic storm?

A) Jettisoning the best customers
B) Reducing cooperation with suppliers
C) Finding recession-resistant opportunities
D) Hiding cash

Question 69

From 1976 to 2004, the share of women owning their own business increased from ____ percent to ____ percent?

A) 50, 90
B) 22, 33
C) 10, 12
D) 33, 75

Question 70

The impact downsizing has on small business is which of the following?

A) No labor force to work in small businesses
B) Opportunity to perform the work large businesses no longer perform
C) An availability of workers with no skills
D) Lack of financial backing for small businesses

Question 71

Why has the number of students studying entrepreneurship increased so dramatically since the early 1970s?

A) More students wanted to buy this book and take this professor's course.
B) The economy has been bad so no other jobs have been available.
C) Marketplace desires change quickly.
D) More small businesses are being formed and the cost of mistakes is higher.

Question 72

The marketing concept was a paradigm shift that involved

A) A focus on production
B) A focus on quality
C) A focus on consumer wants and needs
D) A focus on marketing

Question 73

Until the early 1800s, most goods were produced

A) By small manufacturers
B) By workers in their cottages
C) By large factories
D) By large groups of workers in the town hall

Question 74

The chemical producer, Hoechst Celanese, found that diversity in the work force was particularly beneficial in which area?

A) Problem solving
B) Reaching a consensus
C) Exploring one point of view
D) Downsizing

Question 75

For every one business that closes, how many new businesses are formed?

A) Two hundred
B) Five
C) One
D) Twenty

Question 76

How many new U.S. businesses were formed in 2005?

A) About 670,000
B) About 25 million
C) About 265,000
D) About 6.7 million

Question 77

The term economy of scale refers to which of the following?

A) Increasing costs through the production of larger quantities
B) Decreasing costs through the production of larger quantities
C) Decreasing costs through the production of smaller quantities
D) Increasing costs through the production of smaller quantities

Question 78

To avoid business failure, Terri Holt, a small business owner, has reduced the size of her company's workforce by ten percent. This action is referred to as

A) Downsizing
B) Outsourcing
C) Innovating
D) Networking

Question 79

Businesses owned by which two groups of people are growing faster than all other businesses combined?

A) Hispanic and Asians
B) Blacks and Hispanics
C) Asians and Blacks
D) Women and Minorities

Question 80

According to SBA data, the four-year survival rate between 1997 and 2001 is highest for which category of business owners?

A) American Indian/Native Alaskan-owned business owners
B) Hispanic-owned business owners
C) Asian/Pacific Islander-owned business owners
D) Nonminority-owned business owners