Deck 4: Entrepreneurship,small Business,and New Venture Creation

Question 1

Women account for ________ of all new businesses that are formed,and they lead ________ percent of the small- and medium-sized businesses that export goods and services.

A)about one-fifth;6
B)about one-quarter;18
C)about one-third;18
D)about one-half;12
E)two-thirds;24

Answer 1

D

Question 2

What percentage of Canada's GDP is contributed by small businesses?

A)7 percent
B)13 percent
C)19 percent
D)30 percent
E)41 percent

Answer 2

D

Question 3

How are intrapreneurs different from entrepreneurs?

A)The former are women and the latter are men.
B)The former are older than the latter.
C)The former work within an existing business while the latter start their own business.
D)The former earn less money than the latter.
E)There is no difference between the two terms.

Answer 3

C

Question 4

Entrepreneurs often have more than one goal for starting a business and becoming self-employed.Which of the following reasons is probably the least common goal of entrepreneurs?

A)To seek independence and be their own boss
B)To earn a comfortable living for a period of time
C)To grow and expand a current business
D)To meet community or social obligations
E)To provide for their financial needs

Question 5

A small business is an owner managed business with less than ________ employees.

A)25
B)50
C)10
D)500
E)100

Question 6

The Heritage Foundation's "index of economic freedom" measures

A)how well command economies are performing compared to market economies.
B)the extent to which entrepreneurs have freedom to pursue new business opportunities.
C)how well entrepreneurs are performing in advanced industrialized countries compared to developing economies.
D)how much profit entrepreneurs are making in command economies compared to market economies.
E)the economic freedom entrepreneurs have in various countries,using the United States as the comparison point.

Question 7

Individuals who both recognize and seize opportunities are referred to as

A)speculators.
B)franchisees.
C)entrepreneurs.
D)intrapreneurs.
E)independents.

Question 8

A new firm is

A)one that has been in business for 5 years or less.
B)one that has not yet opened for business.
C)one with less than 10 years' experience.
D)one that has become operational within the previous 12 months.
E)one that opened its doors within the past 6 months.

Question 9

In the Business Register,a goods-producing business is considered small if it has fewer than ________ employees,and a service-producing business is considered small if it has fewer than ________ employees.

A)1000;500
B)500;1000
C)100;50
D)500;250
E)250;500

Question 10

Approximately what percentage of businesses in Canada have less than 100 employees?

A)98
B)58
C)88
D)78
E)28

Question 11

At Telus,the redesign of the company's website was the result of ________ in a large firm.

A)product refinement
B)intrapreneurship
C)entrepreneurship
D)starting a business from scratch
E)marketing research

Question 12

Self-employed Canadians account for about ________ percent of the workforce.

A)3
B)5
C)15
D)22
E)34

Question 13

The part of the economy that is made up of companies and organizations not owned or controlled by the government is called

A)crown corporations.
B)split sector.
C)legislated corporations.
D)public sector.
E)the private sector.

Question 14

What are the three key elements in the entrepreneurial process?

A)The entrepreneur,the opportunity,and the marketing plan
B)The marketing plan,the production plan,and the finance plan
C)The product (or service)plan,the entrepreneur,and luck
D)The entrepreneur,the opportunity,and the resources
E)The financing plan,the product (or service)plan,and luck

Question 15

Which of the following is correct with regard to small business?

A)Various measures might be used to define a small business,including the number of people the business employs,the company's sales revenue,the size of the investment required,or the type of ownership structure the business has.
B)Since the Business Register tracks businesses and the Labour Force Survey tracks individuals,these sources of information are not useful in defining the term "small business."
C)To be included in the Business Register,a business must have at least five paid employees.
D)In the Business Register,a goods-producing company,is considered small if it has fewer than 500 employees,while a service-producing business is considered small if it has fewer than 100 employees.
E)All of these are correct.

Question 16

Which is the most common source of ideas for a new venture?

A)Brainstorming
B)Family
C)Work experiences
D)Children
E)Magazines

Question 17

According to Industry Canada,there are about ________ people who are "self- employed" and about ________ "business establishments."

A)1)2 million;1.2 million
B)5 million;500 000
C)2)8 million;2.2 million
D)725 000;500 000
E)225 000;225 000

Question 18

During the period from 2005 to 2015,small businesses created approximately ________ percent of all private sector jobs in Canada.

A)8
B)15
C)28
D)45
E)88

Question 19

In the 2017 Heritage Foundation index of economic freedom,the top three countries were ________;Canada ranked ________.

A)Australia,Japan,and Singapore;25th
B)the United States,Germany,and Japan;8th
C)the United States,Ireland,and Germany;11th
D)Hong Kong,Singapore,and New Zealand;7th
E)China,Japan,and South Vietnam;37th

Question 20

Approximately how many new businesses are started each day in Canada?

A)25
B)100
C)250
D)380
E)500

Question 21

Which one of the following statements is correct?

A)Love money is a form of debt financing.
B)Suppliers typically provide long-term financing.
C)Debt financing refers to money invested by the owner in the company.
D)Borrowing money reduces the potential for higher returns when a business is performing well.
E)Banks are typically risk averse.

Question 22

An example of a debt source of funds is ________ and an example of an equity source of funds is ________.

A)family and friends;venture capitalists
B)private lenders;family and friends
C)private lenders;trade credit
D)venture capitalists;private lenders
E)family and friends;private lenders

Question 23

A business is normally at its riskiest point during the ________ phase.

A)preliminary
B)growth
C)start-up
D)maturity
E)conception

Question 24

Which of the following statements is (are)correct with respect to financing a business?

A)Debt financing refers to money that is borrowed,while equity financing refers to money that is invested in the business by investors in return for a share of the ownership of the company.
B)The most common source of debt financing is venture capitalists.
C)Choosing between debt and equity financing involves trade-offs with regard to immediate vs.long-term profitability.
D)Most new venture founders prefer equity financing because they are reluctant to give up any control to outsiders.
E)All these statements are correct.

Question 25

When screening ideas,an entrepreneur would ask all of the following questions except

A)is the idea marketable?
B)does this idea have a high entrance cost?
C)does this idea create or add value for the customer?
D)does the idea provide a sustainable competitive advantage?
E)is the idea financially viable?

Question 26

With regard to the process of screening possible ideas for a new idea,which of the following is correct?

A)Determining whether or not the new idea adds value for customers is not essential at this early stage of the process.
B)It is not possible to determine at this early stage whether a new idea will actually give a company a sustained competitive advantage.
C)It is important to determine if sales will lead to profits.
D)If the idea is not expected to result in making a profit for a number of years,exit costs are low.
E)All of these are correct.

Question 27

Trade credit is

A)the selling of bonds or debentures.
B)reinvested in the enterprise.
C)paid to the owners in the form of dividends.
D)derived from funds generated from the operation of the business.
E)delayed payment terms offered by suppliers.

Question 28

A ________ typically includes a company description,product description,marketing analysis and plan,operating plan,financial plan,and other supporting information.

A)bank loan application
B)business plan
C)tax application
D)partnership agreement
E)grant application

Question 29

Assets that a borrower uses to secure a loan or other credit are referred to as

A)financed assets.
B)tangible assets.
C)fixed assets.
D)collateral.
E)assignments.

Question 30

All of the following are common sources of equity for new ventures except

A)banks.
B)personal savings.
C)love money.
D)private investors.
E)venture capitalists.

Question 31

With respect to the financing of a business,which one of the following statements is accurate?

A)Love money is the most popular form of debt financing.
B)Suppliers typically provide long-term financing.
C)Debt financing refers to money invested by the owner in the company.
D)Borrowing money reduces the potential for higher returns when a business is performing well.
E)Banks are typically risk averse.

Question 32

Bootstrapping involves all of the following actions except

A)acquiring resources such as people and equipment.
B)doing more with less.
C)purchasing as many resources as possible.
D)using other people's resources.
E)borrowing materials.

Question 33

One popular source of equity capital is informal capital from private investors who are known as

A)private loaners.
B)traditional lenders.
C)pseudo loaners.
D)off-the-books financers.
E)angels.

Question 34

Venture capitalists

A)require collateral for all transactions.
B)are risk averse lenders.
C)invest funds from professionally managed pools of investor money.
D)offer loans with a maximum 90-day payback period.
E)are individuals in the United States who are willing to loan money to Canadians who want to start a business.

Question 35

Karen is trying to figure out whether she can start her own small business.But,as with many small businesses,money is a problem.She asks for your help.You indicate that the most likely source of money for starting up a small business is

A)family investment.
B)lottery winnings.
C)banks.
D)credit unions.
E)personal savings.

Question 36

Erin feels that she has a wonderful opportunity to create a new apple beverage she saw in Europe by using surplus apples grown near Georgian Bay in Ontario.At this point,which question must she answer in evaluating this opportunity?

A)What interest rate will be charged for financing the purchase of capital equipment?
B)What depreciation procedures will be used?
C)What kind of computers should I purchase?
D)Where will my business be located?
E)Are there enough customers willing to buy this product?

Question 37

Which source of capital is identified as a group of small investors who are willing to invest money into the new firm in exchange for an ownership share?

A)Venture capital firm
B)Foreign investors
C)Stockbroker syndicate
D)Silent domestic partner
E)Banks

Question 38

Bootstrapping means

A)doing more with less.
B)selling shares.
C)designing new products.
D)preparing a business plan.
E)creating new ideas.

Question 39

A financial forecast includes all of the following items except

A)a cash budget.
B)an estimate of start-up costs.
C)an income statement.
D)a listing of potential customers.
E)a balance sheet.

Question 40

Robert wants to start a new business.At this point,he needs to ask himself all of the following questions except

A)what is my competitive advantage?
B)how much will the customer buy?
C)what legal form should the business take?
D)what value is created or added to for the customer?
E)what is the marketability of this idea?

Question 41

________ provide new businesses in the early phases of development with support to help nurture them into a successful future.

A)Angel Banks
B)Venture Capitalists
C)Intrapreneurs
D)Franchisees
E)Business Incubators

Question 42

Margaret has an opportunity to buy an existing business.She should be knowledgeable about all of the following issues except

A)the location of the business.
B)legal form of the business.
C)difficulty in determining an appropriate price for the business.
D)incomplete knowledge of the state of the business.
E)the reputation of the business.

Question 43

Judy is a graduate from a chiropractor program.Normally,graduates start up their own business,much like dentists and doctors.She has the choice of starting on her own or buying an existing practice.What is an advantage for her of starting a new business from scratch?

A)No problems as a result of the prior owner's errors
B)Odds are better to succeed
C)Relationship with suppliers already established
D)Needs and desires of customers known
E)The risks are lower than if she were to buy an existing practice

Question 44

The ________ fit involves determining if the resources needed to capitalize on the opportunity can be acquired.

A)resource-entrepreneur
B)personal-entrepreneur
C)entrepreneur-opportunity
D)opportunity-resource
E)entrepreneur-resource

Question 45

To start up a new business by operating under a license issued by a parent company to local entrepreneurs who own and manage the business is known as

A)intrapreneurial business.
B)a macroenterprise.
C)an enterprise.
D)a microenterprise.
E)a franchise.

Question 46

Which of the following is not likely to be provided by the seller of a franchise?

A)Financing help
B)Guarantee of success
C)Marketing strategy
D)Training for employees and managers
E)Management advice

Question 47

Which of the following is an advantage for the franchisee?

A)Freed from detail of local operations
B)Recognition
C)Rapid growth for the franchise
D)Low entry cost
E)Guaranteed success

Question 48

Harold's father owns a plumbing business,which Harold will likely take over.However,Harold needs to understand the problems that family businesses face.Which of the following is not typically a problem in a family business?

A)Untrained and uneducated family members as personnel
B)Failure to respond to changing market conditions
C)Choosing an appropriate successor
D)Consistent under-financing
E)Disagreement among family members about the future of the business

Question 49

The practice of collecting financial contributions from various individuals through an online platform is known as

A)Angel Investing.
B)Shark Investment.
C)Online Mall Funding.
D)Crowdfunding.
E)Venture Funding.

Question 50

In a franchise agreement,the ________ is purchasing the right to sell the products of the ________.

A)franchisee;franchiser
B)franchiser;parent company
C)franchiser;franchisee
D)pigeon;shyster
E)subleaser;leaser

Question 51

Which of the following is considered an advantage for both the franchisee and the franchisor?

A)Guaranteed success
B)Economies of scale in buying
C)Promotion savings
D)Recognition
E)Management assistance

Question 52

For a new business to succeed,it is important that the entrepreneurs form the right team.Which of the following should be the top criteria in selecting team members?

A)Personal competencies
B)Family links
C)Personal friendship
D)Successor plans
E)Franchisee demands

Question 53

Which of the following is correct with regard to collateral?

A)It refers to business (but not personal)assets that a borrower uses to secure a loan or other credit.
B)It consists of tangible assets like buildings as well as intangible assets like goodwill.
C)Collateral can be seized by the lender if the loan is not repaid according to specified terms.
D)It refers to personal (but not business)assets that a borrower uses to secure a loan or other credit.
E)Banks are most impressed with debt investment.

Question 54

Which of the following is the most significant disadvantage of starting a business from scratch?

A)Having few employees
B)Inability to franchise
C)Having competition
D)Coming up with new ideas
E)The risk of failure

Question 55

Which of the following is not one of the disadvantages of owning a franchise?

A)High failure rates
B)Sacrifice of independence
C)Difficult to terminate
D)On-going payments to the parent company
E)High start-up costs

Question 56

Jody is a young graduate from a business program.She can either help out in the family business or work with another organization.Which of the following is not a typical advantage associated with a family business?

A)Highly trained individuals
B)Valuable community relationships
C)Personal sacrifices leading to financial advantage
D)High employee loyalty
E)Unified family management

Question 57

The benefits of franchising the franchiser enjoys include all of the following except

A)more revenue.
B)more financing.
C)more involvement in the details of local operations.
D)advertising money is spent more efficiently.
E)rapid growth.

Question 58

What is the most significant disadvantage of owning a franchise?

A)Start-up costs
B)Operational guidelines
C)Difficulty obtaining loans
D)Double taxation
E)Competition

Question 59

Molly believes that success is almost guaranteed when one buys a franchise.You point out that she should consider the costs such as

A)emergency needs.
B)operational expenses.
C)the franchise sales price.
D)training expenses.
E)all of these.

Question 60

According to a BDC study there will be many opportunities to buy existing businesses since ________ percent of small business owners are over 50.

A)60
B)80
C)25
D)35
E)90

Question 61

Which of the following statements about partnerships is false?

A)A partner cannot sell their interest without the other partners' consent.
B)The partnership terminates upon the death of a partner.
C)A partner cannot retire without the other partners' consent.
D)General partnerships are limited to ten partners.
E)It is easier to borrow money than a sole proprietorship.

Question 62

A new business typically adopts one of four main organizational forms.They are

A)franchise,sole proprietorship,partnership,or corporation.
B)franchise,partnership,corporation,or co-operative.
C)sole proprietorship,franchise,corporation,or co-operative.
D)sole proprietorship,partnership,corporation,or co-operative.
E)debt,equity,venture capital,or gifted.

Question 63

A major disadvantage of the sole proprietorship is the

A)ability to grow by adding talent.
B)high start-up costs.
C)unlimited liability.
D)lack of freedom in making business decisions.
E)difficulty in beginning business activities.

Question 64

Which of the following is a key contributing factor to the success of a small business?

A)Hard work,drive,and dedication
B)Overcapitalization
C)Strong control systems
D)Creativity
E)Insufficient capital

Question 65

Olivia has found a viable business,a small furniture store,she is interested in purchasing.She has learned that the store is supplied by reliable vendors and has a steady stream of local and online buyers.What should Olivia's next step be at this point?

A)Analyze the furniture store's past financial statements.
B)Start negotiating a purchase price with the current owner.
C)Approach a banking institution about financing her purchase.
D)Consult a marketing agency about ways to reach more customers.
E)Search for vendors that can provide similar products at lower costs.

Question 66

Which of the following is not typical for a sole proprietorship?

A)Limited liability
B)Losing money at start-up
C)Lack of continuity
D)Easy to dissolve
E)Hard to borrow money

Question 67

Partnerships are generally more advantageous than sole proprietorships because

A)the talents of the partners can be pooled.
B)some businesses can only be formed as partnerships.
C)there are many types of partnerships.
D)partners are jointly and severally liable.
E)many people can be the president of the company.

Question 68

Which is the most important reason for the failure of small business?

A)Poor marketing
B)Managerial incompetence
C)Loss of interest in the business
D)Fraud
E)Poor production capabilities

Question 69

Shirley is opening a flower shop and has decided to operate as a sole proprietorship.Which of the following is not an advantage Shirley will have in operating her business?

A)Freedom
B)Simplicity of operation
C)Limited liability
D)Low start-up costs
E)Choice of location

Question 70

Tax laws permit ________ to treat the sales revenues and operating expenses of the business as part of their personal finances.

A)sole proprietorships
B)joint ventures
C)privately-held corporations
D)either publicly-held or privately-traded corporations
E)publicly-held corporations

Question 71

A general partnership has advantages which are similar to a sole proprietorship,such as

A)easy to transfer ownership.
B)limiting owner's liability.
C)being simple to organize.
D)providing for continuity.
E)being dependent upon resources of an individual.

Question 72

Low start-up costs,simplicity in formation,and freedom are advantages in establishing a

A)corporation.
B)sole proprietorship.
C)partnership.
D)joint venture.
E)co-operative.

Question 73

A limited partnership attempts to

A)avoid the problem of unlimited liability for the owners.
B)limit the number of partners who may purchase a share of ownership.
C)provide for continuity of operation upon the departure of one of the partners.
D)limit the number of partners who may vote at board meetings.
E)limit the geographical area of operation for a business firm.

Question 74

If sole proprietor Tom decided to merge his business with that of Cindy,another sole proprietor,a ________ would result.

A)partnership
B)T-4A special corporation
C)publicly-traded corporation
D)dual proprietorship
E)co-operative

Question 75

Many professional organizations,such as law firms and accounting firms,are formed as

A)joint ventures.
B)partnerships.
C)public corporations.
D)private corporations.
E)sole proprietorships.

Question 76

The size of a partnership is

A)limited to a maximum of $100 million in annual sales.
B)unlimited.
C)limited to a maximum of 100 partners.
D)limited to a maximum of 1000 employees.
E)limited to a maximum of $10 million in annual sales.

Question 77

Franchising accounts for about ________ percent of retail sales in Canada.

A)10
B)20
C)40
D)60
E)80

Question 78

Low start-up costs and simplicity of operations are among the main advantages of

A)a sole proprietorship.
B)selling shares.
C)incorporating.
D)a co-operative.
E)none of these.

Question 79

Sam Clark has a custom cheesecake business that he owns and operates out of his home.Sam's ownership structure likely is

A)a franchise.
B)a limited partnership.
C)a partnership.
D)a cooperative.
E)a sole proprietorship.

Question 80

The features of a sole proprietorship include all the following except

A)a lot of government paperwork.
B)simple to form.
C)easy to dissolve.
D)limited resources.
E)unlimited liabilities.