Deck 8: Building the Founding Team

Question 1

Which of the following is perhaps the most critical factor in effective startup teams?

A) Achievement
B) Education
C) Intelligence
D) Communication
E) None of these are correct.

Answer 1

D

Question 2

Many ventures start as _____ where the owners are considered "members" and "managers."

A) S corporations
B) sole proprietorships
C) limited liability companies
D) joint ventures
E) C corporations

Answer 2

C

Question 3

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

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.

Answer 3

B

Question 4

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.

Question 5

Entrepreneurs often suffer from a lack of opportunities.

Question 6

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

Question 7

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

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

Question 8

Boards of publicly owned corporations can be composed of inside or outside members or a combination of the two.

Question 9

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

Question 10

An accountant is an advocate, but a lawyer is bound by rules and ethics that do not permit advocacy.

Question 11

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

Question 12

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

Question 13

The chances of success are greater when the lead entrepreneur and the team share the same _____ for a new venture.

A) responsibilities
B) skills
C) vision
D) network
E) status expectations

Question 14

All of the following are factors that are significant in team composition EXCEPT

A) ecological constraints.
B) functionality.
C) reward structure.
D) homophily.
E) network constraints.

Question 15

In startups, being chief executive officer (CEO) is arguably the best job of all.

Question 16

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

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

Question 17

All of the following are independent contractors that entrepreneurs use on a regular basis EXCEPT

A) consultants.
B) employee leasing firms.
C) manufacturers.
D) distributors.
E) advisory boards.

Question 18

All of the following are part of an entrepreneur's extended network EXCEPT

A) government agencies.
B) personal advisors.
C) manufacturing support.
D) sales support.
E) customers.

Question 19

Research shows that fewer than 25 percent of founders are still the CEO when their company goes public.

Question 20

Which of the following is NOT a professional advisor to an entrepreneur?

A) An attorney
B) A mentor
C) An accountant
D) A banker
E) An insurance agent

Question 21

To ensure compliance with IRS regulations while hiring independent contractors, an entrepreneur should do all of the following EXCEPT

A) indicate the methods of accomplishing the work.
B) indicate the desired result of the work.
C) dr aw up a contract with each independent contractor.
D) verify that the independent contractor possesses the necessary licenses.
E) verify that the independent contractor carries workers' compensation insurance.

Question 22

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

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 23

The entrepreneurial team owns all or the majority of the stock in a

A) publicly held company.
B) privately owned corporation.
C) limited liability company.
D) publicly traded corporation.
E) strategic partnership.

Question 24

A(n) _____ is an informal panel of experts and other people who are interested in seeing a new venture succeed.

A) mentor board
B) startup team
C) virtual team
D) advisory board
E) consulting firm

Question 25

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

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 26

Which of the following is a service that consultants do NOT provide?

A) Training the sales staff and/or management
B) Conducting market research
C) Acting as temporary key management
D) Representing the entrepreneur in any legal actions
E) Conducting research and development

Question 27

In general, founders who bring the idea or seed capital to the venture will receive a premium on the share of stock they receive, typically between _____ and _____ percent.

A) 1; 2
B) 3; 5
C) 5; 10
D) 10; 15
E) 20; 25

Question 28

A(n) _____ consists of individuals who serve as a sounding board for ideas, act as coaches to raise your spirits, and warn you when you are heading down a wrong path.

A) advisory board
B) board of directors
C) founding team
D) personal mentor board
E) professional employer organization (PEO)

Question 29

A board member who is a founder, family member, or retired manager of the firm is a(n)

A) inside board member.
B) outside board member.
C) advisory board member.
D) venture capitalist.
E) angel investor.

Question 30

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

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 31

_____ are parties who own their own businesses and are hired by entrepreneurs to do a specific job.

A) Labor unions
B) Independent contractors
C) Co-operatives
D) Venture capitalists
E) Distributors

Question 32

Which of the following individuals would be the best fit as the chief executive officer (CEO) of a startup?

A) Jamal, a Web developer
B) Katelyn, an engineer
C) Mia, a scientist
D) All of these are correct.
E) None of these are correct.

Question 33

Having a qualified _____ on the advisory team puts a startup in a better position to seek a line of credit for operating capital or a loan to purchase equipment once the business has a track record.

A) accountant
B) auditor
C) banker
D) director
E) attorney

Question 34

Which of the following is NOT a characteristic of communication in an effective team?

A) Each team member spends about the same amount of time talking and listening .
B) Although conversations occur among all the members, the leader should dominate a majority of the discussions .
C) The conversations take place face to face and tend to be energetic and alive .
D) Back-channel or sidebar conversations are typical .
E) Team members often go outside the team to seek information and bring it back to share with the team .

Question 35

A(n) _____ is bound by rules and ethics that do not permit advocacy.

A) banker
B) insurance agent
C) consultant
D) accountant
E) lawyer

Question 36

For his new startup business venture, Amal has hired StaffRight to hire his employees and assume the payroll and human resources functions for his business for a fee. StaffRight is a(n)

A) professional employer organization (PEO).
B) venture capitalist.
C) mentor board.
D) consulting firm.
E) advisory board.

Question 37

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

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.

Question 38

The general recommendation is to have no fewer than _____ and no more than _____ board members.

A) 5; 10
B) 5; 15
C) 10; 15
D) 10; 20
E) 15; 20

Question 39

Compared to a formal board of directors, an advisory board

A) is subject to more scrutiny.
B) has more functions in a closely held corporation.
C) is subject to less scrutiny.
D) is a less costly alternative.
E) has more control in a wholly owned corporation.

Question 40

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

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

Question 41

What role does a mentor board play for an entrepreneur?

Question 42

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

Question 43

What are the functions of the board of directors?

Question 44

What are some reasons why startups fail?

Question 45

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

Question 46

Is there such a thing as a perfect founding team? Describe some characteristics of effective founding teams.

Question 47

How can consultants provide services for a new venture?

Question 48

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

Question 49

Briefly discuss how attorneys can supply a wealth of support for a new venture.

Question 50

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