Deck 6: Managing Small Business Start-Ups

Question 1

Entrepreneurs are able to deal easily with delays and exhibit high levels of patience, knowing that the results will be worth the wait.

Answer 1

False

Question 2

Although researchers disagree over the percentage of new jobs created by small business, it is clear that small business is a job creation engine that is far ahead of large firms in the United States.

Answer 2

True

Question 3

The fastest growing segement of small business in both the U.S. and Canada is partnerships.

Answer 3

False

Question 4

Majority of entrepreneurs, according to a survey, work approximately 80 hours or more per week.

Question 5

Tolerance for ambiguity is the psychological characteristic that allows a person to be untroubled by disorder and uncertainty.

Question 6

Advances in technology, given the high cost, inhibits small companies to compete in a global economy.

Question 7

Thirty-four percent of small businesses fail within two years of opening.

Question 8

Entrepreneurship refers to the process of initiating a business venture, gathering and organizing the appropriate resources, and assuming the associated risks and rewards.

Question 9

Generally speaking, entrepreneurs are in more control of their environment and can be expected to have an external locus of control.

Question 10

An unincorporated business owned by two or more people is called a proprietorship.

Question 11

A business plan is a document specifying the business details prepared by an entrepreneur prior to opening a new business.

Question 12

Hard workers, who thrive on the challenge of building a larger more profitable business, consist of 20% of small business owners.

Question 13

Since a corporation is a legal structure reserved for large firms, small businesses have two basic choices for legal structure of their company: proprietorship and partnership.

Question 14

According to the Small Business Administration, small businesses employ more than 90 percent of the private workforce in the United States and are responsible for 85 percent of all business innovations.

Question 15

The fastest growing segement of small business in both the U.S. and Canada is sole proprietorships.

Question 16

Every time Patricia Fuller does poorly on an exam and blames some outside factor, she can be described as having an external locus of control.

Question 17

Women and minorities who have found their opportunities limited in the corporate world are seeing intrapreneurship as the only way to go.

Question 18

Retail, manufacturing and/or service type of businesses are the primary focus of most entrepreneurs.

Question 19

A tolerance for ambiguity is a psychological characteristic that enables a person to accept the threat of competition and potential risk.

Question 20

People who have high achievement needs like to set their own goals, which are moderately difficult.

Question 21

The largest sources for new business ideas come from in-depth understanding of an industry or profession and market niches that are not being filled.

Question 22

A business incubator is an independent company producing a product or service similar to that produced by the entrepreneur's former employer.

Question 23

The last of the five stages of growth for an entrepreneurial company is the resource maturity stage.

Question 24

Borrowing money that has to be repaid at a later date in order to start a business is equity financing.

Question 25

Entrepreneurs in the sustainer category alike the chance to balance work and personal life and often don't want the business to grow too large.

Question 26

Social entrepreneurs have a primary goal of improving society rather than maximizing profits.

Question 27

The first stage of growth for an entrepreneurial company is the investment stage.

Question 28

Entrepreneurs in the optimizer category are rewarded by the personal satisfaction of being business owners.

Question 29

Borrowing from family and friends is a common source of debt financing for a start-up business.

Question 30

Unlocking Innovative Solutions through PEOPLE in Chapter 6 describes how White Dog Enterprises does well by doing good. Owner Judy Wicks believes all business should strive to be humane, sustainable, small, and local.

Question 31

Social entrepreneurship combines the creativity, business smarts, passion, and hard work of the traditional entrepreneur with a mission to change the world for the better.

Question 32

The fastest growing segment of small business is sole proprietorships.

Question 33

The drawbacks of proprietorship include unlimited liability and difficulty in obtaining financing.

Question 34

An attractive innovation for entrepreneurs who want to start a business from scratch is to join a business incubator.

Question 35

A franchise is a business opportunity that provides shared office space, shared secretarial assistance, management support services, and management advice to entrepreneurs.

Question 36

In the start-up stage of an entrepreneurial business, formal planning tends to be nonexistent except for the business plan.

Question 37

In the survival stage of growth, the main problems are producing the product or service and obtaining customers.

Question 38

When funds are invested in exchange for ownership in the company, it is called equity financing.

Question 39

Entrepreneurs in the sustainer category are rewarded by the personal satisfaction of being business owners.

Question 40

Continuity and limits on the owners' liability are two principle advantages of forming a corporation.

Question 41

By Stage 3 of growth for an entrepreneurial firm, the owner should start implementing more structured control systems.

Question 42

Mike's Bikes believes that each of the employee should enjoy the idea of working on something that is new, creative, or personally meaningful. Mike's Bikes would describe which of the categories of small business owners?

A) Optimizers
B) Idealists
C) Hard workers
D) Sustainers
E) Jugglers

Question 43

An entrepreneur

A) assumes the risks of the business.
B) reaps the rewards of the business.
C) assumes the financial and legal risks of ownership.
D) recognizes a viable idea for a business product or service and carries it out.
E) all of these.

Question 44

All of the following are reasons that account for the reversal of the long-term trend toward ever-larger companies EXCEPT

A) economic changes.
B) globalization and increased competition.
C) technology.
D) new opportunities and market niches.
E) government changes.

Question 45

Someone who recognizes a viable idea for a business product or service and carries it out is referred to as a(n)

A) intrapreneur.
B) entrepreneur.
C) manager.
D) leader.
E) introvert.

Question 46

If a small business owner enjoys the chance to balance work and personal life, he would be considered a(n)

A) idealist.
B) optimizer.
C) hard worker.
D) juggler.
E) sustainer.

Question 47

Which of the following demographic factors distinguish entrepreneurs from others?

A) They are likely the youngest child in their family.
B) Most entrepreneurs launch their businesses between the ages of 35 and 55.
C) Their parents likely worked for large companies.
D) They are likely the children of immigrants.
E) All of these.

Question 48

Alexandria Flanagan strongly believes in her abilities and feels that she controls her own destiny. She can be described as having a(n)

A) tolerance for ambiguity.
B) internal locus of control.
C) external locus of control.
D) low energy level.
E) awareness of passing time.

Question 49

__________ is the belief by individuals that their future is not within their control but rather is influenced by external forces.

A) Awareness of passing time
B) Tolerance for ambiguity
C) Internal locus of control
D) External locus of control
E) Deferred locus of control

Question 50

Which of these, according to the Small Business Administration, defines a business?

A) It has fewer than 500 employees.
B) It has sales less than $5 million a year.
C) It has fewer than $100 million in assets.
D) The SBA's definition of small business includes employee numbers and assets.
E) It has fewer than 50 employees and $1 million in sales.

Question 51

Of these characteristics, which is associated with entrepreneurship?

A) A high need for power
B) A high need for affiliation
C) An internal locus of control
D) An external locus of control
E) Low energy level

Question 52

__________ is the process of starting a business venture, organizing the resources, and taking the risks.

A) Intrapreneurship
B) Entrepreneurship
C) Small business administration
D) Venture capital
E) Equity financing

Question 53

Today, inspired by the growth of companies such as Amazon.com, entrepreneurs are flocking to the __________ to start new businesses.

A) Small Business Administration
B) Internet
C) bookstore
D) mall
E) Internal Revenue Service

Question 54

All of these are entrepreneurial characteristics EXCEPT

A) self-confidence.
B) tolerance for ambiguity.
C) external locus of control.
D) high energy level.
E) awareness of passing time.

Question 55

The majority of owners of new businesses work

A) between 40 and 50 hours per week.
B) less than 40 hours per week.
C) more than 60 hours per week.
D) more than 75 hours per week.
E) more than 90 hours per week.

Question 56

At Stage 3 of growth for an entrepreneurial firm, managers often are hired to take over duties performed by the owner.

Question 57

Which of these refers to the belief by individuals that their future is within their control and that external forces will have little influence?

A) Awareness of passing time
B) Tolerance for ambiguity
C) Internal locus of control
D) External locus of control
E) Deferred locus of control

Question 58

__________ is the type of business that most entrepreneurs start.

A) Retail
B) Manufacturing
C) Service
D) All of these
E) Retail and manufacturing only

Question 59

The belief by individuals that their future is not within their control, but rather is influenced by some external force is considered

A) an external locus of control.
B) an internal locus of control.
C) a result of a need to achieve.
D) a tolerance for ambiguity.
E) a result of a boost of self-confidence.

Question 60

Being interested in computers, Jim Johnson came up with an idea of personalizing the screen saver programs with family pictures. After trying a couple of programs, Jim started marketing this service to neighbors and area businesses. Jim's activities can be described as a(n)

A) entrepreneurship.
B) intrapreneurship.
C) useless idea.
D) large business.
E) partnership.

Question 61

Mary Lou likes to set her own goals, which have an intermediate level of difficulty. Which of the entrepreneurial characteristics does she probably possess?

A) A high need for achievement
B) A high need for power
C) An external locus of control
D) An inability to deal with uncertainty
E) Intolerance for ambiguity

Question 62

A(n) __________ is an unincorporated business owned by two or more.

A) partnership
B) proprietorship
C) corporation
D) association
E) trade alliance

Question 63

In order to be a successful entrepreneur,

A) an individual must have certain skills.
B) an individual must have experience.
C) there must be a need in the marketplace.
D) all of these
E) an individual must have certain skills and certain experience.

Question 64

Which of the following is NOT an appropriate legal structure for an entrepreneurial company?

A) Proprietorship
B) Corporation
C) Partnership
D) Trade alliance
E) All of these are appropriate legal structures for an entrepreneurial company.

Question 65

What is the primary goal of the social entrepreneur?

A) maximizing profits
B) improving society
C) reaching social circles
D) finding funding
E) writing grants

Question 66

__________ refers to an unincorporated business owned by an individual for profit.

A) Partnership
B) Proprietorship
C) Corporation
D) Association
E) Trade alliance

Question 67

Entrepreneurs tend to

A) need clear instructions.
B) like specific instructions.
C) be impatient.
D) lack self-confidence.
E) have low energy level.

Question 68

One of the first characteristics or points of a successful business plan is

A) a profile of potential customers and market needs.
B) demonstrate a clear, compelling vision that creates an air of excitement.
C) the key ingredient of the business that will attract million of customers.
D) the entrepreneur's background and role in the company.
E) essential information about funding received so far.

Question 69

A(n) __________ has a legal life of its own.

A) partnership
B) proprietorship
C) corporation
D) association
E) trade alliance

Question 70

According to Manager's Shoptalk in Chapter 6, successful business plans generally share which of these characteristic(s)?

A) Provide ambiguous financial projections
B) Keep the plan short-no more than 50 pages
C) Include limited information about the target market
D) Avoid information about competitors
E) Exclude the sources and uses of start-up funds

Question 71

Before opening his own business, Tanaka was writing a report that details the specifics of his ideas and future business operations. This document is known as

A) a SWOT analysis.
B) a business portfolio.
C) a business plan.
D) a competitive analysis.
E) a mission statement.

Question 72

Taryn is a very good middle manager. However, she has long wanted to open her own business. Which of Taryn's characteristics is not consistent with entrepreneurship?

A) Taryn has high self-confidence.
B) Taryn tends to put things off till later.
C) She is untroubled by uncertainty.
D) She has a high energy level.
E) She has high need to achieve.

Question 73

A(n)______ is a popular small business form because it is easy to start and has few legal requirements.

A) partnership
B) proprietorship
C) corporation
D) association
E) trade alliance

Question 74

The most cited source of new business ideas is

A) brainstorming.
B) in-depth understanding of industry/profession.
C) a hobby.
D) copying someone else.
E) none of these.

Question 75

The drawback(s) of proprietorship include

A) the unlimited liability of the partners.
B) conflicts with partners.
C) existence regardless of whether the owners live or dies.
D) difficulty in obtaining financing.
E) complexity and cost.

Question 76

Annu believes that such things as luck or chance will determine her future success. Annu has

A) an internal locus of control.
B) a high need for achievement.
C) a tolerance for ambiguity.
D) an external locus of control.
E) high level of self-confidence.

Question 77

Raj Shah started his one-man consulting business under the name Shah Associates. The legal structure for the company can best be described as a(n)

A) proprietorship.
B) partnership.
C) trade alliance.
D) corporation.
E) one man operation.

Question 78

Conchita, Kibwana, and Ravi started selling computer software on college campuses under the name Student Software Company. Each person contributed $1500 toward start-up costs and agreed on dividing costs and profits equally. The legal structure for the company can best be described as a

A) proprietorship.
B) partnership.
C) trade alliance.
D) corporation.
E) None of these.

Question 79

__________ means that people are motivated to excel and pick situations in which success is likely.

A) External locus of control
B) Tolerance for Ambiguity
C) Awareness of passing time
D) Internal locus of control
E) Need to achieve

Question 80

__________ is the psychological characteristic that allows a person to be untroubled by disorder and uncertainty.

A) Tolerance for ambiguity
B) External locus of control
C) Need to achieve
D) Awareness of passing time
E) Internal locus of control