Deck 5: Small Business, Entrepreneurship, and Franchises

Question 1

How does the SBA define a small business?

Answer 1

Answer not provided.

Question 2

What do small businesses as a group contribute to the U.S. economy?

Answer 2

Answer not provided.

Question 3

Is opening your own business usually a way to make big profits quickly? Support your view.

Answer 3

Answer not provided.

Question 4

Why are more small businesses in distribution industries than in production industries?

Question 5

Why should small-business owners have good skills in working with people?

Question 6

The textbook gives several key reasons for business failure. Poorly planned expansion and the wrong location are two of them. How do these two factors contribute to business failure?

Question 7

How quickly can a small business respond to a new competitor moving into the same block? Why?

Question 8

Give examples to support the statement, "There must be some motivation to start a business."

Question 9

Data from 2012 from the Small Business Administration shows women-owned businesses as a dominate part of the U.S. economy. What were some of the findings of that data? What makes women successful business owners?

Question 10

What are the advantages of owning a small business? Give examples.

Question 11

What is a small-business development center (SBDC)?

Question 12

Give examples of how small businesses fill needs of society and other businesses.

Question 13

What does it mean to have an entrepreneurial spirit?

Question 14

What are the disadvantages of owning a small business?

Question 15

Why are small businesses prone to failure?

Question 16

What is a business plan? What are its components? Why is it so important?

Question 17

What skills might someone who is starting a new small business need?

Question 18

Why do certain industries tend to be more attractive for the start-up of a small business?

Question 19

How can small businesses challenge larger, established firms?

Question 20

What are some industries that attract small businesses?

Question 21

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant. Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally. The company hired an international agency to help it learn what and what not to do. After the agency met with the managers of Mc-King a few times, the Mc-King management decided it would go ahead with its decision to expand internationally.
Refer to Mc-King Chicken. When Brian opens the Mc-King Chicken restaurant in his town, he would be known as the

A) franchisor.
B) franchising.
C) franchise.
D) franchisee.
E) franchises.

Question 22

What is the Small Business Administration? Who created it?

Question 23

Why is the failure rate lower for franchises than for independent businesses?

Question 24

What is the Service Corps of Retired Executives (SCORE)? How does it assist small-business owners?

Question 25

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started her job, she noticed several things as causes of the business not doing as well as the owners were expecting. Angela has been thinking of starting her own small business because she feels she has learned a great deal through working for Personal Wellness.
Due to her education, attention to detail, and organization skills, Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would help organize, structure, and focus the business. As part of the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company as she is concerned that her leaving the company may be detrimental to the slow, but forward, progress that the company is making and her connection with the owners is strong. Angela's most immediate concern is keeping the business from failing.
Refer to Personal Wellness. In preparing the business plan, Angela would have incorporated all of these components except

A) company and industry descriptions.
B) an exit strategy.
C) government regulations.
D) benefits to the community.
E) a marketing plan.

Question 26

How has the SBA targeted providing assistance to women? What resources are available to women-owned businesses and why?

Question 27

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started her job, she noticed several things as causes of the business not doing as well as the owners were expecting. Angela has been thinking of starting her own small business because she feels she has learned a great deal through working for Personal Wellness.
Due to her education, attention to detail, and organization skills, Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would help organize, structure, and focus the business. As part of the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company as she is concerned that her leaving the company may be detrimental to the slow, but forward, progress that the company is making and her connection with the owners is strong. Angela's most immediate concern is keeping the business from failing.
Refer to Personal Wellness. Personal Wellness can be classified as operating in what type of industry?

A) Service
B) Production
C) Manufacturing
D) Distribution
E) Wholesaling

Question 28

Why is helping women become entrepreneurs a special goal of the SBA?

Question 29

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant. Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally. The company hired an international agency to help it learn what and what not to do. After the agency met with the managers of Mc-King a few times, the Mc-King management decided it would go ahead with its decision to expand internationally.
Refer to Mc-King Chicken. Which of the following would not be an advantage of a franchise?

A) He gains fast and well-controlled distribution.
B) He has more capital available to expand.
C) Outlets are maintained and operated according to a set plan.
D) He has the opportunity to start a business with limited capital.
E) Success will cause another outlet to be opened nearby.

Question 30

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant. Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally. The company hired an international agency to help it learn what and what not to do. After the agency met with the managers of Mc-King a few times, the Mc-King management decided it would go ahead with its decision to expand internationally.
Refer to Mc-King Chicken. Which of the following would be an advantage for Brian?

A) Guidance from the franchisor
B) Franchise holders paying for their security
C) Disagreements increasing
D) Contract disputes
E) The franchisor maintaining a great deal of control

Question 31

What is the primary function of SBA financial assistance?

Question 32

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started her job, she noticed several things as causes of the business not doing as well as the owners were expecting. Angela has been thinking of starting her own small business because she feels she has learned a great deal through working for Personal Wellness.
Due to her education, attention to detail, and organization skills, Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would help organize, structure, and focus the business. As part of the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company as she is concerned that her leaving the company may be detrimental to the slow, but forward, progress that the company is making and her connection with the owners is strong. Angela's most immediate concern is keeping the business from failing.
Refer to Personal Wellness. What is the least likely reason that Personal Wellness would possibly fail?

A) Capital
B) Employees
C) Management
D) Money
E) Planning

Question 33

What are the advantages and disadvantages to the franchisee of having a franchise?

Question 34

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started her job, she noticed several things as causes of the business not doing as well as the owners were expecting. Angela has been thinking of starting her own small business because she feels she has learned a great deal through working for Personal Wellness.
Due to her education, attention to detail, and organization skills, Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would help organize, structure, and focus the business. As part of the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company as she is concerned that her leaving the company may be detrimental to the slow, but forward, progress that the company is making and her connection with the owners is strong. Angela's most immediate concern is keeping the business from failing.
Refer to Personal Wellness. When Angela suggested that the company contact a group, what type of group was she referring to?

A) Strategic institute
B) Small-business institute
C) HR institute
D) Management institute
E) Business institute

Question 35

What can the Small Business Administration do for a small business?

Question 36

What are small-business investment companies?

Question 37

Is franchising a guarantee of success? Explain.

Question 38

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started her job, she noticed several things as causes of the business not doing as well as the owners were expecting. Angela has been thinking of starting her own small business because she feels she has learned a great deal through working for Personal Wellness.
Due to her education, attention to detail, and organization skills, Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would help organize, structure, and focus the business. As part of the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company as she is concerned that her leaving the company may be detrimental to the slow, but forward, progress that the company is making and her connection with the owners is strong. Angela's most immediate concern is keeping the business from failing.
Refer to Personal Wellness. A business plan should answer all of the following questions except

A) "Which accounting firm will audit the company?"
B) "What exactly is the nature and mission of the new venture?"
C) "Why is this new enterprise a good idea?"
D) "How much will the new venture cost?"
E) "What are the entrepreneur's goals?"

Question 39

What is a franchise? What are the major types of franchising arrangements?

Question 40

What is a small-business institute? How does it help small-business owners?

Question 41

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant. Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally. The company hired an international agency to help it learn what and what not to do. After the agency met with the managers of Mc-King a few times, the Mc-King management decided it would go ahead with its decision to expand internationally.
Refer to Mc-King Chicken. The international agency advising Mc-King would have made which of the following recommendations?

A) Be aware that less money is needed to fund international operations.
B) Remember that strong local management is needed to keep an international franchise going.
C) Plan for the local competition to be weak.
D) Assume that customers everywhere need or want what the franchise offers.
E) Expect hiring, training, and marketing practices to be identical in all countries.

Question 42

To qualify as a small business, a manufacturing plant can employ no more than ____ people.

A) 500
B) 1,000
C) 2,000
D) 3,000
E) 3,500

Question 43

What is the primary reason that so many new businesses fail?

A) Owner does not work hard enough
B) Mismanagement resulting from lack of business know-how
C) Low employee quality for new businesses
D) Lack of brand-name recognition
E) Inability to compete with well-established brand names

Question 44

To qualify as a small business, a retailing establishment may not exceed annual sales of

A) $1.2 million to $4 million.
B) $2.6 million to $5 million.
C) $3 million to $6 million.
D) $7 million.
E) $12.5 million.

Question 45

Which of the following would least likely be started as a small business?

A) Flower shop
B) Restaurant
C) Electricity company
D) Landscaping business
E) Furniture repair store

Question 46

Michael Tucker operates Tucker Farms in northern Illinois. Last year, his annual receipts were just under $750,000. According to the Small Business Administration, Tucker Farms is a

A) small business.
B) medium-sized business.
C) large business.
D) franchise.
E) joint venture.

Question 47

To qualify as a small business, an agricultural company's maximum annual receipts must be no more than

A) $500,000.
B) $9 million.
C) $800,000.
D) $1 million.
E) $750,000.

Question 48

A company generally needs more than ____ employees in order to be considered large.

A) 50
B) 100
C) 300
D) 500
E) 1,000

Question 49

Ben has been thinking about going into business. However, he has discounted entering automobile manufacturing because it

A) requires little skill and knowledge.
B) is not a part of the production industry.
C) requires huge investments in machinery and equipment.
D) is unprofitable.
E) requires by law a corporate form of business.

Question 50

Approximately what percentage of the jobs in the United States do small businesses provide?

A) 5 percent
B) 10 percent
C) 30 percent
D) Over 50 percent
E) Nearly 90 percent

Question 51

A small business is all of the following except

A) independently owned.
B) operated for profit.
C) dominant in its field.
D) difficult to manage.
E) demanding of the owner's time and attention.

Question 52

Approximately how many businesses are there in the United States?

A) 960,000
B) 11.8 million
C) 27.5 million
D) 1.05 billion
E) 4 billion

Question 53

Which of the following organizations would be considered a small business?

A) Producer of semiconductors with 2,000 employees
B) Wholesaler with 50 employees
C) Retail clothing store chain with annual sales of $26 million
D) Construction company with average annual receipts of $32 million
E) Farmer with annual receipts of $10 million

Question 54

Mary's cleaning business has several customers but is not dominant in its field. This is an example of a(n) ____ business.

A) entrepreneurship
B) unsuccessful
C) small
D) manufacturing
E) large corporate

Question 55

Businesses such as flower shops, restaurants, bed and breakfasts, and automobile repair are good candidates for entrepreneurs because they

A) do not require any skills.
B) are the most likely to succeed.
C) can obtain financing easily.
D) require no special equipment.
E) have a relatively low initial investment.

Question 56

Which of the following is not considered a category in the distribution industries?

A) Manufacturing
B) Wholesaling
C) Retailing
D) Transportation
E) Communications

Question 57

Price Waterhouse, a large accounting firm, would be most properly classified in the ____ industry, whereas a grocery store such as Kroger would be included in the ____ industry.

A) distribution; production
B) service; distribution
C) production; service
D) service; production
E) distribution; service

Question 58

According to a recent survey, approximately what percentage of all new businesses can be expected to survive their first ten years?

A) 16
B) 23
C) 31
D) 46
E) 52

Question 59

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant. Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally. The company hired an international agency to help it learn what and what not to do. After the agency met with the managers of Mc-King a few times, the Mc-King management decided it would go ahead with its decision to expand internationally.
Refer to Mc-King Chicken. The international agency advising Mc-King would have recommended that it do all of the following except

A) understand the laws and regulations governing franchising in each country.
B) understand that management must be from the home country to teach the new employees the way things are done.
C) thoroughly research the competitive situation.
D) check trade laws before buying a franchise in another country.
E) find out what support the franchisor offers in each country.

Question 60

Businesses are generally placed into three broad categories: service industries, production industries, and ____ industries.

A) financial
B) manufacturing
C) distribution
D) transportation
E) retailing

Question 61

Which of the following is the most likely example of a production industry?

A) Wholesale outlet
B) Retail outlet
C) Financial enterprise
D) Subassembly plant
E) Transportation company

Question 62

Nathan's business constructs storage sheds for new housing developments as requested by the builders. Nathan's business would best be classified as a

A) service business.
B) retailer.
C) distribution business.
D) production business.
E) wholesaler.

Question 63

An individual's desire to create a new business is referred to as

A) the entrepreneurial spirit.
B) the desire for ownership.
C) self-determination.
D) self-evaluation.
E) the laissez-faire spirit.

Question 64

The main reason there are fewer production industries than distribution or service industries is that

A) there are few things production industries manufacture.
B) production industries have no market.
C) production industries need a large initial investment.
D) there is little chance for profit in production industries.
E) few people want to work in production industries.

Question 65

Which of the following is not a reason for starting a small business?

A) Desire to determine one's own destiny
B) Willingness to find and accept a challenge
C) Desire for a guaranteed financial return
D) Desire for independence
E) Desire to create a new business

Question 66

Distribution industries account for approximately what percentage of all small businesses?

A) 20
B) 25
C) 33
D) 55
E) 70

Question 67

All of the following are reasons people go into business except the

A) desire to create a new business.
B) willingness to accept a challenge.
C) guaranteed return on investment.
D) desire for independence.
E) desire to determine one's own destiny.

Question 68

Small businesses are typically managed by

A) relatives.
B) professional managers.
C) friends.
D) the people who start and own them.
E) a board of directors.

Question 69

Service industries account for ___ percent of all small businesses.

A) 29
B) 29
C) 48
D) 58
E) 66

Question 70

Dana owns and operates a catering business. This is an example of a

A) distribution business.
B) production business.
C) service business.
D) retailer.
E) manufacturer.

Question 71

By age 26, Tom was a plant manager in the snack-foods division. By 33, he headed the division, one of the most profitable in the corporation. Eventually, however, the company decided to move its corporate offices. Although he loved the job and thought the work was great, Tom's lifestyle was awful. He was on the road so often that he was giving up much of his family life. Tom had also become disenchanted with corporate life. He saw that the closer one got to the top, the more vulnerable one's position became. Thus, Tom left the corporation to start his own snack-foods company. His thoughts and actions most clearly reveal his

A) entrepreneurial spirit.
B) need for independence.
C) desire to determine his own destiny.
D) willingness to find and accept a challenge.
E) lack of self-confidence.

Question 72

Kim Nguyen is planning to open a boutique stocked with exotic imports from around the world. Most probably, this new business will be managed by

A) Kim Nguyen.
B) her friends.
C) her relatives.
D) a professional manager.
E) her family.

Question 73

Which of the following would most likely be classified as a distribution industry?

A) Subassembly plant
B) TV repair shop
C) Insurance agency
D) Grocery store
E) Medical office

Question 74

The industry concerned with the movement of goods from producer to consumer is

A) service.
B) distribution.
C) production.
D) agriculture.
E) wholesaling.

Question 75

Of the small businesses in the distribution industry, nearly three-quarters of them are involved in

A) wholesaling.
B) purchasing.
C) service.
D) retailing.
E) communications.

Question 76

Which of the following is the most likely example of a production industry?

A) Telephone company
B) Movie theaters
C) Financial enterprise
D) Subassembly plant
E) Transportation company

Question 77

Production industries make up approximately what percentage of all small businesses?

A) 5
B) 10
C) 19
D) 31
E) 41

Question 78

Joe decides to start his own business designing websites for other businesses. Joe's business would be classified as a

A) distribution business.
B) retailer.
C) production business.
D) wholesaling business.
E) service business.

Question 79

Megan's business sells souvenirs and craft items to tourists in Myrtle Beach, South Carolina. This is an example of a ____ business.

A) service
B) communication
C) production
D) distribution
E) wholesaling

Question 80

Mustaffah always knew he wanted to start his own business. He was very passionate and wanted to create something new. Mustaffah's primary motivation for starting his own business is

A) his need for independence.
B) his entrepreneurial spirit.
C) his desire to determine his own destiny.
D) the lack of good jobs in other companies.
E) his background with his family.