Deck 3: Entrepreneurship, New Ventures, and Business Ownership

Question 1

In a small business,who determines prices for wholesalers and customers?

A) Customers
B) Franchise owners
C) Market forces
D) Small business administration
E) Small business owners

Answer 1

C

Question 2

Which of the following types of venue is favored by small-business retailers?

A) Superstore
B) Catalog showroom
C) Specialty shop
D) Department store
E) Studio workroom

Answer 2

C

Question 3

The Small Business Administration (SBA)may consider a business with as many as 1500 employees to be small as long as it has low annual revenues.

Answer 3

True

Question 4

Why is it difficult to compare relative job growth for different-sized businesses?

A) Sourcing up-to-date employment figures is difficult.
B) Many small businesses experience rapid unreported growth.
C) Spheres of influence overlap between the small and big business sectors.
D) Staff size of small businesses tends to change faster than staff size of big businesses.
E) It is hard to determine the cutoff point at which a small business becomes a large business.

Question 5

People who assume the risk of business ownership with a primary goal of growth and expansion are called entrepreneurs.

Question 6

What is the process of seeking business opportunities under conditions of risk?

A) Investment
B) Entrepreneurship
C) Leadership
D) Diversification
E) Growth

Question 7

Which of the following can assist a small business and helps to determine standards based on industry?

A) The U.S. Department of Commerce
B) The Small Business Administration
C) A franchise
D) Venture capitalist
E) The Small Business Development Center

Question 8

The Small Business Administration is the government agency charged with owning small businesses.

Question 9

Small businesses produce more patents per employee than large patenting firms.

Question 10

When an entrepreneur has the goals of growth and expansion,with the vision of turning the business into a large business,what term is used when referring to the business?

A) Visionary
B) Small Business
C) Diversification
D) Start-up
E) Expansionist

Question 11

The contribution a small business on the U.S.economy is measured based on its impact to which economic systems?

A) Bank loans, and contributions to big business
B) International trade, interest rates, and the service industry
C) Bank loans and innovation
D) The service industry, the stock market, and job creation
E) Job creation, contributions to big business, and innovation

Question 12

When an investor is not interested in owning their own business,why do they need to understand entrepreneurship?

A) To understand why someone would want to work so hard for a small return
B) To determine the key characteristics of success
C) To understand how to convert a great idea to a profitable idea
D) To assess the market potential for up-and-coming businesses
E) To learn how to set up a business plan

Question 13

What term is most closely associated with enterprises that pursue entrepreneurship with the goal of independence from working for someone else with a reasonable degree of financial security?

A) Vision
B) New ventures
C) Small business
D) LLC
E) Dominance

Question 14

How is the U.S.economy affected by small businesses?

Question 15

Most businesses in the United States are large businesses with more than 500 employees.

Question 16

The U.S.Department of Commerce considers a business "small" if it has fewer than how many employees?

A) 10
B) 50
C) 100
D) 500
E) 1,500

Question 17

Which entity is defined as independent and has little influence on its market?

A) Corporation
B) Joint venture
C) Small business
D) Partnership
E) Government agency

Question 18

Which of the following industry groups is the fastest growing segment of small business enterprise?

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

Question 19

Which of the following BEST defines those who assume the risk of business ownership?

A) Entrepreneurs
B) Customers
C) Corporate partners
D) The Small Business Administration
E) Banks

Question 20

Major innovations are most likely to come from large corporations.

Question 21

Which distinctive competency must an entrepreneur identify when attempting to enter a market segment that is not currently being exploited?

A) The ability to identify new markets
B) The ability to identify niche markets
C) The ability to differentiate themselves from others in the market
D) The ability to gauge prices to get the highest return without driving away customers
E) The ability to move quickly to take advantage of new opportunities

Question 22

What is the major drawback of accepting venture capital?

A) Sharing company control
B) Having to pay high interest rates
C) Limiting expansion
D) Facing a short repayment period
E) Having to write proposals

Question 23

Which of the following are groups of small investors seeking to make profits on companies with rapid growth potential?

A) Community banks
B) Venture capital companies
C) Equity managers
D) Government securities dealers
E) Stock brokers

Question 24

Who constitutes the membership of SCORE?

A) Retired executives
B) Venture capitalists
C) Company officers
D) Commercial lenders
E) Successful entrepreneurs

Question 25

Most successful entrepreneurs have a strong desire to be their own bosses.

Question 26

Which of the following helps entrepreneurs gain skills that are essential for running a business?

A) ESOP
B) SBIC
C) SEC
D) LLC
E) SBA

Question 27

Which of the following is federally licensed to borrow money from the Small Business Administration to invest in or lend to small businesses?

A) SCORE
B) SBICs
C) SBDC
D) FDIC
E) SEC

Question 28

What is the advantage to starting a business from scratch instead of buying an existing business?

A) There is a proven ability to attract customers.
B) Profit is generated sooner.
C) There is a stronger relationship with lenders and other stakeholders.
D) There are no ill-effects from the previous owner.
E) There is a clearer picture of what to expect in terms of start-up.

Question 29

Explain entrepreneurship and describe key entrepreneurial characteristics.

Question 30

What is the MOST important source of money for new business start-ups?

A) Banks
B) The SBA
C) Personal resources
D) Government grants
E) Venture capital

Question 31

Where can a new business owner go to seek help and learn from other institutions and disciplines?

A) The Service Corps of Retired Executives (SCORE)
B) The Small Business Development Center (SBDC)
C) Small business investment companies (SBICs)
D) Venture capitalist
E) Minority Enterprise Small Business Investment Companies (MESBICs)

Question 32

What is considered to be a significant disadvantage of owning a franchise?

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

Question 33

Which key element of a business plan will determine inventory,size of space required,and number of employees needed?

A) Financial planning
B) Comparing existing businesses
C) Sales forecasting
D) Setting goals and objectives
E) Identifying strategies and how to implement them

Question 34

What is the first step in becoming an entrepreneur?

A) Deciding to proceed
B) Formulating a business plan
C) Identifying distinctive competencies
D) Searching for capital to invest
E) Implementing plans and opening

Question 35

Loans are the most important sources of money for new businesses.

Question 36

What does an entrepreneur use to summarize his or her business strategy for a proposed new venture?

A) Success chart
B) Director's guideline
C) Financial blueprint
D) Business plan
E) Balance sheet

Question 37

Lending institutions are more likely to help finance the purchase of an existing business rather than the start-up of a business from scratch.

Question 38

A business plan demonstrates how an entrepreneur's business strategy will be implemented.

Question 39

What does a start-up company need in order to estimate the required size of a plant,store,or office,inventory levels,and size of staff?

A) Sales forecast
B) Tax estimate
C) Business objective
D) Stock options
E) Funding source

Question 40

What is first mover advantage?

A) The concept that the first in the market will make the most money
B) The concept that a firm who exploits an opportunity before others has an advantage
C) The concept that there is an advantage in leaving a market when it becomes flooded
D) The concept that large organizations cannot take advantage of an opportunity as quickly as an entrepreneur
E) The concept that there is more risk being first, but also more reward, if successful

Question 41

What is a major drawback of sole proprietorships?

A) Short-term focus of shareholders
B) Work flexibility
C) Low start-up costs
D) Unlimited liability
E) Structured hours

Question 42

A new business should have enough capital to operate at least how many months without earning a profit?

A) 1
B) 2
C) 4
D) 6
E) 9

Question 43

Small-business investment companies (SBICs)may be sponsored by the federal government.

Question 44

Neglect is a major factor that contributes to small business failure.

Question 45

Discuss four sources of financing for starting up a small business.

Question 46

What are the advantages and disadvantages for a franchisee?

Question 47

The number of minority-owned businesses has decreased in recent years.

Question 48

The Small Business Development Center provides micro loan programs for members.

Question 49

In which business sector are cooperatives still important?

A) Manufacturing
B) Automotive
C) Public utilities
D) Agriculture
E) Health care

Question 50

Which of the following is the MOST significant recent trend in small-business start-ups?

A) Entrepreneurs who cross over from big business
B) Increased opportunities for minorities
C) Increased opportunities for women
D) Emergence of e-commerce
E) Global economic downturn

Question 51

Which of the following types of businesses is MOST common in the United States?

A) Sole proprietorships
B) General partnerships
C) Cooperatives
D) Corporations
E) Limited partnerships

Question 52

What is the MOST effective way for an entrepreneur to become a competent manager?

A) Working alone
B) Relying on luck
C) Getting a college degree
D) Being open to opportunities
E) Working for a successful company first

Question 53

A group of small investors who invest money in companies in return for partial ownership is known as a small-business development company.

Question 54

Which of the following factors MOST contributes to small business failure?

A) Managerial incompetence or inexperience
B) Bad product design
C) Legal problems
D) Time spent raising capital
E) Personnel issues

Question 55

Which of the following legal forms of business is owned and usually operated by a single person who is responsible for its debts?

A) Cartel
B) Corporation
C) General partnership
D) Sole proprietorship
E) Limited partnership

Question 56

The failure rate among small businesses has been increasing in recent years.

Question 57

Many new businesses are started by people who have left big corporations.

Question 58

Why might an entrepreneur wish to purchase an existing business rather than start one from scratch?

Question 59

Franchisees may be obligated to contribute a percentage of sales to parent corporations.

Question 60

Which of the following represents the fastest-growing segment of minority business ownership?

A) African Americans
B) Asians
C) Hispanics
D) Pacific Islanders
E) Europeans

Question 61

Which of the following is an advantage of sole proprietorships?

A) Ease in attracting a silent partner
B) Sales and expenses are treated as part of personal finances
C) It is easier to borrow money.
D) There is increased continuity
E) Bills are paid out of pocket

Question 62

Low start-up costs and tax benefits are advantages of sole proprietorships.

Question 63

What resources does a sole proprietorship primarily depend on?

A) The corporation
B) Foreign investors
C) Capital markets
D) Those of the owner
E) A committed clientele

Question 64

What type of business has two or more owners who share in the operation of the firm and are financially responsible for its debts?

A) Corporation
B) Partnership
C) Cooperative
D) Conglomerate
E) Nonprofit

Question 65

What is the MOST common type of partnership?

A) Limited partnership
B) Corporate partnership
C) General partnership
D) Sole partnership
E) Cooperative partnership

Question 66

The least common type of partnership is the general partnership.

Question 67

Which of the following describes an investor in a business who is liable for some of its debt,but has no active role in its operation?

A) General partners
B) Unlimited partners
C) Master partners
D) Limited partners
E) Minority partners

Question 68

When a business owner forms a master limited partnership,what responsibilities does the master partner have toward the minority partner(s)?

A) The master partner must provide detailed operating and financial reports.
B) The master partner must allow the partners to decide all major business changes and transactions.
C) The master partner must make all liabilities clear before the partnership is formed.
D) The master partner must give up majority ownership.
E) The master partner must allow the partners to take an active role in the business.

Question 69

What is the MOST important advantage of general partnerships?

A) The unlimited liability of the partnership
B) The ability to grow with the addition of new talent and money
C) The ease of implementing an effective control system
D) The increased role of luck
E) The need for minority partners

Question 70

By law,each general partner is liable for all debts incurred in the name of the partnership.

Question 71

Describe three disadvantages of operating a business as a sole proprietorship.

Question 72

Which of the following is a partner who actively manages a firm and has unlimited liability for its debts?

A) Limited partner
B) General partner
C) Stockholding partner
D) Public partner
E) Silent partner

Question 73

In what type of ownership is an owner liable for debt,but only based on how much they invested?

A) Master limited partnership
B) Cooperative
C) Limited partnership
D) Corporation
E) General partnership

Question 74

What type of partner invests all funds in the organization but plays no role in its management?

A) Limited partnership
B) General partner
C) Silent partner
D) Active partner
E) Master limited partnership

Question 75

What do both sole proprietorships and partnerships lack?

A) Trust
B) Legal standing
C) Continuity
D) Shared vision
E) Adaptable processes

Question 76

If a business owner needs money for expansion,but does not want to give up sole control over the business,what type of partnership would be best?

A) General partnership
B) Limited partnership
C) Active partnership
D) Master limited partnership
E) Cooperatives

Question 77

Who invests all of the funds needed for a business but plays no role in its management?

A) Silent partner
B) Sole proprietor
C) General partner
D) Principal
E) Director

Question 78

What type of partnership allows an organization to sell shares of the partnership to investors on a public market?

A) General partnership
B) Limited partnership
C) Cooperative
D) Master limited partnership
E) Unlimited partnership

Question 79

Which of the following will force a sole proprietorship to be legally dissolved?

A) Sales exceed $1 million.
B) The partners reorganize the firm's structure.
C) Earnings are less than $500,000.
D) The owner donates profits.
E) The owner dies.

Question 80

The choice of legal ownership of a small business should be based on what?

A) Goals of the entrepreneur
B) Tax advantages
C) Stakeholders needs
D) Legal liability
E) Ease of launch