Deck 5: The Challenges of Starting a Business

Question 1

The success of small businesses in fostering creativity has caused many large companies to respond by downsizing in order to act more like small companies.

Answer 1

True

Question 2

According to the Small Business Administration, one of the most common reasons for starting a business is to _____.

A) be your own boss
B) develop managerial skills
C) achieve financial security
D) manage team-oriented projects

Answer 2

A

Question 3

Clarke Santiago and his wife Teresa, parents of two children, opened a buffet restaurant last year. They've been so successful with their family-style atmosphere that some investor friends have offered funding to expand into two additional locations. The investors also want to consider opening several more restaurants each year. After thinking it over, the Santiagos decided to stick with one restaurant and add catering services-a move that should provide them with a satisfactory income. The Santiagos' business is a good example of a _____.

A) lifestyle business
B) start-up business
C) sole proprietorship
D) franchise

Answer 3

A

Question 4

Over the last two decades, women have become the majority of small business owners.

Question 5

A(n) _____ is someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it.

A) executive
B) marketer
C) entrepreneur
D) small business owner

Question 6

There are more than 40 million small businesses in the United States.

Question 7

It is unlikely that you'd decide to set up a new company to make cars.

Question 8

Which of the following is not a reason that prevents some people from starting a business?

A) Don't want to sacrifice a steady income
B) Don't have the money to start a business
C) Lack of a good business idea
D) To enjoy creative freedom

Question 9

The success of small businesses in fostering creativity has gone unnoticed by big businesses.

Question 10

The purpose of starting a business is to satisfy customers.

Question 11

Entrepreneurs typically stay their charted courses rather than cater to changing situations.

Question 12

Entrepreneurs usually start with few resources but build their businesses with the collective help of family members and investors.

Question 13

Innovators at large businesses are the primary driving force behind the discovery of new ways of doing old things.

Question 14

Entrepreneurs usually start _____, beginning with _____ resources.

A) at the bottom / limited
B) small / limited
C) independently / specialized
D) small / patented

Question 15

At the end of the day, entrepreneurs' successes will depend on their ability to manage and grow the organizations that they created to implement their visions.

Question 16

Which of the following best describes entrepreneurs?

A) They're usually onetime managers who open up a business for the sole purpose of providing an income for themselves and their family
B) They're retired businesspeople working on a voluntary basis.
C) They're risk takers who can adjust to changing situations.
D) None of the above

Question 17

Explain why some individuals become entrepreneurs.

Question 18

While many _____ ventures are based on innovative ideas, others revolve around improvements to existing goods or services.

A) franchise
B) not-for-profit
C) governmental
D) entrepreneurial

Question 19

Which of the following is not a characteristic of an entrepreneur?

A) Is confident in their innovation or business idea
B) Is willing to work under a certain degree of uncertainty
C) Avoids risk
D) Has the flexibility to adjust to changing situations

Question 20

As someone who has identified a business opportunity and assumed the risk of creating and running a business to take advantage of it, Rick Jurmain is an entrepreneur.

Question 21

Because Gonzalez's company is independently operated, the Small Business Administration would consider it a large business.

Question 22

More than three-fourths of all U.S. adults are either self-employed or work for businesses with fewer than 500 employees.

Question 23

Gonzalez's shop managers regularly think of new ways to market their products, improve their quality, keep them fresher, and meet consumer needs. In this respect, Gonzalez's business is unusual among small businesses.

Question 24

The majority of small businesses are owned by ____.

A) white females
B) black males
C) white males
D) black females

Question 25

A company is considered large if it _____.

A) employs more than 500 employees
B) is independently owned and operated and exerts little influence in its industry
C) demonstrates sustained growth
D) has been in existence for more than ten years

Question 26

_____ tend to offer environments that appeal to individuals with the talent to invent new products or improve the way things are being done.

A) Small businesses
B) Free markets
C) Family-owned businesses
D) Sole proprietorships

Question 27

Many small firms provide _____ services to large firms-that is, they hire themselves out to help with special projects or to handle certain business functions.

A) franchising
B) entrepreneurial
C) supplemental
D) outsourcing

Question 28

Small businesses like Gonzalez's account for about 50 percent of the U.S. gross domestic product each year.

Question 29

Small businesses in the U.S. generate about 50% of our gross domestic product (GDP).

Question 30

Which of the following is not a criteria used by the SBA in defining a small business?

A) Exerts little influence in its industry
B) Has fewer than 300 employees
C) Is independently owned
D) Is independently operated

Question 31

In what ways do small businesses help the U.S. economy?

Question 32

Although the split between those working in small companies and those working in big companies is about even, large companies:

A) hire less frequently and fire less frequently than small companies.
B) develop more patents per employee than small companies.
C) offer employees a more innovative-friendly environment than small companies.
D) are more likely than small firms to offer U.S. workers their first job when they enter the business world.

Question 33

The Small Business Administration defines a small business as one with 500 or fewer _____.

A) investors
B) customers
C) employees
D) products

Question 34

_____ companies provide valuable services to _____ companies by acting as sales agents for their products.

A) Large / small
B) Small / large
C) Wholesale / retail
D) Entrepreneurial / corporate

Question 35

The past two decades have seen a _____ in the number of businesses owned by women and minorities.

A) substantial increase
B) substantial decrease
C) moderate decrease
D) moderate increase

Question 36

Small business output in the United States generates about _____ of our gross domestic product.

A) 10 percent
B) 90 percent
C) 50 percent
D) 75 percent

Question 37

Gonzalez's business is not a small business because it's unique in the flower-shop industry.

Question 38

Gonzalez's company should be considered a small business.

Question 39

The majority of Americans entered the business world by working for _____, which are constantly creating jobs and providing opportunities for a vast number of workers.

A) franchises
B) small businesses
C) entrepreneurs
D) sole proprietorships

Question 40

Owners of small businesses are responsible for much of the _____ of U.S. business.

A) short-term debt
B) healthcare shortfall
C) wage escalation
D) product innovation

Question 41

Because an owner can delegate both authority and responsibility, entrepreneurs often have more free time than people who work for someone else.

Question 42

To understand where _____ businesses are concentrated, you need to divide them into the goods-producing sector and the service-producing sector.

A) struggling
B) small
C) profitable
D) innovative

Question 43

A survey conducted by the Wall Street Journal indicates that, by and large, small business owners have had more satisfying business experiences than they would have had as top-level executives.

Question 44

A small business that buys flowers from a local grower and sells them to a grocery store is an example of a wholesaler.

Question 45

A small business that buys goods from other firms and sells them to consumers is known as a _____.

A) wholesaler
B) retailer
C) distributor
D) franchiser

Question 46

If you want to start a new business, which of the following enterprises would be the best choice?

A) Automobile manufacturer
B) Aluminum processor
C) Steel refinery
D) Car dealership

Question 47

Unfortunately for small business, the service-producing sector has been steadily decreasing in revenues over the past 10 years.

Question 48

A rewarding aspect of being a business owner is that you can't get fired-an advantage that comes under the heading of "Creative Freedom and Personal Satisfaction."

Question 49

Because Green Thumb Landscapers buys goods from other firms and sells them to consumers, the company is a retailer.

Question 50

A local bakery is acting as a _____ when it sells desserts to a restaurant.

A) wholesaler
B) retailer
C) franchiser
D) franchisee

Question 51

The largest areas of the goods-producing sector are construction and manufacturing.

Question 52

Among small businesses, the service-producing sector is larger than the goods-producing sector.

Question 53

Manufacturing is primarily the domain of _____ businesses.

A) professional
B) midsize
C) large
D) multinational

Question 54

In which industries would you find a heavy concentration of small businesses?

A) Veterinary services
B) Florist
C) Aluminum manufacturing
D) Both

Question 55

About 80 percent of small businesses in the U.S. are concentrated in the _____ sector.

A) goods-producing
B) retail
C) service-producing
D) professional

Question 56

Which of the following is an advantage of buying an existing business?

A) You can identify competitors.
B) You have access to current cash flow.
C) You can identify suppliers.
D) You will inherit employees.

Question 57

The service-producing sector includes manufacturing, construction, and agriculture.

Question 58

The goods-producing sector is home to only 22 percent of all small businesses, the majority of which are in _____.

A) construction
B) food service
C) direct marketing
D) retailing

Question 59

One advantage of working for someone else is the likelihood of making more money than if you were running your own business.

Question 60

In what industries are small businesses concentrated?

Question 61

Starbucks' Howard Schultz is an example of a person who came up with a business idea as a result of a hobby.

Question 62

Which of the following is among the rewards of being a small business owner?

A) Freedom from fiscal responsibility
B) Free time
C) Freedom from job-related stress
D) Lifestyle freedom

Question 63

The monthly fee that a franchisee must pay to keep the company's trade name is called a(n) _____.

A) royalty fee
B) advertising fee
C) franchise fee
D) trade fee

Question 64

When buying a franchise, the business owner must pay a monthly royalty fee but typically reserves the right to buy core products from other suppliers.

Question 65

Which of the following is an advantage to starting a business?

A) Financial security
B) Avoidance of unpleasant work tasks
C) Opportunity to gain an understanding of all aspects of a business
D) Lower stress level

Question 66

Which of the following business options makes it easiest for the owner to predict future business success?

A) Joining a cooperative
B) Buying a franchise
C) Spinning off from a corporation
D) Buying an existing business

Question 67

Franchises generally don't include such complex products as hotels.

Question 68

Summarize the advantages and disadvantages of business ownership.

Question 69

Buying a franchise is the most common, though riskiest, option for starting a new business.

Question 70

The first step before actually starting a business is to get financing.

Question 71

Which of the following is among the disadvantages of small business ownership?

A) Lifestyle uncertainty
B) Steep learning curve
C) Heavy time commitment
D) Family values

Question 72

Franchises are often quite _____.

A) legally simple
B) easily acquired
C) attractive from a tax standpoint
D) expensive

Question 73

If you run a _____, you may find that you must adhere to certain rules even if you disagree with some of them.

A) previously owned business
B) franchise
C) limited liability corporation
D) partnership

Question 74

As a business owner, you're in charge and can decide when and where you want to work. This managerial freedom best reflects the _____ advantage of small business ownership.

A) financial
B) intellectual
C) time-management
D) lifestyle

Question 75

Which of the following is the most common but riskiest option in becoming a small business owner?

A) Marketing an unknown product
B) Starting from scratch
C) Obtaining a franchise
D) Buying an existing business

Question 76

A survey conducted by the Wall Street Journal indicates that _____ have a more satisfying business experience.

A) top-level executives
B) small business owners
C) franchise owners
D) team members

Question 77

As a business owner, you're responsible for making the decisions that pertain to the profitability of your business. This decision-making freedom best reflects the _____ advantage of small business ownership.

A) independence
B) first-mover
C) lifestyle
D) financial

Question 78

Franchises are considered an easy, cost-efficient way to start your own business.

Question 79

If he bought a local combination miniature golf course and driving range, Bernard Blanco would find that buying an existing business is an easier option than starting from scratch.

Question 80

If you purchase a business, it is lawful for the previous owner to set up a competing business that draws its former and your current customers away from you _____.

A) only by paying a stipulated fee
B) any time he or she wants
C) only after a stipulated time
D) only in a mutually agreed-upon location