Deck 18: Entrepreneurship and Small Business: Taking Risks Can Make Dreams Come True

Question 1

The U.S. government defines a small business as a __________.*

A) publicly held company
B) new venture
C) corporation
D) privately owned and operated business

Answer 1

D

Question 2

Small businesses are defined as having less than__________employees.*

A) 25
B) 50
C) 100
D) 500

Answer 2

D

Question 3

A person who is willing to pursue opportunities that others see as problems or threats is a(n) __________.

A) business person
B) fool
C) entrepreneur
D) banker

Answer 3

C

Question 4

At what stage in the life-cycle of a business is professional management experience the most important?*

A) Birth
B) Breakthrough
C) Maturity
D) All of the above

Question 5

Minority entrepreneurs create almost __________ million jobs.

A) 2
B) 6
C) 10
D) 20

Question 6

People aged __________ are the most entrepreneurial active in the United States.

A) 25-34
B) 45-54
C) 55-64
D) 75-84

Question 7

Small business employs over __________ percent of America's private workers.*

A) 50
B) 60
C) 70
D) 80

Question 8

__________ is dynamic risk-taking, creative, growth oriented behavior.

A) Business
B) Capitalism
C) Investing
D) Entrepreneurship

Question 9

Entrepreneurship that is targeted at solving the problems of the poor and disadvantaged is called __________ entrepreneurship.*

A) minority
B) social
C) disadvantaged
D) welfare

Question 10

When people start new businesses because they have few or no other options, it is called __________.

A) socialism
B) capitalism
C) small business
D) necessity-based entrepreneurship

Question 11

Potential entrepreneurs often possess all of the following characteristics EXCEPT:

A) a high need for achievement.
B) an intolerance for ambiguity.
C) flexibility.
D) a high energy level.

Question 12

Small business makes up at least __________ percent of U.S. companies.*

A) 60
B) 70
C) 80
D) 90

Question 13

The first person to enter a new market is said to have a __________.

A) first mover advantage
B) good time
C) difficult time
D) disadvantage

Question 14

Research indicates that while not absolutely required, most entrepreneurs have which of the following trait(s)?

A) An external locus of control
B) A low need for achievement
C) A discomfort with uncertainty
D) Self-confidence and self-reliance

Question 15

In the stage model of business life-cycles presented in your text, which stage sees major growth and an increase in structural complexity?

A) Majority stage
B) Breakthrough stage
C) Post maturity stage
D) Birth stage

Question 16

87% of small businesses employ less than __________ people.

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

Question 17

Employees in large corporations who take significant risk and display entrepreneurial behavior are called __________.*

A) entrepreneurs
B) senior managers
C) intrapreneurs
D) venture capitalists

Question 18

The U.S. federal agency responsible for defining and supporting small businesses is the __________.

A) SBA
B) NSA
C) SEC
D) FDA

Question 19

Small business ownership offers great opportunities, with the fastest growing segment being __________ owned businesses.*

A) women
B) Hispanic-American
C) African-American
D) Asian-American

Question 20

The main difference between "social entrepreneurs" and general business entrepreneurs is:

A) their higher tolerance for ambiguity.
B) their desire to take greater risks.
C) a higher degree of self-motivation.
D) their drive toward a social mission.

Question 21

A small business that consists of an individual or man and wife only is called a __________.*

A) partnership
B) general partnership
C) sole proprietorship
D) corporation

Question 22

Getting a loan from friends or banks in order to start a business is called __________.

A) equity financing
B) initial public financing
C) debt financing
D) leasing

Question 23

A partnership in which owners share managerial responsibilities is called a __________.

A) limited liability corporation
B) specific partnership
C) general partnership
D) limited partnership

Question 24

A __________ combines the advantages of the sole proprietorship, partnership, and corporation.

A) partnership
B) limited liability company
C) proprietorship
D) x corporation

Question 25

The business structure that gives you the most control but that carries the greatest risk is the __________.

A) corporation
B) sole proprietorship
C) general partnership
C) limited liability corporation
D) limited partnership

Question 26

The __________ stage of the life-cycle of an entrepreneurial firm involves refining the strategy, investing wisely, and staying flexible.*

A) birth
B) breakthrough
C) maturity
D) All of the above.

Question 27

A firm in the "birth" stage of its life cycle should focus on:

A) becoming profitable.
B) refining the strategy.
C) finding the money.
D) growing.

Question 28

All of the following should be involved in a business plan EXCEPT:

A) an executive summary.
B) the business fundamentals.
C) careful organization.
D) long and detailed analysis to cover all potential questions.

Question 29

According to the U.S. government, at least __________ percent of small businesses fail in their first five years.*

A) 60
B) 70
C) 80
D) 90

Question 30

Most of the failures of small start-up companies can be related to __________.*

A) finding the money to start the business
B) inferior product ideas
C) lack of professional management skills
D) failing to do an IPO

Question 31

A real indication of a problem with family owned businesses is that only three percent are expected to survive beyond the __________ generation.

A) first
B) second
C) third
D) fourth

Question 32

A business entity that is legally separated from the owners is a __________.

A) corporation
B) general partnership
C) proprietorship
D) limited partnership

Question 33

Common reasons for small business failures include all of the following EXCEPT:

A) lack of experience
B) lack of strategy
C) poor financial controls
D) moderate growth rate

Question 34

Most businesses in the U.S. are controlled by:

A) families.
B) governments.
C) big corporations.
D) other small businesses.

Question 35

A partnership that consists of one general manager that manages the business and one or more partners that are not involved in the business is called a __________.

A) general partnership
B) limited partnership
C) proprietorship
D) limited liability corporation

Question 36

Family businesses have many problems. The issue, who will run the business when the current family head leaves, is called a __________ problem.

A) follow through
B) succession
C) follow up
D) resignation

Question 37

John wants to start a new business, but he would like to keep the paperwork simple and avoid large legal fees. However, John does not want his personal property attached to the business. John should start his company as a __________.

A) corporation
B) partnership
C) limited liability company
D) proprietorship

Question 38

When two or more people agree to contribute resources to start and operate a business, it is called a __________.

A) partnership
B) limited liability company
C) sole proprietorship
D) x corporation

Question 39

A plan to determine how the leadership of a family owned business will transition is called a(n) ___________ plan.

A) business
B) operating
C) succession
D) strategic

Question 40

The two types of partnerships are __________ and __________.*

A) S corporation; corporation
B) specific; general
C) general; limited
D) limited; specific

Question 41

An angel investor who invests in a new venture is providing __________.

A) debt financing
B) partnership financing
C) restricted financing
D) equity financing

Question 42

When a business gets to the "maturity" stage of development, it should focus on refining its strategy, continuing growth, and managing for success.

Question 43

Which form of financing would give you the most control with less flexibility in cash flows?*

A) Equity financing
B) Money from a venture capitalist
C) Debt financing
D) An IPO

Question 44

Sue, as president of Sue's Stuff LLC, owns 200,000 shares of the company. Sue will be a very wealthy person if the company has a successful __________.

A) year
B) joint venture
C) equity investor
D) initial public offering

Question 45

Women owned businesses in the U.S. have declined in recent years.

Question 46

The Family Firm Institute reports that family businesses account for 78% of new jobs created in the United States and provide 60% of the nation's employment.

Question 47

Entrepreneurship is only involved in starting a new business from scratch.

Question 48

A(n) __________ is the first time that a company sells its stock to the public.

A) stock exchange
B) initial public offering
C) private exchange
D) stock auction

Question 49

Most new businesses fail within five years.

Question 50

Intrapreneurship is the same as entrepreneurship.

Question 51

Raising money to start a business by selling a percentage of the company is called __________.

A) debt financing
B) initial public financing
C) asset financing
D) equity financing

Question 52

A college degree is necessary to be a successful entrepreneur.

Question 53

A "small" business is actually one with 500 or fewer employees.

Question 54

A friend comments to you, "When things go right, nothing beats a family business. But, when things go wrong, there is not much worse than a family business!" Based upon your reading, is this statement true or false?

Question 55

The payoff for venture capitalists is at the occurrence of the __________.

A) retirement of the debt
B) government regulation
C) business closure
D) initial public offering

Question 56

Research shows that entrepreneurs are born, not made.

Question 57

People who make a living by investing large sums of money in start-up businesses in exchange for an equity position in the company are called __________.

A) venture capitalists
B) equity investors
C) bankers
D) start-up managers

Question 58

Fortunately, when it comes to financing, women have far more access to capital than men.

Question 59

Entrepreneurship offers a good path to success for women and minorities.

Question 60

A wealthy private individual who invests in new ventures in return for equity in the company is called a(n) __________.

A) equity investor
B) angel investor
C) new venture manager
D) banker

Question 61

When you provide ownership shares in exchange for capital that does not have to be repaid in order to start or run your business, you are using __________ financing.

Question 62

How would you evaluate your "fit" as an entrepreneur?

Question 63

Compare and contrast the various structural options open to a small business organization.

Question 64

When an IPO is successful, the market bids up the share price, thus increasing the value of the original shares held by the venture capitalist and the entrepreneur.

Question 65

__________ display entrepreneurial behavior as employees of larger firms.

Question 66

The document that describes the goals of the firm, outlines how it intends to operate, and lays out the financial strategies is called a(n) __________.

Question 67

Equity financing provides control to the business owner which has to be repaid eventually.

Question 68

The underlying reasons for most small business failures are __________ mistakes.

Question 69

The main, if not only, reason for writing a business plan is to obtain financing.

Question 70

A good family succession plan won't only spell out how the financial end of things will be handled, but it should also cover control and leadership issues.

Question 71

In a limited partnership, only the general manager is involved in the day-to-day operations; however, all partners share in the profits.

Question 72

When an entrepreneur is forced to open their own business due to layoffs from their job and a low likelihood of replacing the job, inability to grow in their current career, or simply to put food on the table, they are engaged in __________ entrepreneurship.

Question 73

__________ involves developing a business to solve pressing societal needs at home or abroad.

Question 74

A(n) __________ occurs when a firm moves faster than its competitors in spotting and exploiting a new market or previously unrecognized niche in the market.

Question 75

The organizational structure that exists as a legal entity separate from the ownership is called a(n) __________.

Question 76

An LLC is a hybrid structural form that gives advantages of sole proprietorships / partnerships for taxes and corporations for liability protection.

Question 77

A(n) __________ is when two or more people agree to contribute resources to start and operate a business together.

Question 78

A(n) __________ is a facility that offers services to help new businesses get established.

Question 79

Individuals and/or groups who make money by providing funds to new companies in exchange for an equity position and the hope of rising equity value are called __________.

Question 80

In addition to all of the normal operational challenges of small business, when you decide to go into business with siblings, parents, or relatives, you also face the possibility of __________ developing over the multiple relationships and issues that exist outside of the business, complicating the business relationships as well.