Question 1

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

Accepted Answer

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 2

The _____ section of the business plan explains why your proposed offerings are better than those of competitors and indicates what market needs will be met by your products.

Accepted Answer

A)  "Development and Production" 
B)  "Marketing" 
C)  "Global Issues" 
D)  "Goods, Services and the Production Process"

Question 3

SCENARIO BASED
In order to meet the financial needs for future business growth as well as current demands, TruWood Cabinet Makers must secure a business loan of $125,000 from a local bank. The loan committee has asked owner and general manager Jarret Jones to write a comprehensive business plan that meets all of First Security Bank’s requirements for such a large loan. After a lot of research and careful writing, the plan is constructed and ready for presentation to the loan committee.
-As a practical businessman, Jones knows that his business plan must demonstrate his knowledge of his customers (including the demographics of various customer segments), product promotion, pricing, and the essentials of distribution. Thus his inclusion of a strong _____ plan.

Accepted Answer

A)  marketing 
B)  promotion and advertising 
C)  industry analysis 
D)  financial and management

Question 4

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

Accepted Answer

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

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

What elements does a business plan encompass

Accepted Answer

The answer of What elements does a business plan encompass...

Question 7

The final step in the process of starting a business is _____.

Accepted Answer

A)  getting your financing 
B)  creating your business plan 
C)  deciding if you need partners 
D)  researching your customer base

Question 8

The _____ section of a business plan specifies the firm's cash needs and explains how the owners will be able to repay its debts.

Accepted Answer

A)  "Financial Plan" 
B)  "Development and Production" 
C)  "Industry Analysis" 
D)  "Management"

Question 9

SCENARIO BASED
Mary Gonzalez recently expanded her chain of flower shops. As the only small flower shop located in major airports in the Midwest, she has a unique operation. She has 72 employees in 30 shops, and although her company isn’t dominant in its industry, her shops are busy year round. To accommodate her unique clientele, Mary developed the idea of packaging flowers in small waterproof pots that won’t leak either in the airport or aboard planes.
-Gonzalez's business is not a small business because it's unique in the flower-shop industry.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

How does franchising work and in what industries do we find franchises

Accepted Answer

The answer of How does franchising work and in what...

Question 12

Explain the benefits of obtaining a franchise.

Accepted Answer

The answer of Explain the benefits of obtaining a franchise....

Question 13

Donna Graves has just completed research to determine the types of advertising to use in her proposed business. She will discuss advertising under the _____ heading in the "Marketing" section of her business plan.

Accepted Answer

A)  "Pricing" 
B)  "Target Market" 
C)  "Promotion" 
D)  "Distribution"

Question 14

SCENARIO BASED
Brothers Ronnie and Jacob are both in college; Ronnie is a senior and Jacob a sophomore. They’re both majoring in business administration and want to open a small business a few years after graduation. They understand that it’s important to gain more management experience and build good credit ratings. Ronnie wants more security in his work and would be satisfied working with an older partner until he “learns the ropes.” More than Jacob, he’d prefer a business that’s been established for a few years. Although he likes a certain degree of independence, he’s willing to follow directions and take advice. Jacob, on the other hand, wants more freedom to make his own choices and to succeed or fail on his own merits. He’s quite creative and likes to set his own rules.
-By following your advice, Ronnie would probably enjoy all of the advantages of small business ownership except _____.

Accepted Answer

A)  time commitment 
B)  financial rewards 
C)  lifestyle freedom 
D)  creative freedom and personal satisfaction

Question 15

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

Accepted Answer

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

Question 16

Accounting, finance, management, marketing, and production are the _____ areas of business.

Accepted Answer

A)  decision-making 
B)  functional 
C)  bottom-line 
D)  distribution

Question 17

The _____ section of your business plan tells the reader where you will purchase products for resale.

Accepted Answer

A)  "Goods, Services and the Production Process" 
B)  "Industry Analysis" 
C)  "Management Plan" 
D)  "Financial Plan"

Question 18

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

Accepted Answer

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

Question 19

Evaluate the differences between starting a new business from scratch and buying an existing business.

Accepted Answer

The answer of Evaluate the differences between starting a new...

Question 20

SCENARIO BASED
Brothers Ronnie and Jacob are both in college; Ronnie is a senior and Jacob a sophomore. They’re both majoring in business administration and want to open a small business a few years after graduation. They understand that it’s important to gain more management experience and build good credit ratings. Ronnie wants more security in his work and would be satisfied working with an older partner until he “learns the ropes.” More than Jacob, he’d prefer a business that’s been established for a few years. Although he likes a certain degree of independence, he’s willing to follow directions and take advice. Jacob, on the other hand, wants more freedom to make his own choices and to succeed or fail on his own merits. He’s quite creative and likes to set his own rules.
-As Jacob's business advisor, what would you probably advise him to do

Accepted Answer

A)  Start a business from scratch. 
B)  Buy an existing business. 
C)  Buy a franchise. 
D)  Go into business with his brother.

Exam 5: The Challenges of Starting a Business