Deck 7: Starting a New Business

Question 1

About 50 percent of home-based businesses deal with financial and service-related businesses.

Answer 1

False

Question 2

Figure 7.1 in the text on Inc. 500 companies shows that most Inc. 500 companies are started by partners.

Answer 2

True

Question 3

Fast-growth start-ups tend to be headed by people who have started other businesses.

Answer 3

True

Question 4

Most people quit their current jobs when starting their new business.

Question 5

T F The first thing you need to start a new business is a business plan.

Question 6

Figure 7.1 in the text on Inc. 500 companies shows that few of the CEOs take a salary over $100,000.

Question 7

A majority of high-growth CEOs had at least 10 years of experience in the industry before beginning a new business.

Question 8

To run a successful Web business, logistics are huge.

Question 9

There is no difference between an idea and an opportunity.

Question 10

Most fast-growth companies are started by partnerships.

Question 11

As a product progresses through the product life cycle, the window of opportunity for the product concept widens.

Question 12

Windows of opportunity seldom open and close since the markets for products and services seldom change.

Question 13

Figure 7.2 shows that windows of opportunity don't close.

Question 14

During times of economic hardship and near double-digit unemployment, people are less likely to start their own businesses.

Question 15

The fastest growing segment of business startups are home-based businesses.

Question 16

E-business has made all other business models obsolete.

Question 17

According to the chapter opening case, Derek Johnson had success in starting his own business while still in college.

Question 18

The biggest disadvantage of beginning an e-business is that compared to a traditional business, you need a higher amount of overhead to become established and successful.

Question 19

A desire for total independence may mean a person is ready to start their own business.

Question 20

Beginning a new business is easier than buying an existing business or franchise because you can do everything right the first time.

Question 21

Companies that pursue operational excellence know that their customers value low price.

Question 22

Starting a business because other job opportunities have evaporated during times of economic hardship is referred to as

A) Frugal business advantage
B) Necessary entrepreneurship
C) Fiscal entrepreneurship
D) Economic advantage

Question 23

When a business begins operations, advance payments of estimated federal and possibly state income taxes must be paid.

Question 24

Customer service could be the competitive advantage for a business.

Question 25

The most critical concern in getting a business off the ground is the feasibility of the idea.

Question 26

If a person provides services to a business but is not an employee of the business, they are considered dependent contractors.

Question 27

The most common source of ideas for new businesses comes from education courses taken by potential new business owners.

Question 28

Withholding for Social Security taxes is 9.25 percent, which the employer must match.

Question 29

While still in his 20s, according to the chapter opening case, Derek Johnson founded all of the following technology-related companies except

A) Short Message Service
B) Tatango.com
C) Derek Media
D) Twitter

Question 30

The corridor principle describes how business opportunities can be projected far into the future.

Question 31

Sometimes business opportunities come unexpectedly, and the small business owner must then take advantage of that opportunity presented.

Question 32

Which of the following increases when beginning a new business rather than buying an existing business?

A) Frustration
B) Income
C) Risk
D) Profit potential

Question 33

In addition to a business plan, a market analysis, competitive analysis, and startup costs are important to success.

Question 34

In the idea stage, what a small business owner needs is people who can be objective about the new business idea and point out shortcomings.

Question 35

Turning a hobby into a business is a viable route to self-employment.

Question 36

Thomas Edison is the most prolific inventor of all time, with 1,093 patents.

Question 37

New ideas occur to small business owners three times as often after the business is running than before it began.

Question 38

Focusing on one-time sales with individual customers is the premise behind the customer intimacy model.

Question 39

When deciding whether an idea represents an opportunity that should be pursued, it is important to trust research and ignore intuition.

Question 40

The name of the business must be filed with the secretary of state in the state where the business is being formed.

Question 41

Which of the following is likely to be the most capital intensive?

A) A Four Seasons Hotel
B) A Ford manufacturing facility
C) A Burger King Restaurant
D) A medium-sized university

Question 42

Which of the following is not a disadvantage to new business startups?

A) Problems in identifying area market needs
B) Finding motivated employees
C) Vendor issues
D) Customer relationship problems

Question 43

Wanda has dreams of opening her own pet shop called "Wanda's Aquarium". Aside from think of a name and how her store will look, she has done very little planning at this very early stage. All she currently has is

A) A strategy
B) Financial means
C) An objective
D) A vision

Question 44

A business that is more dependent on the services of people than on money and equipment is known as

A) A labor-intensive business
B) A capital-intensive business
C) A service-intensive business
D) An asset-intensive business

Question 45

The fastest growing segment of business startups are

A) Home-based businesses
B) Capital-intensive businesses
C) Service-intensive businesses
D) Manufacturing businesses

Question 46

According to the Bureau of Labor Statistics, __________ Americans start businesses while keeping their regular jobs each year.

A) 200,000
B) 6.8 million
C) 1.2 million
D) 98 million

Question 47

The risk of failure is greater with

A) Existing businesses
B) Franchises
C) Startups
D) Existing family-owned businesses

Question 48

In the beginning of a new business, the only thing the new business person has is

A) Vision
B) Capital
C) Assets
D) A customer base

Question 49

Manufacturing businesses are more

A) Labor intensive
B) Capital intensive
C) Service intensive
D) Asset intensive

Question 50

A business that depends greatly on equipment and capital for its operations is known as

A) A labor-intensive business
B) A capital-intensive business
C) A service-intensive business
D) An asset-intensive business

Question 51

Which of the following is not a basic characteristic of a successful web business?

A) Continuously spending more on new equipment than you take in revenue
B) Having a secure method of payment
C) Having a good strategic reason for being online
D) Designing an attractive, functional web site

Question 52

Service businesses are more

A) Labor intensive
B) Capital intensive
C) Service intensive
D) Asset intensive

Question 53

E-commerce accounts for approximately what percentage of total retail sales?

A) Less than 1 percent
B) 10.2 percent
C) 3.6 percent
D) 13.4 percent

Question 54

E-business can be boiled down to all of the following ideas except

A) Slow down the speed of business
B) Reduce costs
C) Enhance customer service
D) Improve the business process

Question 55

Many people start businesses while keeping their regular jobs. Before doing this, they should check on their company's _____________ policy and avoid doing anything that might resemble a conflict of interest.

A) Sidelines
B) Moonlighting
C) Extra jobs
D) Sidelighting

Question 56

As a result of the recent economic recession, Bart was laid off from his corporate finance job indefinitely. With little planning, he eventually started his own business as a financial management consultant, helping small business owners keep afloat financially during tough economic times. This is a classic example of

A) Frugal business advantage
B) Necessary entrepreneurship
C) Fiscal entrepreneurship
D) Economic advantage

Question 57

Which of the following is not an advantage of new business startups?

A) Freedom to create
B) Ability to create a distinctive competitive advantage
C) No negative image due to someone else's mistake
D) Well-established clientele

Question 58

No matter what type of business a person is starting, the most important resource is

A) Capital
B) Assets
C) Experience
D) Time

Question 59

According to data from the Small Business Success Index, which of the following is true?

A) The median age for a U.S. small business owner is 49.5 years
B) 44 percent of U.S. small business owners are female
C) 75 percent of U.S. small business owners have a college degree
D) 16 percent of U.S. small business owners started the business

Question 60

The primary advantages of operating a home-based business are which of the following?

A) Schedule flexibility and lack of commuting problems
B) Low overhead and an increase in creativity
C) Lack of commuting problems and less office expense
D) Schedule flexibility and low overhead

Question 61

Most fast-growth companies are started by

A) Sole proprietorships
B) Partnerships
C) Corporations
D) Home-based businesses

Question 62

After running a small restaurant for two years, Pam and Jim realized that a greater opportunity existed in food distribution. They hired family members to run the restaurant while they focused their energy on starting a food distribution company. This is an example of the

A) Distributive responsibility principle
B) Corridor principle
C) Experience curve
D) Bell curve

Question 63

Which of the following provides the greatest percentage of business ideas to prospective business owners?

A) Consultants
B) Conferences
C) Competitors
D) Social-networking sites

Question 64

Many ideas for new products or businesses do not add value for the customer or user and consequently are not

A) Profitable
B) Business opportunities
C) Economically viable in the long run
D) Worthwhile investments

Question 65

During the _________ stage in the product life cycle, the window of opportunity is wide open because little or no competition exists.

A) Introduction
B) Growth
C) Maturity
D) Decline

Question 66

Just under 40 percent of Inc. 500 CEOs began their businesses with startup capital of

A) Between $500 and $1,000
B) Less than $10,000
C) Over $100,000
D) $1.5 million

Question 67

Go Computers is an example of

A) A business that was very profitable
B) A business that would make a good investment
C) An idea that was ahead of its market
D) An idea that was behind its market

Question 68

The final answer to whether an idea is an opportunity that should be followed will come from a combination of

A) Research and a consultant's advice
B) Intuition and experience
C) Research and intuition
D) The banker and the accountant

Question 69

The majority of high-growth firms are headed by

A) Men
B) Women
C) Minorities
D) Minority women

Question 70

Jeff, an avid angler, decided to retire early to pursue a career of making and selling custom hand-made fishing flies and lures. This is an example of identifying business ideas from

A) Prior work experience
B) Hobbies and avocations
C) Serendipity
D) Ambition

Question 71

Which of the following questions can give a potential business owner insight on future and current demand?

A) Does the idea solve a consumer's want or need?
B) How much competition exists?
C) Can the idea be turned into a profitable business?
D) Does the business owner have the appropriate skills needed in order to be successful?

Question 72

Most high-growth firms are in which industry?

A) High-tech
B) Utilities
C) Health care
D) Entertainment

Question 73

The most common exit strategy for fast-growth businesses is

A) Passing on to family owners
B) Selling to outside investors
C) Selling to employees
D) Ending in bankruptcy

Question 74

Which of the following has the qualities of being attractive, durable, and timely and is anchored in a product or service that creates or adds value for its buyer?

A) An idea
B) A business opportunity
C) A new product
D) An improved product

Question 75

A majority of high-growth CEOs had at least ______ years of experience in the industry.

A) Two
B) Five
C) Seven
D) Ten

Question 76

A period of time in which an opportunity is available is known as

A) A window of opportunity
B) An idea
C) The right time for a product
D) The introductory stage

Question 77

The stages that products in the marketplace go through are known as

A) The product life cycle
B) The product growth stages
C) The product timeline
D) The product opportunity stages

Question 78

Which of the following is a source for business ideas that results in avoiding many errors and establishing competitive advantages early on?

A) Hobbies
B) Personal interests
C) Prior work experience
D) Education

Question 79

Opportunities that become available to an entrepreneur only after the entrepreneur has started a business are known as

A) Windows of opportunity
B) An idea whose time has come
C) The corridor principle
D) Secondary opportunities

Question 80

Years before the regular use of iPads and tablet computers, the concept of portable, pen-based computers was introduced. However, Go Computers sold only 20,000 units and lasted only three years. This is an example of an idea that

A) Has a long product life cycle
B) Has passed its window of opportunity
C) Is in demand by consumers
D) Is too far ahead of the market