Deck 3: He Entrepreneurial Process

Question 1

Pattern recognition is the process of linking knowledge in one field or marketplace with quite different technical, business, or market know-how from others.

Answer 1

True

Question 2

In a free enterprise system, opportunities are held up and prevented by such factors as changing circumstances, chaos, confusion, inconsistencies, and information gaps.

Answer 2

False

Question 3

In order for an entrepreneur to estimate and communicate sustainable value to potential stakeholders, an opportunity should have a minimum market size of $1 million.

Answer 3

False

Question 4

Abstract thinking-taking out a small bit of information and using it to represent the whole thing-is associated with the right side of the brain.

Question 5

The best opportunities are focused enterprises; what you start out to do is what you end up doing.

Question 6

Knowing how capital suppliers and entrepreneurs think about the opportunity creation and recognition process, their search and evaluation strategies, and what they look for is a key frame of reference.

Question 7

The business environment in which an entrepreneur launches his or her venture cannot be altered significantly.

Question 8

Marketplaces dominated by large, multi-billion-dollar players are impenetrable by smaller, entrepreneurial companies since they are unable to compete with entrenched, resource-rich, established companies.

Question 9

The vast majority of start-up entrepreneurs spend inordinate amounts of time chasing inappropriate funding sources for their venture.

Question 10

With the exception of the real estate they may own for their business, small business owners usually build a lot of equity.

Question 11

One of the big differences between the growth and equity minded entrepreneur and the traditional small business owner is that the entrepreneur is willing to use leverage financing.

Question 12

In terms of a business, bigger is always better.

Question 13

Social and non-profit organizations do not need to be as concerned with positive cash flow since they operate in a different type of market than for-profit organizations.

Question 14

Superior opportunities solve a significant problem, remove a serious pain-point, or meet a significant want or need-for which someone is willing to pay a premium.

Question 15

The viable time frame within which a venture can be developed is called the window of opportunity.

Question 16

The best and the brightest venture capitalists rarely miss a home run opportunity when it is presented to them.

Question 17

The vast majority of radical innovation in Canada occurs in new and smaller firms.

Question 18

Thinking creatively and expansively about how new technology discoveries will drive the next new industries is a critical aspect of opportunity recognition.

Question 19

While an intense level of psychological ownership and involvement is certainly a prerequisite for creating a new business, the fatal flaw in attachment to an invention or product is a narrow focus.

Question 20

For owners of small businesses, extremely long hours of 70, 80, or even 100 hours a week, and rare vacations, are often the rule rather than the exception.

Question 21

Ventures that generate after-tax profits of more than 5 percent are quite fragile.

Question 22

The primary reason that first-time entrepreneurs run out of cash at a faster rate than they bring in customers and profitable sales is that they have not focused on the right opportunity.

Question 23

What annual growth rate is indicative of a thriving and expansive industry-one that offers opportunities for new entrants to create niches?

A) 5 to 10 percent
B) 10 to 20 percent
C) 20 to 30 percent
D) 30 to 50 percent
E) Opportunities always exist

Question 24

Moore's Law and Metcalfe's Law are most closely associated with what concept of opportunity recognition?

A) Technology sea changes
B) Irrational exuberance
C) Value chain disruption
D) Venture investor criteria
E) Market momentum

Question 25

The attractiveness of an opportunity diminishes when the time to breakeven and achieve positive cash flow exceeds 10 years.

Question 26

Which minimum return on investment would a professional investor expect with a superior business opportunity?

A) 10 percent
B) 20 percent
C) 25 percent
D) 30 percent
E) 50 percent

Question 27

One of the big differences between the growth and equity minded entrepreneur and the traditional small business owner is that the entrepreneur thinks

A) Bigger
B) Smaller
C) Smarter
D) Less

Question 28

Which of the following is related to the development of the value chain and channels of distribution?

A) Financial services
B) Telecommunications
C) Moore's Law
D) Superstores

Question 29

Success is a highly situational occurrence, depending on:

A) Timing
B) Stakeholders
C) Market
D) All of the answers are correct

Question 30

Windows of opportunity open ______.

A) As the market becomes established
B) As the market becomes large and structured
C) As the market matures
D) Depending on the opportunity
E) Quicker than ever because of technological advances

Question 31

The inability to achieve and sustain a position as a high-cost producer shortens the life expectancy of a new venture.

Question 32

Being opportunity-focused means never lose sight of ______.

A) Competitive advantages
B) The customer and the marketplace
C) The economic and funding metrics of the venture
D) Distinctive competencies
E) Product development

Question 33

To gain market entry with high-value-added products or services in a growing market, it is best to price slightly below competitors.

Question 34

Which of the following should receive first consideration in the opportunity screening process?

A) The Product
B) The Financials
C) The Market
D) The Strategy
E) Depends on the opportunity

Question 35

What most small businesses do not know about, but that is a way of life in the world of high-potential ventures, is what we will call the

A) Circle of venture capital ecstasy
B) Venture team
C) The economics of the venture
D) Strategic differentiation

Question 36

Price-cutting and other competitive strategies in highly concentrated markets can present a significant barrier to entry for new entrants.

Question 37

Which of the following is a right-mode brain characteristic?

A) Verbal: Using words to name, describe, and define
B) Concrete: Relating to things as they are at the present moment
C) Rational: Drawing conclusions based on reason and facts
D) Linear: Thinking in terms of linked ideas
E) Symbolic: Using a symbol to stand for something

Question 38

Analyzing market structure would include all of the following except:

A) Product differentiation
B) Demand sensitivity
C) Number of sellers
D) Payback to the customer
E) Conditions of entry and exit

Question 39

Data available about market characteristics, competitors, and the like are frequently inversely related to the real potential of an opportunity.

Question 40

The context in which the sale or acquisition of a company occurs is largely driven by the capital markets at that particular time.

Question 41

With higher potential businesses, what is the likely payback to the user or customer of a given product or service through cost savings or other value-added or value-created properties?

Question 42

Attractive opportunities are ones that have potential for a moderate-to-strong degree of control over which of the following?

A) Barriers to entry
B) Exit mechanism
C) Channels of distribution
D) Strategic differentiation
E) Economies of scale

Question 43

Having a favourable window of opportunity is most closely related to:

A) Barriers to entry
B) Exit mechanisms
C) Channels of distribution
D) Strategic differentiation
E) Economies of scale

Question 44

Which of the following would not be a good source for an entrepreneur seeking viable opportunities?

A) Patent brokers
B) Bankruptcy judges
C) Trust officers
D) All are good sources

Question 45

Earnings before interest but after taxes (EBIAT) are driven by all the following except:

A) Liquidity
B) Profitability
C) Sales
D) Asset intensity

Question 46

Discuss how the capital markets food chain concept pertains to fund raising strategies for the start-up entrepreneur.

Question 47

At a 20 percent gross margin, for every $1 increase in fixed costs (e.g., insurance, salaries, rent, and utilities), sales need to increase by how many dollars just to stay even?

Question 48

Which of the following has research shown to be the most important determinant of competitive success?

A) Customer service
B) Product differentiation
C) Flexibility
D) Pricing
E) Economies of scale

Question 49

With regard to the capital markets, what is most critical in initial public offerings?

A) Audited documentation
B) Timing
C) Market adoption
D) The underwriter(s)
E) The contract with the bank

Question 50

The highly organic and situational nature of the entrepreneurial process underscores the criticality of determining fit and the balancing of what?

Question 51

In the "circle of venture capital ecstasy," what attracts the "best venture capitalists, board members, and other mentors and advisors" who can add value to the venture?

Question 52

If an idea is not an opportunity, what is an opportunity?