Deck 5: Small Business, Entrepreneurship, and Franchises

Question 1

How does the SBA define a small business?

Answer 1

Answer not provided.

Question 2

What are the disadvantages of owning a small business?

Answer 2

Answer not provided.

Question 3

What are the advantages of owning a small business? Give examples.

Answer 3

Answer not provided.

Question 4

What is the Small Business Administration? Who created it?

Question 5

Give examples of how small businesses fill the needs of both society and other businesses.

Question 6

How can small businesses challenge larger, established firms?

Question 7

Why do certain industries tend to be more attractive for small business start-ups?

Question 8

What skills might someone who is starting a new small business need?

Question 9

What can the Small Business Administration do for a small business?

Question 10

Why should small-business owners have good skills in working with people?

Question 11

What does it mean to have an entrepreneurial spirit?

Question 12

What is the Service Corps of Retired Executives (SCORE)? How does it assist small-business owners?

Question 13

Give examples to support the statement, "There must be some motivation to start a business."

Question 14

Why are more small businesses in distribution industries than in production industries?

Question 15

Why are small businesses prone to failure?

Question 16

What is a business plan? What are its components? Why is it so important?

Question 17

What is the Minority Business Development Agency? Why was it created?

Question 18

What do small businesses as a group contribute to the U.S.economy?

Question 19

What are some industries that attract small businesses?

Question 20

Is opening your own business usually a way to make big profits quickly? Support your view.

Question 21

Michael Tucker operates Tucker Farms in northern Illinois.Last year, his annual receipts were just under $750,000.According to the Small Business Administration, Tucker Farms is a _____.

A) small business
B) medium-sized business
C) large business
D) franchise
E) joint venture

Question 22

What is the primary function of SBA financial assistance?

Question 23

What is a small-business development center (SBDC)?

Question 24

What is a franchise? What are the major types of franchising arrangements?

Question 25

A small business is all of the following except

A) independently owned.
B) operated for profit.
C) dominant in its field.
D) difficult to manage.
E) demanding of the owner's time and attention.

Question 26

Why is helping women to become entrepreneurs a special goal of the SBA?

Question 27

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant.Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages.He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally.The company hired an international agency to help it learn what to do and what not to do.After the agency met with the managers of Mc-King a few times, the Mc-King management decided they would go ahead with their decision to expand internationally.
Refer to Mc-King Chicken.Which of the following would be an advantage for Brian?

A) guidance from the franchisor
B) franchise holders paying for their security
C) disagreements increasing
D) contract disputes
E) the franchisor maintaining a great deal of control

Question 28

Why is the failure rate lower for franchises than for independent businesses?

Question 29

Mary's cleaning business has several customers but is not dominant in its field.This is an example of a(n) ____ business.

A) entrepreneurship
B) unsuccessful
C) small
D) manufacturing
E) large corporate

Question 30

What are the advantages and disadvantages to the franchisee of having a franchise?

Question 31

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years.It is a retail business that sells sporting goods equipment.When she started to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped it would.Angela has been thinking of starting her own small business because she feels she has learned much working for Personal Wellness.
Angela's manager asked her to create a business plan for Personal Wellness.The manager hoped that this plan would put things into perspective to help the company do better.After creating the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Angela wants to make sure that her leaving does not become the cause of the company going under.
Refer to Personal Wellness.What is not one of the key reasons Personal Wellness would possibly fail?

A) capital
B) employees
C) management
D) money
E) planning

Question 32

What are small-business investment companies?

Question 33

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years.It is a retail business that sells sporting goods equipment.When she started to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped it would.Angela has been thinking of starting her own small business because she feels she has learned much working for Personal Wellness.
Angela's manager asked her to create a business plan for Personal Wellness.The manager hoped that this plan would put things into perspective to help the company do better.After creating the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Angela wants to make sure that her leaving does not become the cause of the company going under.
Refer to Personal Wellness.When Angela suggested that the company contact a group, what type of group was she referring to?

A) strategic institute
B) small-business institute
C) HR institute
D) management institute
E) business institute

Question 34

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant.Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages.He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally.The company hired an international agency to help it learn what to do and what not to do.After the agency met with the managers of Mc-King a few times, the Mc-King management decided they would go ahead with their decision to expand internationally.
Refer to Mc-King Chicken.Which of the following would not be an advantage of a franchise?

A) He gains fast and well-controlled distribution.
B) He has more capital available to expand.
C) Outlets are maintained and operated according to a set plan.
D) He has the opportunity to start a business with limited capital.
E) Success will cause another outlet to be opened nearby.

Question 35

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years.It is a retail business that sells sporting goods equipment.When she started to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped it would.Angela has been thinking of starting her own small business because she feels she has learned much working for Personal Wellness.
Angela's manager asked her to create a business plan for Personal Wellness.The manager hoped that this plan would put things into perspective to help the company do better.After creating the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Angela wants to make sure that her leaving does not become the cause of the company going under.
Refer to Personal Wellness.Personal Wellness can be classified as operating in what type of industry?

A) service
B) production
C) manufacturing
D) distribution
E) wholesaling

Question 36

Mc-King Chicken
Brian decided to open a local franchise of the well-known Mc-King Chicken, a fast-food restaurant.Before he took the initiative to open the franchise, he tried to weigh all the advantages and disadvantages.He decided, based on his research and understanding, that it would be beneficial to open a local fast-food restaurant.
Mc-King has become quite successful domestically, and now it is exploring the possibility of opening franchises internationally.The company hired an international agency to help it learn what to do and what not to do.After the agency met with the managers of Mc-King a few times, the Mc-King management decided they would go ahead with their decision to expand internationally.
Refer to Mc-King Chicken.When Brian opens the Mc-King Chicken restaurant in his town, he would be known as the _____.

A) franchisor
B) franchising
C) franchise
D) franchisee
E) franchises

Question 37

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years.It is a retail business that sells sporting goods equipment.When she started to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped it would.Angela has been thinking of starting her own small business because she feels she has learned much working for Personal Wellness.
Angela's manager asked her to create a business plan for Personal Wellness.The manager hoped that this plan would put things into perspective to help the company do better.After creating the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Angela wants to make sure that her leaving does not become the cause of the company going under.
Refer to Personal Wellness.In preparing the business plan, Angela would have incorporated all of these components except

A) company and industry descriptions.
B) an exit strategy.
C) government regulations.
D) benefits to the community.
E) a marketing plan.

Question 38

Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years.It is a retail business that sells sporting goods equipment.When she started to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped it would.Angela has been thinking of starting her own small business because she feels she has learned much working for Personal Wellness.
Angela's manager asked her to create a business plan for Personal Wellness.The manager hoped that this plan would put things into perspective to help the company do better.After creating the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Angela wants to make sure that her leaving does not become the cause of the company going under.
Refer to Personal Wellness.A business plan should answer all of the following questions except

A) "Which accounting firm will audit the company?"
B) "What exactly is the nature and mission of the new venture?"
C) "Why is this new enterprise a good idea?"
D) "How much will the new venture cost?"
E) "What are the entrepreneur's goals?"

Question 39

What is a small-business institute? How does it help small-business owners?

Question 40

Is franchising a guarantee of success? Explain.

Question 41

The industry concerned with the movement of goods from producer to consumer is _____.

A) service
B) distribution
C) production
D) agriculture
E) wholesaling

Question 42

To qualify as a small business, a retailing establishment may not exceed annual sales of _____.

A) $1.2 million to $4 million
B) $2.6 million to $5 million
C) $3 million to $6 million
D) $7 million
E) $12.5 million

Question 43

Production industries make up approximately what percentage of all small businesses?

A) 5
B) 10
C) 19
D) 31
E) 40

Question 44

Of the small businesses in the distribution industry, nearly three-quarters of them are involved in _____.

A) wholesaling
B) purchasing
C) service
D) retailing
E) communications

Question 45

Businesses are generally placed into three broad categories: service industries, production industries, and ____ industries.

A) financial
B) manufacturing
C) distribution
D) transportation
E) retailing

Question 46

To qualify as a small business, a manufacturing plant can employ no more than ____ people.

A) 500
B) 1,000
C) 2,000
D) 3,000
E) 3,500

Question 47

Which of the following would most likely be classified as a distribution industry?

A) subassembly plant
B) TV repair shop
C) insurance agency
D) grocery store
E) medical office

Question 48

What is the primary reason that so many new businesses fail?

A) owner does not work hard enough
B) mismanagement resulting from lack of business know-how
C) low employee quality for new businesses
D) lack of brand-name recognition
E) inability to compete with well-established brand names

Question 49

Price Waterhouse, a large accounting firm, would be most properly classified in the ____ industry, whereas a grocery store such as Kroger would be included in the ____ industry.

A) distribution; production
B) service; distribution
C) production; service
D) service; production
E) distribution; service

Question 50

Approximately what percentage of the jobs in the United States do small businesses provide?

A) 5
B) 10
C) 30
D) 50
E) 75

Question 51

To qualify as a small business, an agricultural company's maximum annual receipts must be no more than _____.

A) $500,000
B) $9 million
C) $800,000
D) $1 million
E) $750,000

Question 52

Megan's business sells souvenirs and craft items to tourists in Myrtle Beach, South Carolina.This is an example of a ____ business.

A) service
B) communication
C) production
D) distribution
E) wholesaling

Question 53

Which of the following organizations would be considered a small business?

A) producer of semiconductors with 2,000 employees
B) wholesaler with fifty employees
C) retail clothing store chain with annual sales of $26 million
D) construction company with average annual receipts of $32 million
E) farmer with annual receipts of $10 million

Question 54

Distribution industries account for approximately what percentage of all small businesses?

A) 20
B) 25
C) 33
D) 55
E) 70

Question 55

Ben has been thinking about going into business.However, he has discounted entering automobile manufacturing because it

A) requires little skill and knowledge.
B) is not a part of the production industry.
C) requires huge investments in machinery and equipment.
D) is unprofitable.
E) requires by law a corporate form of business.

Question 56

Statistically, approximately what percentage of all new businesses can be expected to fail within their first seven years?

A) 10
B) 25
C) 50
D) 31
E) 70

Question 57

A company generally needs more than ____ employees in order to be considered large.

A) 50
B) 100
C) 300
D) 500
E) 1,000

Question 58

Approximately how many businesses are there in the United States?

A) 50,000
B) 11 million
C) 27 million
D) 1 billion
E) 4 billion

Question 59

Service industries account for approximately what percentage of all small businesses?

A) 25
B) 35
C) 48
D) 70
E) 80

Question 60

Joe decides to start his own business designing websites for other businesses.Joe's business would be classified as a _____.

A) distribution business
B) retailer
C) production business
D) wholesaling business
E) service business

Question 61

Which of the following statements is correct?

A) The risk of failure for women-owned businesses is lower than average.
B) Women are starting businesses at about the same rate as men.
C) Women are almost always sure to succeed.
D) Women own 7.7 million businesses in the United States.
E) Minority business owners pay lower federal tax on profits than men do.

Question 62

Which of the following is the most likely example of a production industry?

A) wholesale outlet
B) retail outlet
C) financial enterprise
D) subassembly plant
E) transportation company

Question 63

You have just opened a new small business.You're really happy to learn that studies show that small-business workers

A) don't really like bill collectors much.
B) are more innovative than workers in large businesses.
C) are especially good at handling inventories in the warehouse to avoid damage and spoilage.
D) design ad campaigns that work especially well on network television.
E) pay little attention to their salary levels compared to similar workers in small businesses.

Question 64

Dana owns and operates a catering business.This is an example of a _____.

A) distribution business
B) production business
C) service business
D) retailer
E) manufacturer

Question 65

Kim Nguyen is planning to open a boutique stocked with exotic imports from around the world.Most probably, this new business will be managed by

A) Kim Nguyen.
B) her friends.
C) her relatives.
D) a professional manager.
E) her family.

Question 66

The fact that insulin and power steering both originated with individual inventors and small companies is testimony to the power of small businesses as providers of _____.

A) employment
B) competition
C) technical innovation
D) capital
E) quality products

Question 67

Janis starts a small quilting and embroidery business.She purchases a technologically advanced quilting machine and an embroidery machine for a combined $25,000.Her monthly payments on the equipment are $500, but she has only one client at this time.Janis is facing a potential

A) inventory flow problem.
B) cash-flow problem.
C) competitive advantage.
D) overexpansion problem.
E) advertising issue.

Question 68

Imagine that you want to open your own small business.You will probably be most concerned with having

A) a lot of inventory in the warehouse on opening day.
B) a really good lawyer and an even better accountant.
C) the best Madison Avenue ad agency money can buy.
D) a good source of capital and good management skills.
E) a top-notch marketing consultant and a lot of inventory in the warehouse.

Question 69

Which of the following is not a reason for starting a small business?

A) desire to determine one's own destiny
B) willingness to find and accept a challenge
C) desire for a guaranteed financial return
D) desire for independence
E) desire to create a new business

Question 70

Lauren starts a business that sells personal computers.Within the first year she discovers that computer technology becomes outdated very quickly, and she has not been able to sell her products for as much as she thought due to the passage of time.Lauren has mismanaged _____.

A) inventory
B) cash flow
C) financing arrangements
D) personnel
E) money

Question 71

Which of the following statements is true regarding the profitability of new businesses?

A) It may take several years for a new business to begin showing a profit.
B) Profitability is not an important issue for new businesses.
C) Most new businesses will turn a profit within the first year.
D) If a company does not show a profit within the first year, it will fail.
E) Most new businesses are highly profitable when they first start.

Question 72

What is a common mistake that small-business owners make when their businesses starts growing?

A) They sell more goods and services.
B) They put too much money in advertising.
C) They move beyond their local area.
D) They overexpand without proper planning.
E) They invest too much of their own money.

Question 73

An individual's desire to create a new business is referred to as _____.

A) the entrepreneurial spirit
B) the desire for ownership
C) self-determination
D) self-evaluation
E) the laissez-faire spirit

Question 74

Nathan's business constructs storage sheds for new housing developments as requested by the builders.Nathan's business would best be classified as a _____.

A) service business
B) retailer
C) distribution business
D) production business
E) wholesaler

Question 75

Small businesses are typically managed by

A) relatives.
B) professional managers.
C) friends.
D) the people who start and own them.
E) a board of directors.

Question 76

The main reason there are fewer production industries than distribution or service industries is that

A) there are few things production industries manufacture.
B) production industries have no market.
C) production industries need a large initial investment.
D) there is little chance for profit in production industries.
E) few people want to work in production industries.

Question 77

A new small business, Underwater Wildlife, has opened to sell tours of underwater sites around the country and in South America.However, money has to be paid up front by the Underwater staff to book hotels and other travel arrangements before its clients have paid for the tours.That means Underwater is facing a potential _____.

A) insurance difficulty
B) cash-flow problem
C) inventory-flow problem
D) business plan crunch
E) employee expansion task

Question 78

By age 26, Tom was a plant manager in the snack-foods division.By 33, he headed the division, one of the most profitable in the corporation.Eventually, however, the company decided to move its corporate offices.Although he loved the job and thought the work was great, Tom's lifestyle was awful.He was on the road so often that he was giving up much of his family life.Tom had also become disenchanted with corporate life.He saw that the closer one got to the top, the more vulnerable one's position became.Thus, Tom left the corporation to start his own snack-foods company.His thoughts and actions most clearly reveal his

A) entrepreneurial spirit.
B) need for independence.
C) desire to determine his own destiny.
D) willingness to find and accept a challenge.
E) lack of self-confidence.

Question 79

Megan always knew she wanted to start her own business.She was very passionate and wanted to create something new.Megan's primary motivation for starting her own business is

A) her need for independence.
B) her entrepreneurial spirit.
C) her desire to determine her own destiny.
D) the lack of good jobs in other companies.
E) her background with her family.

Question 80

Steve Jobs and Steven Wozniak, the founders of Apple Computer, Inc., are creative, free-spirited individuals who decided that being corporate underlings was not what they wanted from a career.They had an innovative idea for a product and desired to create their own business based on this idea.All of the following are factors that could have led them to go into business except

A) their independence.
B) the willingness to find and accept a challenge.
C) the desire to determine their own destiny.
D) the low risk and high rewards inherent in entrepreneurship.
E) entrepreneurial spirit.