Deck 10: Managing Small Business Start-Ups

Question 1

A sole proprietorship is an unincorporated business owned by two or more people.

Answer 1

False

Question 2

Entrepreneurship and small business is an engine for job creation and innovation.

Answer 2

True

Question 3

The drawbacks of proprietorship include unlimited liability and difficulty in obtaining financing.

Answer 3

True

Question 4

Entrepreneurs in the optimizer category are rewarded by the personal satisfaction of being business owners.

Question 5

Immigrants are more likely to start small businesses than native-born citizens.

Question 6

The most common source of new business ideas comes from in-depth understanding of an industry or profession.

Question 7

Social entrepreneurship combines the creativity, business smarts, passion and hard work of the traditional entrepreneur with a mission to change the world for the better.

Question 8

The psychological characteristic that allows a person to be untroubled by disorder and uncertainty is called tolerance for ambiguity.

Question 9

The process of initiating a business venture, gathering and organizing the appropriate resources and assuming the associated risks and rewards refers to entrepreneurship.

Question 10

Optimizers are rewarded by chance to work on something new and creative.

Question 11

The first step in pursuing an entrepreneurial dream is to come up with a viable idea.

Question 12

A document specifying the business details prepared by an entrepreneur prior to opening a new business is known as a business plan.

Question 13

Entrepreneurs in the sustainer category are rewarded by the personal satisfaction of being business owners.

Question 14

Social entrepreneurs are leaders who are committed to both good business and ensuring high profitability.

Question 15

Since a corporation is a legal structure reserved for large firms, small businesses have two basic choices for legal structure of their company: proprietorship and partnership.

Question 16

Entrepreneurs in the sustainer category like the chance to balance work and personal life and often don't want the business to grow too large.

Question 17

Social entrepreneurs have a primary goal of improving society rather than maximizing profits.

Question 18

A need to achieve is a psychological characteristic that means people are motivated to excel and pick situations in which success is likely.

Question 19

A business plan for a small business should be detailed, encompassing at least 100 pages.

Question 20

Particularly in a turbulent environment, the three most important traits of successful entrepreneurs are realism, flexibility, and passion.

Question 21

The first stage of growth for an entrepreneurial company is the investment stage.

Question 22

Two principle advantages of forming a corporation are continuity and limits on the owners' liability.

Question 23

If a small business owner enjoys the chance to balance work and personal life, they would be considered a(n) _____.

A) idealist
B) optimizer
C) hard worker
D) juggler
E) sustainer

Question 24

A(n) _____ is an employee who recognizes a viable idea for a business product or service and carries it out.

A) intrapreneur
B) entrepreneur
C) manager
D) leader
E) introvert

Question 25

Entrepreneurs see themselves as being less in control of their environment, generally speaking, and can be expected to have an external locus of control.

Question 26

Which of the following is the process of starting a business venture, organizing the resources and taking the risks?

A) Intrapreneurship
B) Entrepreneurship
C) Small business administration
D) Venture capital
E) Equity financing

Question 27

Borrowing from family and friends is a common source of debt financing for a start-up business.

Question 28

A domain name gives a company an address on the Web and a unique identity.

Question 29

An attractive innovation for entrepreneurs who want to start a business from scratch is to join a business incubator.

Question 30

The failure rate for high-tech business is lower than the failure rate for conventional businesses.

Question 31

Equity financing is when funds are invested in exchange for ownership in the company.

Question 32

The takeoff stage is the last of the five stages of growth for an entrepreneurial company.

Question 33

To succeed in the competitive online market, aspiring entrepreneurs need to identify a market niche that isn't being served by other companies.

Question 34

A venture capital firm is a group of companies or individuals that invests money in new or expanding businesses for ownership and potential profits.

Question 35

In the start-up stage of an entrepreneurial business, formal planning tends to be non-existent except for the business plan.

Question 36

At the success stage of growth, a company's substantial financial gains may come at the cost of losing its advantages of small size, including flexibility and the entrepreneurial spirit.

Question 37

The advantage of buying an existing business is the ability to develop and design the business in the entrepreneur's own way.

Question 38

An entrepreneur:

A) assumes the risks of the business.
B) reaps the rewards of the business.
C) assumes the financial and legal risks of ownership.
D) recognizes a viable idea for a business product or service and carries it out.
E) all of these.

Question 39

The owner should start implementing more structured control systems by Stage 3 of growth for an entrepreneurial firm.

Question 40

At Stage 3 of growth for an entrepreneurial firm, managers often are hired to take over duties performed by the owner.

Question 41

What is the most common way that entrepreneurs finance the start-up of a new business?

A) Self-financing from savings or credit cards
B) Loans from friends, family or business associates
C) Bank loans
D) Lines of credit
E) Venture capital

Question 42

The most common reason for becoming an entrepreneur is:

A) joining the family business.
B) to control one's future.
C) to be one's own boss.
D) to fulfill a dream.
E) the result of being laid off.

Question 43

Social entrepreneurs are committed to both good business and:

A) swaying political opinion of consumers.
B) improving the natural environment.
C) positive sustainable social change.
D) non-profit goals.
E) big profits.

Question 44

Which of the following is a popular small business form because it is easy to start and has few legal requirements?

A) A partnership
B) A PLC
C) A corporation
D) An association
E) A trade alliance

Question 45

A group of companies or individuals that invests money in new or expanding businesses, typically for partial ownership and potential future cash flows is known as:

A) an equity financing firm.
B) a franchisor.
C) a venture capital firm.
D) a corporation.
E) a trade alliance.

Question 46

Which of the following is the most cited source of new business ideas?

A) Brainstorming
B) In-depth understanding of an industry or profession
C) An active hobby
D) Copying someone else
E) None of these

Question 47

Which of these refers to an unincorporated business owned by an individual for profit?

A) Partnership
B) Sole proprietorship
C) Corporation
D) Association
E) Trade alliance

Question 48

A venture capital firm wants to invest in businesses with a high rate of return. In return, they will:

A) invest large amounts of money.
B) provide necessary assistance and advice.
C) provide information to help the entrepreneur prosper.
D) all of the three above.
E) provide only the minimum assistance and advice to help the entrepreneur prosper only.

Question 49

Which of the following per Daft et al are high-energy people who enjoy handling every detail of their own businesses?

A) Jugglers
B) Idealists
C) Sustainers
D) Optimizers
E) Hard workers

Question 50

_____ combines creativity, passion, and hard work of the traditional entrepreneur with a mission to change the world for the better.

A) Contemporary entrepreneurship
B) Traditional entrepreneurship
C) Modern-day entrepreneurship
D) Social entrepreneurship
E) Conventional entrepreneurship

Question 51

A legal entity created by the state and existing apart from its owners is known as:

A) a partnership.
B) a proprietorship.
C) a corporation.
D) an association.
E) a trade alliance.

Question 52

A(n) _____ has a legal entity of itself .

A) partnership
B) LLP
C) corporation
D) association
E) trade alliance

Question 53

Which of the following is the psychological characteristic that allows a person to be untroubled by disorder and uncertainty?

A) Tolerance for ambiguity
B) External locus of control
C) Need to achieve
D) Awareness of passing time
E) Internal locus of control

Question 54

The drawback(s) of partnership includes:

A) the unlimited liability of the partners.
B) conflicts with partners.
C) existence regardless of whether the owners live or dies.
D) difficulty in obtaining large value levels of financing.
E) complexity and cost.

Question 55

Which of these means that people are motivated to excel and choose situations in which success is more likely?

A) External locus of control
B) Tolerance for Ambiguity
C) Awareness of passing time
D) Internal locus of control
E) Need for self achievement

Question 56

_____ refers to borrowing money that has to be repaid in order to start a business.

A) Venture capital
B) Debt financing
C) Equity financing
D) Franchising
E) Licensing

Question 57

What are the two principal advantages of forming a corporation?

A) Unlimited liability and potential conflicts with partners
B) Freedom from debt and relatively simple structure
C) Continuity and limits on directors' liability
D) Unlimited liability and continuity
E) Continuity and non-taxable structure

Question 58

Which of the following is NOT an appropriate legal structure for an entrepreneurial company?

A) Limited Liability
B) Corporation
C) Partnership
D) Trade alliance
E) All of these are appropriate legal structures for an entrepreneurial company.

Question 59

One of the early characteristics or rationale of a successful business plan is to:

A) develop a profile of potential customers and market needs.
B) demonstrate a clear and compelling vision that creates excitement and commitment.
C) unearth the key ingredient of the business that will attract millions of customers.
D) reveal the entrepreneur's background and role in the company.
E) provide essential information about funding received so far.

Question 60

What is the primary goal of the social entrepreneur?

A) Maximizing profits
B) Improving society
C) Reaching social circles
D) Finding funding
E) Writing grants

Question 61

The process of initiating a business venture, organizing it and assuming its risks is known as _____.

Question 62

Entrepreneurs who aspire to start an online businesses typically implement all the following steps EXCEPT:

A) create a professional website.
B) choose a domain name.
C) build online relationships
D) creating a physical production location.
E) identify a profitable market niche.

Question 63

Entrepreneurs in the _____ category like the idea of working on something that is new, creative or personally meaningful.

Question 64

A(n) _____ recognizes a viable idea for a business product or service and carries it out.

Question 65

All of these are essential entrepreneurial characteristics except:

A) self-confidence.
B) tolerance for ambiguity.
C) external locus of control.
D) high energy level.
E) education.

Question 66

_____ is the psychological characteristic that allows a person to be untroubled by disorder and uncertainty.

Question 67

Which of these refers to the financing that consists of funds that are invested in exchange for ownership in the company?

A) Venture-debt
B) Debt financing
C) Equity financing
D) Franchising
E) Licensing

Question 68

_____ refers to an arrangement by which the owner of a product or service allows others to purchase the right to distribute the product or service with support from the owner.

A) Franchising
B) Business incubation
C) Spinning-off
D) Globalization
E) Right offerings

Question 69

In the next decade, _____ and _____ businesses could end up being the emerging growth companies.

Question 70

Which of these offers the advantage that the entrepreneur has the ability to develop and design the business in their own specific way?

A) Participate in a business incubator
B) Start a new business
C) Buy a franchise
D) Buy an existing business
E) All of these

Question 71

A human quality linked to entrepreneurship in which people are motivated to excel and pick situations in which success is likely is called the _____.

Question 72

During the latter stages of entrepreneurial growth, the manager:

A) must learn to delegate and decentralize authority.
B) must institute greater use of rules and procedures.
C) must hire sufficient professional management to handle the growth phase.
D) all of the above.
E) none of the above.

Question 73

Formal planning, such as a strategic plan, is usually instituted during which stage?

A) Start-up
B) Survival
C) Takeoff
D) Success
E) Resource maturity

Question 74

The key problem, at the _____ stage of growth, is how to grow rapidly and finance that growth.

A) existence
B) survival
C) takeoff
D) resource maturity
E) success

Question 75

At which stage of growth is the company if it is solidly based and profitable?

A) Resource maturity
B) Takeoff
C) Survival
D) Success
E) Existence

Question 76

During the _____ stage, the company will need to make greater use of budgets, standard cost systems and statistical reports.

A) existence
B) survival
C) takeoff
D) success
E) maturity

Question 77

With the entrepreneurial personality, Holly can be expected to have all of the following traits except:

A) internal locus of control.
B) tolerance for ambiguity.
C) high need to achieve.
D) high uncertainty avoidance.
E) all of these.

Question 78

After fully developing their new business idea, Holly and Peter recognize the need to develop a business plan. Typical business plans will include all of the following, except:

A) mission or vision of the company.
B) information about the suppliers.
C) policy for extending credit to customers.
D) analysis of critical risks that threaten success.
E) All of these should be included.

Question 79

Which of these is true about the business incubator?

A) It gives up control since every business is run the same way.
B) It provides shared office space, management support services and management advice.
C) It develops an international business.
D) It provides an established name and advertising.
E) All of these.

Question 80

The majority of existing incubators are operated by:

A) large corporations.
B) Not for profit organizations.
C) small businesses.
D) international businesses.
E) college drop-outs.