Deck 8: Calculating Startup Capital Requirements

Question 1

The board is headed by the chairperson, who, in a new, private venture, is typically the lead entrepreneur.

Answer 1

True

Question 2

A board of directors can be made up of inside or outside members or a combination of the two.

Answer 2

True

Question 3

Among the reasons why startup teams fail are all of these except:

A)Putting structure on the organization before it's time
B)Pretending there are sales from beta customers
C)Suffocating under opportunity overload
D)Licensing the technology too soon
E)All of these choices are reasons why startup teams fail

Answer 3

E

Question 4

____ staff is a way for a new business to enjoy the advantages of having the kind of skilled work force available to major corporations without incurring so many of the expenses.

A)Hiring
B)Leasing
C)Outsourcing
D)Borrowing
E)None of these choices

Question 5

Which of the following is not an independent contractor you would expect to find on an entrepreneur's extended team?

A)Consultants
B)PEOs
C)Manufacturing support
D)Sales support
E)Board of advisors

Question 6

The single most important factor in the success or failure of founding teams is:

A)Achievement
B)Education
C)Intelligence
D)Communication
E)None of these choices

Question 7

Choosing a good attorney is a time-consuming but vital task that should be accomplished immediately after startup.

Question 8

An accountant is your advocate, but your lawyer is bound by rules and ethics that do not permit advocacy.

Question 9

All of the following are part of an entrepreneur's extended network except ____.

A)government agencies
B)personal advisors
C)manufacturing support
D)sales support
E)customers

Question 10

Because consultants tend to be fairly expensive, they are best used for critical, one-time advising or problem-solving assignments.

Question 11

Most entrepreneurs try to avoid hiring employees as long as possible, because employees are the single biggest expense in the business.

Question 12

When an entrepreneur decides to use a team effort to create the new venture, he or she generally looks for people who have ____ skills.

A)independent
B)competing
C)complementary
D)differentiated
E)homogeneous

Question 13

Which of the following is not a professional advisor to an entrepreneur?

A)Attorney
B)Board of directors
C)Accountant
D)Banker
E)Insurance agent

Question 14

____ are more likely to make the mistake of putting structure on the organization before its time.

A)Personal advisors
B)Founding teams
C)Startup teams
D)High-tech teams
E)Virtual teams

Question 15

If a new venture is a corporation, a board of directors is required.

Question 16

Working boards are crucial in the startup phase.

Question 17

The intense effort required of a startup can be shared when the entrepreneur uses a ____.

A)creditor
B)business agent
C)stockholder
D)founding team
E)board of directors

Question 18

The chances of success are greater when the lead entrepreneur and the team share the same ____ for the new venture.

A)advisors
B)skills
C)vision
D)network
E)status expectations

Question 19

In a wholly owned or closely held corporation, there really is little distinction between the functions of a board of directors and those of a board of advisers.

Question 20

When choosing a banker, the entrepreneur planning a new venture should seek out an officer with the rank of assistant vice president or higher.

Question 21

An informal panel of experts and other people who are interested in seeing the new venture succeed is a/an ____.

A)mentor board
B)startup team
C)virtual team
D)advisory board
E)consulting firm

Question 22

The entrepreneurial team owns all or the majority of the stock in a ____.

A)publicly held company
B)privately owned corporation
C)governmental operation
D)sole proprietorship
E)strategic partnership

Question 23

The functions assumed by a professional employer organization include ____ functions.

A)payroll and human resource
B)marketing research
C)manufacturing
D)All of these choices
E)None of these choices

Question 24

The firm's ____ should be thought of as a business partner who can be a source of information and networking; help make decisions regarding capital needs; and assist in preparing pro forma operations and cash-flow analyses.

A)accountant
B)auditor
C)banker
D)board
E)None of these choices

Question 25

An accountant can help a growing business in all of the following except ____.

A)auditing
B)bookkeeping
C)preparing documents for acquisition of intellectual-property rights
D)preparing documents for acquisition of intellectual-property rights
E)preparing taxes

Question 26

Which of the following would not be representative of good team member communication?

A)Talking and listening for about the same amount of time
B)Talking over one another
C)Lively face to face conversations with team members
D)Back-channel or sidebar conversations
E)Back-channel or sidebar conversations

Question 27

A board member with no direct connection to the business is a/an ____.

A)inside board member
B)personal advisor
C)partner
D)outside board member
E)insurance agent

Question 28

A/An ____ consists of individuals whom the entrepreneur respects and trusts. They serve as a sounding board for ideas and act as coaches.

A)advisory board
B)board of directors
C)founding team
D)personal mentor board
E)independent contractor

Question 29

The board is headed by the chairperson, who, in a new, private venture, is typically the ____.

A)lead entrepreneur
B)founder
C)CEO
D)CFO
E)advisor

Question 30

Parties who run their own businesses and are hired by the entrepreneur to do a specific job are ____.

A)labor unions
B)independent contractors
C)co-operatives
D)secret partnerships
E)silent partnerships

Question 31

Which of the following is a service that consultants do not provide?

A)Training sales staff and/or management
B)Conducting market research
C)Acting as temporary key management
D)Bringing the activity in-house
E)Conducting research and development

Question 32

One of the biggest incentives for taking on the risk of a startup venture is the opportunity to acquire a/an ____ stake and participate in the potential upside if the startup is a success.

A)buy-sell
B)equity
C)investor
D)advisor
E)None of these choices

Question 33

A/an ____ is an advocate, but a/an ____ is bound by rules and ethics that do not permit advocacy.

A)insurance agent / banker
B)banker / insurance agent
C)consultant / government agency
D)lawyer / accountant
E)accountant / lawyer

Question 34

A board member who is a founder, employee, or retired manager of the firm is a/an ____.

A)inside board member
B)outside board member
C)personal advisor
D)officer
E)chair of the board

Question 35

Attorneys can provide the new venture with a wealth of support, which includes all the following except ____.

A)assisting in complying with federal, state, and local laws
B)preparing financial statements
C)advising and preparing documents for intellectual-property rights acquisition
D)negotiating and preparing contracts
E)apprising the entrepreneur of the latest tax reform legislation and helping minimize the venture's tax burden

Question 36

The Law of Agency defines the terms employee and independent contractor ____.

A)on issues of taxation
B)on issues of education
C)in securing a loan
D)in securing private consultants
E)in securing grants

Question 37

When choosing people to serve on the board of directors, consider those who have all of the following characteristics except ____.

A)important contacts in the industry
B)a personality compatible with the rest of the board
C)exploitive behavior
D)good problem-solving skills
E)honesty and integrity to engender a sense of mutual trust

Question 38

To determine whether the accounting and control procedures are adequate once the new venture is beyond the startup phase and is growing consistently, ____.

A)an annual audit is needed
B)financial statements are not required
C)a business agent is not required
D)a labor union is essential
E)the entrepreneur should file with the SEC

Question 39

A high-tech venture with significant up-front funding and the potential for exponential growth requires a management team of ____.

A)creative founders
B)young entrepreneurs
C)experienced professionals
D)scientists and technical experts
E)venture capitalists

Question 40

Because they tend to be fairly expensive, consultants are best used for ____.

A)technology startups
B)human resources
C)critical one-time advice or problem solving
D)employee leasing
E)repetitive tasks

Question 41

Briefly discuss the important factors in composing the founding team.

Question 42

What are the primary considerations to take into account before asking a family member or close friend to be a partner?

Question 43

Briefly discuss the special issues that may arise with founding teams in the high-tech industry.

Question 44

Why is a founding team more likely to be successful versus a solo, independent entrepreneur?

Question 45

What are the functions of the board of directors?

Question 46

Discuss the advantages and disadvantages associated with virtual teams.

Question 47

How can consultants provide services for the new venture?

Question 48

Briefly discuss the elements of the entrepreneur's extended networks.

Question 49

Briefly discuss how attorneys can supply a wealth of support for the new venture.

Question 50

What services can a founder with banking experience offer the team?