Deck 6: Small Business and Entrepreneurship: Economic Rocket Fuel

Question 1

Aside from the long hours and hard work needed to start a new business,the decision to become an entrepreneur entails very few trade-offs.

Answer 1

False

Question 2

The Forbes list of the 400 richest individuals is dominated by entrepreneurs.

Answer 2

True

Question 3

Research suggests that fewer than 25% of all teenagers and young adults plan to start their own business.

Answer 3

False

Question 4

Entrepreneurs must balance high risk and high reward.

Question 5

Economic survival can motivate individuals to become entrepreneurs.

Question 6

Owning a business means that you are an entrepreneur.

Question 7

An entrepreneur is an individual willing to take the risk of owning and operating a business.

Question 8

A major attraction of entrepreneurship is that it offers a steady,predictable income.

Question 9

Every small business owner starts out as an entrepreneur.

Question 10

Entrepreneurs strive to meet the needs of the marketplace in hopes of dramatically changing the economic and social landscape worldwide.

Question 11

Only people willing to work long hours are likely to find entrepreneurship an appealing career option.

Question 12

Roman Sivkov migrated to Canada from Russia soon after the collapse of the Soviet Union.He is very bright and is willing to work hard,but he has had a hard time keeping a full-time job because of his limited command of English and heavy accent.Roman may well find that entrepreneurship is his best option for economic success.

Question 13

When launching a new business,entrepreneurs give up high-value benefits,including health insurance and paid time off.

Question 14

Successful entrepreneurs are seldom visionaries.Instead,their strength is the ability to take the abstract ideas of others and turn them into successful businesses.

Question 15

The vast majority of the richest individuals in Canada earned their wealth by obtaining employment in major corporations and then working their way into positions in senior management within these organizations.

Question 16

People who face discrimination that limits their economic opportunities in corporate Canada are likely to find that entrepreneurship offers even less attractive opportunities.

Question 17

The primary factor that influences many people to become entrepreneurs is the opportunity to make more money than they could earn if they worked for someone else.

Question 18

Although entrepreneurs enjoy independence from working for a boss,they still find that they must work for their customers.

Question 19

Most small business owners start their businesses with the intention of changing the world through transformative growth.

Question 20

The desire for a higher level of challenge can motivate someone to become an entrepreneur.

Question 21

Most entrepreneurs have a very realistic appreciation of their own strengths and weaknesses.

Question 22

Dom Castille feels like the world must be against him.He feels his boss is making unreasonable demands and treating him very unfairly at work,and he tells everyone who will listen about the incredible string of bad luck that has dogged his personal life.He hopes that he can hang on long enough for his luck to turn around.Dom's perceptions suggest that he has an external locus of control.

Question 23

A market niche that is too small to attract the attention of major corporations can prove to be quite profitable for a small business.

Question 24

Entrepreneurs usually view the world in terms of black and white; they seldom consider the many shades of grey that other people see when they look at the same issues.

Question 25

Successful entrepreneurs typically view their failures as opportunities to learn so that they can do better next time.

Question 26

Vishal Gondal,the 28-year-old founder of Indiagames,would be considered a classic entrepreneur.

Question 27

Small businesses can often create a competitive edge by providing more personalized customer service.

Question 28

Successful entrepreneurs often have high energy levels that enable them to work extremely long hours to launch their businesses.

Question 29

One drawback of small businesses is that they are frequently limited to serving highly competitive market niches that offer little hope of being profitable.

Question 30

Internal locus of control refers to a firm belief that the individual is personally responsible for what happens in his or her life.

Question 31

The Internet has opened a wide range of new opportunities for small businesses.

Question 32

Small businesses often have an advantage in foreign markets where customers want to deal directly with a company's top management.

Question 33

Individuals with an internal locus of control tend to be very self-reliant.

Question 34

One advantage small businesses often enjoy is the ability to keep overhead costs to a minimum.

Question 35

Rather than become discouraged,entrepreneurs often bounce back after failures to create successful ventures.

Question 36

The development of the Internet has made it harder for small firms to compete effectively against giant businesses.

Question 37

Dr.George Petrie,educator and a university football coach,once explained his outlook in the statement: "I believe that this is a practical world and that I can only count on what I earn.Therefore,I believe in work-hard work." Dr.Petrie's views suggest that he had an internal locus of control.

Question 38

Entrepreneurs are often overconfident in their own abilities,which can lead them to start businesses even though they lack the skills they need to succeed.

Question 39

Steve Jobs would not be considered entrepreneurial because he developed his products while working for Apple Inc.

Question 40

Renée Senn has worked very hard for the past six months to start up a new business.Although she was very confident when she launched her business that it would be a great success,she now realizes that it is doomed to fail.If Renée is a true entrepreneur,this failure is likely to be a devastating blow to her ego and self-confidence.

Question 41

Small businesses cannot succeed without a business plan.

Question 42

A key benefit of buying an existing business is that relationships with customers,suppliers,and vendors are already established.

Question 43

Individuals who want to become small business owners are almost always better off starting their own business than they are buying an existing business.

Question 44

Three downsides to buying a franchise include initial high costs,the ongoing percentage-of-sales royalty fees,and the franchise requirements that,in effect,reduce the owner's independence.

Question 45

One advantage of opening a franchise rather than starting a business from scratch is that start-up costs tend to be lower.

Question 46

Rob Baron owns a small sheet metal fabrication business that employs 23 workers.As a small business owner,one of the major advantages Rob will enjoy when competing against larger firms is a lower cost of government regulations.

Question 47

One of the biggest problems facing people who want to start a small business is the lack of educational resources available to help them learn the ins and outs of starting and managing their new company.

Question 48

Buying an established business is generally less risky than starting a business from scratch.

Question 49

More than 50% of small businesses don't survive beyond their first year.

Question 50

Jorge Martinez wants to start his own small business,but he is concerned about competing against larger firms.Given his concerns,Jorge would probably be interested in starting a business that served a market niche.

Question 51

The failure rate of a franchise is significantly higher than the rate for starting a business from scratch.

Question 52

A typical business plan should be approximately five to seven pages long and should provide only a broad overview of the purpose,strategy,and organization of the firm.One common mistake small business owners make is to develop long,detailed business plans that bankers and investors simply won't take the time to read.

Question 53

Small businesses tend to be at a serious disadvantage when it comes to providing employees with health care coverage.

Question 54

Starting a business from scratch rather than buying an existing company means that the owner has more control over all aspects of the company's organization,structure,and strategy.This can be both a major advantage and a major disadvantage.

Question 55

Many small businesses that don't survive more than six years go out of business for reasons other than the actual failure of the business.

Question 56

Fewer than half of start-up businesses are still in business after the sixth year.

Question 57

One advantage of buying a franchise is that the franchiser usually offers training,financial assistance,and a recognizable brand.

Question 58

A key reason for developing a formal business plan is that having such a plan is absolutely critical when seeking external financing.

Question 59

Small business owners typically find that the small size of their companies makes it simple for them to handle all of the management functions by themselves.

Question 60

If you're thinking about starting a small business,it is often a good idea to work for about three years for someone else in the same industry before venturing out on your own.

Question 61

Rates of entrepreneurship in countries like Uganda and Ecuador are high because many of the citizens in those nations become entrepreneurs out of economic necessity.

Question 62

Small business generates more than half of the Canadian gross domestic product.

Question 63

The majority of new small businesses obtain most of their initial financing from bank loans.

Question 64

Unlike other lenders who invest for financial gain,the main reason angel investors provide financing to start-up companies is that they have a sincere desire to give back to the community that made them wealthy.

Question 65

Small businesses rarely have the creative means to develop new and innovative products.They often wait for larger organizations to develop the product and then simply copy the larger organization's idea.

Question 66

The majority of new firms are funded with the personal resources of the founder.

Question 67

Because they lack the financial resources to fund research and product development efforts,small businesses are seldom able to introduce new innovations into the marketplace.

Question 68

When borrowing money from family and friends to start a business,it is a good idea to keep the loan arrangements on a professional basis.

Question 69

Most entrepreneurs have little trouble finding adequate financing during their start-up year because the small size of their new firms means that financial needs are minimal.

Question 70

About half of all start-ups use credit cards as a source of financing.

Question 71

More than half of all start-up companies obtain at least part of their initial financing from venture capital firms.

Question 72

Angel investors are wealthy individuals who provide financing to promising new start-up companies.

Question 73

Venture capitalist firms provide financing to new companies in exchange for a share of ownership in those companies.

Question 74

The Global Entrepreneurship Monitor (GEM)shows that people living in high-income countries tend to be much more willing to start their own businesses than people who live in low-income countries.

Question 75

Cultural and political factors help explain why Canada has a much higher entrepreneurship rate than Japan and many European nations.

Question 76

Phillie Truper is a student and wants to start a new business but lacks sufficient personal financial resources.She has asked banks and other lenders for loans,but they have turned her down,telling her that her proposal is too risky.Phillie might find that the Canadian government has many programs for students that could help her get a loan from one of these lenders by providing a partial loan guarantee.

Question 77

Small businesses are the major source of new jobs created by the Canadian economy.

Question 78

Workers employed by small businesses are much less likely to be laid off during an economic downturn than workers in major corporations.

Question 79

Ted Price's new company is already experiencing steady growth of about 10% per year.Ted believes this rate of growth is sustainable for the next several years.He enjoys the business and wants to maintain personal ownership and control over the firm for as long as possible,but he needs to find some external financing.Ted is likely to find angel investors who are very interested in helping him meet his financial needs.

Question 80

While clearly important to their owners,employees,and local communities,small businesses actually account for only a very small percentage of output and employment in the Canadian economy.