Deck 5: Small Business,Entrepreneurship,and Franchises

Question 1

The main reasons small businesses fail are poor management skills on the part of owners,inadequate capital,and poor planning.

Answer 1

True

Question 2

The various types of businesses attracting small business are generally grouped into service industries,distribution industries,and financial industries.

Answer 2

False

Question 3

According to a government source,more than half of this century's technological innovations came from small companies.

Answer 3

True

Question 4

Many entrepreneurs lack the management skills required to run a business.

Question 5

The incidence of innovation among small-business workers is significantly higher than that among workers in large businesses.

Question 6

A new business is built around the entrepreneur.

Question 7

Large companies often find it less expensive to purchase parts from small companies than to manufacture their own.

Question 8

The SBA has defined a small business as one independently owned,operated for profit,and not dominant in its field.

Question 9

Entrepreneurial spirit is the desire to create a new business.

Question 10

Small firms have traditionally added more than their proportional share of new jobs to the economy.

Question 11

Small businesses are prone to failure.

Question 12

Small businesses are typically managed by people who started and own them.

Question 13

Small businesses are generally managed by professional managers.

Question 14

Service industries make up more than 48 percent of all small businesses.

Question 15

Few Americans take advantage of their freedom to start a business.

Question 16

Small businesses operate only in the service industry,not in manufacturing.

Question 17

About half of small businesses are in the production industries.

Question 18

About three-quarters of all small businesses are in the service industry.

Question 19

It is rare that managers of small businesses lack the management skills necessary to run their businesses.

Question 20

Small businesses account for all nongovernment employment.

Question 21

For those who like dealing with people,small business is the place to be.

Question 22

An investor who is considering investing in Diane's Burger Bar would not likely want to see her business plan.

Question 23

John Wells,an African-American small business owner,might be eligible for a grant from the Minority Business Development Agency.

Question 24

The SBA's website resource targeted at assisting women-owned business is known as the SBA's Online Women's Resource and Growth Center.

Question 25

The purchaser of a franchise is called the franchisee.

Question 26

The business plan should deceive neither investors nor loan officers and should convey accurate and realistic expectations of business potential.

Question 27

Because of small-business competition,large companies must become more efficient and responsive to consumers' needs.

Question 28

A small-business investment company (SBIC)is a government agency that provides venture capital to small enterprises.

Question 29

A main disadvantage of a small business is that employees and customers usually develop too close of a relationship.

Question 30

The purchaser of a franchise is called the franchisor.

Question 31

Money invested in small firms with the potential to become very successful is known as venture capital.

Question 32

Some advantages of the sole proprietorship also apply to the small business.

Question 33

The SBA is a private organization rather than a government agency.

Question 34

In the past,the SBA could guarantee loans up to $5 million.

Question 35

The average length of an SBA loan is about twenty-five years.

Question 36

Society usually does not benefit from entrepreneurs who pursue their individual goals;it is only the entrepreneurs who reap the benefits of their own work and creativity.

Question 37

Statistically,one can expect about 50 percent of new businesses to fail within five years of their founding.

Question 38

A license to operate an individually owned business as though it were part of a chain is a franchise.

Question 39

SCORE is a group of retired businesspeople who volunteer their services to small businesses through the SBA.

Question 40

Economically,the U.S.government is not concerned with whether or not small businesses make it.

Question 41

​Jackie 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.Jackie has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness.
​Jackie'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,Jackie suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Jackie wants to make sure that her leaving does not become the cause of the company going under.
Refer to Personal Wellness.When Jackie 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 42

Franchising is limited only to fast foods.

Question 43

Mc-Queen Chicken
​Lenny decided to open a local franchise of the well-known Mc-Queen 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.
Refer to Mc-Queen 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 44

Small businesses are expected to remain the dominant form of organization in this country.

Question 45

Mc-Queen Chicken
​Lenny decided to open a local franchise of the well-known Mc-Queen 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.
Refer to Mc-Queen Chicken.When Lenny opens the Mc-Queen Chicken restaurant in his town,he would be known as the

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

Question 46

An agreement between two franchisors in which the two franchisors offer their products together is called double franchising.

Question 47

Some franchisors claim that contracts are unfairly tilted toward the franchisees.

Question 48

Franchising experienced tremendous growth during the early 1930s.

Question 49

​Jackie 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.Jackie has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness.
​Jackie'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,Jackie suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Jackie 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 50

International trade will become more important to small-business owners in the new century.

Question 51

The disadvantages of franchising mainly affect the franchisee because the franchisor retains a great deal of control.

Question 52

About one-third of franchised businesses fail during the first two years of operation.

Question 53

All franchisors give geographical protection to their franchise holders.

Question 54

Mc-Queen Chicken
​Lenny decided to open a local franchise of the well-known Mc-Queen 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.
Refer to Mc-Queen Chicken.Which of the following would be an advantage for Lenny?

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 55

​Jackie 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.Jackie has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness.
​Jackie'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,Jackie suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Jackie 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 56

In a franchise,the franchisee gets the opportunity to start a business with limited capital and to make use of the business experience of others.

Question 57

​Jackie 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.Jackie has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness.
​Jackie'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,Jackie suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Jackie 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,Jackie 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 58

There is much less likelihood of failure with a franchised outlet than with an independently owned small business.

Question 59

​Jackie 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.Jackie has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness.
​Jackie'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,Jackie suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company.Jackie 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 60

Franchising is a win-win combination;both franchisees and franchisors are guaranteed success.

Question 61

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

A) 5 percent
B) 10 percent
C) 30 percent
D) over 50 percent
E) nearly 90 percent

Question 62

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

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

Question 63

Approximately how many businesses are there in the United States?

A) 900,000
B) 11 million
C) 27 million
D) 1 billion
E) 4 billion

Question 64

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 65

Which of the following would least likely be started as a small business?

A) Flower shop
B) Restaurant
C) Electricity company
D) Landscaping business
E) Furniture repair store

Question 66

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 67

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

A) 27
B) 35
C) 48
D) 72
E) 84

Question 68

Fatima'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 69

Billy 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 70

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 71

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 72

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 73

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 74

Shai 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 75

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 76

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 77

Which of the following is not considered a category in the distribution industries?

A) Manufacturing
B) Wholesaling
C) Retailing
D) Transportation
E) Communications

Question 78

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

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

Question 79

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

A) Producer of semiconductors with 2,000 employees
B) Wholesaler with 50 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 80

Businesses such as flower shops,restaurants,bed and breakfasts,and automobile repair are good candidates for entrepreneurs because they

A) do not require any skills.
B) are the most likely to succeed.
C) can obtain financing easily.
D) require no special equipment.
E) have a relatively low initial investment.