Deck 6: Small Business and Entrepreneurship: Economic Rocket Fuel

Question 1

Research suggests that teenagers and young adults make up the fastest growing segment of start-up owners.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

Economic survival can motivate individuals to become entrepreneurs.

Answer 3

True

Question 4

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.

Question 5

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 6

Owning a business means that you are an entrepreneur.

Question 7

Although entrepreneurs enjoy independence from working for a boss, they must still meet the needs of their customers who can be even more demanding than the toughest boss.

Question 8

The desire for independence can motivate someone to become an entrepreneur.

Question 9

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

Question 10

Classic entrepreneurs who deliver on the promise of their best ideas can dramatically change the economic and social landscape worldwide.

Question 11

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

Question 12

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

Question 13

Roman Sivkov recently migrated to Canada from Russia. 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 14

People who want to reduce the number of hours in their work day are likely to find entrepreneurship an appealing career option.

Question 15

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

Question 16

Every small business owner starts out as an entrepreneur.

Question 17

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

Question 18

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

Question 19

The segment of "necessity entrepreneurs" includes a range of people, from middle-aged workers who were laid off from corporate jobs, to new immigrants with limited English and heavy accents, to those who experience discrimination in the standard workplace.

Question 20

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 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

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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 28

To be a successful entrepreneur, you must fit the entrepreneurial profile.

Question 29

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 30

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 31

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

Question 32

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

Question 33

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 34

People with an external locus of control rely less on their own efforts and believe that the actions of others and random luck control their fate.

Question 35

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 36

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 37

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

Question 38

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

Question 39

Venture capital firms do not get involved in the operations of the business.

Question 40

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

Question 41

The Canada Small Business Financing (CSBF) program helps small businesses gain loans they might not otherwise get.

Question 42

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

Question 43

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

Question 44

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

Question 45

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 46

Ted Price's new company is already experiencing steady growth of about 10 percent 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 a venture capitalist who is very interested in helping him meet his financial needs.

Question 47

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

Question 48

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 49

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

Question 50

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 51

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 52

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

Question 53

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 54

Smaller firms tend to work around costs with tactics such as offering employees flexible work schedules instead of costly health benefits.

Question 55

The personal touch of smaller businesses is not usually beneficial in selling to foreign markets.

Question 56

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

Question 57

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

Question 58

Sometimes small business owners shut down the business for reasons other than the failure of the firm itself.

Question 59

When you buy an established business, you may inherit old mistakes.

Question 60

Administrative and real costs for employee extended benefits plans are higher than for large businesses, making it even tougher form small firms to offer coverage to their employees.

Question 61

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 62

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 63

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

Question 64

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

Question 65

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 66

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

Question 67

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

Question 68

Small businesses cannot succeed without a business plan.

Question 69

Entrepreneurship rates are significantly lower in countries that provide employment protection such as unemployment insurance.

Question 70

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

Question 71

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 72

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 73

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

Question 74

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 75

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

Question 76

As a franchisee, if something goes wrong with the national brand your business will suffer too.

Question 77

One common mistake that small business owners make is to develop long, detailed business plans that bankers and investors simply won't take the time to read.

Question 78

Fifty percent of small business owners are 50 years of age or older.

Question 79

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

Question 80

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