Deck 5: Small Business, Entrepreneurship, and Franchising

Question 1

People who operate service businesses are almost never considered to be retailers.

Answer 1

False
Explanation: Many service providers are also retailers because they provide their services to the end-user.

Question 2

The majority of all new jobs created in the United States in recent years were generated by

A)medium businesses.
B)small businesses.
C)large businesses.
D)corporations.
E)state governments.

Answer 2

B
Explanation: In the last decade,64 percent of net new jobs annually were created by small businesses.

Question 3

Which of the following groups is most rapidly increasing their presence in the business world?

A)Women
B)Minorities
C)White males
D)People under 30

Answer 3

B
Explanation: The number of minority-owned businesses is increasing at a rate of 30 percent,even higher than for women-owned businesses.

Question 4

A number of very successful high technology businesses began as small entrepreneurial ventures.

Question 5

Retailers purchase goods and resell them to consumers and some distributors.

Question 6

Any business that is independently owned and operated can be classified as a small business.

Question 7

Retailing,services,manufacturing,and high technology are attractive to entrepreneurs because these fields tend to be relatively easy to enter and require low initial financing.

Question 8

The Small Business Administration offers managerial and financial assistance to small businesses.

Question 9

In recent years,small businesses generated very few new jobs in the U.S.

Question 10

It is difficult to define small business because smallness is relative.

Question 11

________ has helped small businesses compete with larger businesses.

A)Well-managed inventory
B)Friendly customer service
C)Technology
D)Good management
E)A diverse workforce

Question 12

The entrepreneurship movement is declining because of technological advances.

Question 13

Your textbook uses the term small business to refer to an owner-managed business that employs not more than

A)100 people.
B)500 people.
C)15,000 people.
D)25 people.
E)1,000 people.

Question 14

Which of the following is not part of the definition of a small business?

A)It employs more than 500 employees.
B)It employs fewer than 500 employees.
C)It is independently owned and operated.
D)It is not dominant in its field.
E)All of the above are part of the definition.

Question 15

Entrepreneurship is the process of creating and managing a business to achieve desired objectives.

Question 16

Why are minority-owned and women-owned small businesses growing so rapidly in the United States?

Question 17

Which of the following is an advantage of a small business?

A)Greater flexibility to change.
B)Highly trained staff.
C)Better products.
D)More diverse employees.
E)Small businesses have not advantages over large ones.

Question 18

Of minority groups in the United States,________ own the most small businesses.

A)Asians
B)African Americans
C)American Indians
D)Hispanics
E)Pacific Islanders

Question 19

What is a small business?

Question 20

The Small Business Administration

A)was established by the U.S.Chamber of Commerce to encourage the entrepreneurial spirit.
B)is an independent agency of the federal government to provide managerial and financial assistance to small businesses.
C)is a subsidiary of the Better Business Bureau.
D)is a division of the federal government that is responsible for ensuring that newly formed businesses adhere to the law.
E)is a U.S.Congressional agency that fosters the establishment of new businesses.

Question 21

The ability to develop a reputation for quality and service is an advantage of a small business.

Question 22

Small businesses cannot be operated from an individual's home.

Question 23

Which of the following fields are most attractive to small businesses?

A)Wholesaling,retailing,and services
B)Retailing,distribution,and services
C)Retailing and wholesaling,services,manufacturing,and high technology
D)Wholesaling,services,and high technology
E)Services,distribution,and high technology

Question 24

Many service businesses are considered retailers because they

A)sell small quantities of goods.
B)sell their services to consumers.
C)sell from a single store location.
D)open their businesses for the same hours that most retailers are open.
E)employ only a small number of people.

Question 25

One of the major reasons people want to own and operate their own business is to

A)make a fortune.
B)be their own boss.
C)have complete freedom.
D)have an easy life.
E)eliminate all pressure.

Question 26

Which of the following is not a reason why small businesses choose to become retailers?

A)Starting a retail business is relatively easy.
B)Retailing does not require a large capital investment.
C)Retailing requires a large capital investment.
D)Gaining knowledge and experience in retailing is relatively easy.
E)The owner can capitalize on personal expertise or interests.

Question 27

In the context of starting a new business,a retailer differs from a manufacturer in that the retailer is less likely to make a heavy investment in

A)equipment and distribution systems.
B)space.
C)bookkeeping.
D)stationery.
E)advertising.

Question 28

Which of the following is not an advantage of small-business ownership?

A)Lower cost of formation
B)Flexibility in decision-making
C)Ability to focus on specific groups of customers
D)Over-optimism
E)Ability to gain a solid reputation

Question 29

A small business's ability to focus on narrow niches can help it develop

A)high blood pressure.
B)lower costs.
C)higher costs.
D)flexibility.
E)an enviable reputation for quality and service.

Question 30

Small businesses usually only have one layer of management,making them more ______ and able to adapt to market demands.

A)flexible
B)reputable
C)expensive
D)independent
E)inefficient

Question 31

How important is small business to the U.S.economy?

Question 32

Relatively low start-up costs are an advantage of a small business.

Question 33

When market conditions change rapidly,a small business usually has fewer layers of management to work through in making decisions.This advantage of small business is

A)focus.
B)flexibility.
C)reputation.
D)hierarchical organization.
E)standardization.

Question 34

The ______ sector accounts for the majority of jobs in the United States.

A)manufacturing
B)retail
C)export
D)wholesale
E)service

Question 35

Perhaps one of the most significant strengths of small businesses is

A)their ability to innovate and bring significant changes and benefits to customers.
B)the entrepreneurial spirit they foster.
C)the encouragement they receive from larger businesses.
D)the competition they encourage.
E)the ease of starting one.

Question 36

One advantage that small businesses have over large businesses is that they

A)are better able to focus on a few key customers.
B)have well-defined goals and objectives.
C)can arrange financial help easily because their capital needs are much smaller.
D)know what they want to do and have the ability to do it.
E)have specialized knowledge about the various areas of business concern.

Question 37

Small businesses have a high success rate.

Question 38

Which of the following is an advantage of small-business ownership?

A)Lower cost of formation
B)High stress level
C)High failure rate
D)Lack of flexibility
E)Poor reputation

Question 39

What are some of the advantages of small-business ownership?

Question 40

Targeting small niches or product needs is a dangerous strategy for a small business to follow.

Question 41

To start any business you must first have

A)investors.
B)an idea.
C)capital.
D)employees.
E)a business plan.

Question 42

The lack of funds to operate a business normally is called

A)discounting.
B)creative financing.
C)financial pessimism.
D)undercapitalization.
E)overcapitalization.

Question 43

Small business success

A)rarely lasts more than two years.
B)is not guaranteed.
C)is not really attainable.
D)happens only in the United States.
E)is a sure thing.

Question 44

Which of the following is not a common cause of small business failure?

A)Poor business concept
B)Managerial inexperience
C)Entrepreneurial vision
D)Inability to cope with growth
E)Undercapitalization

Question 45

Why do small businesses have a high failure rate?

Question 46

Many financial institutions decide whether to loan a small business money based on its

A)reputation.
B)business plan.
C)owners.
D)employees.
E)goals.

Question 47

To start any business,large or small,you must first have a general idea.

Question 48

A key element of business success is a business plan.

Question 49

Managerial inexperience can lead to business failure.

Question 50

Although some businesses are less risky than others,overall the financial risks of running a small business are

A)very low.
B)moderate.
C)insurmountable.
D)low.
E)very high.

Question 51

Which of the following is a disadvantage of small-business ownership?

A)Flexibility
B)Low stress level
C)High failure rate
D)Low failure rate
E)Focus

Question 52

Insufficient funds to withstand slow sales may cause a small business to fail.

Question 53

All of the following concerns contribute to high stress levels for small-business owners except

A)rent increases.
B)changing market demand.
C)competition.
D)expanding inventory.
E)reputation.

Question 54

The business plan should do all of the following except

A)explain the business.
B)include estimates of income and expenses.
C)establish a strategy for acquiring sufficient funds.
D)include an analysis of the competition.
E)act as a constraint that limits the business's flexibility and decision making.

Question 55

Worries about new equipment,expanding inventory,rent increases,competition,changing market conditions,and the like may contribute to

A)overoptimism.
B)a high stress level.
C)a high failure rate.
D)undercapitalization.
E)a low stress level.

Question 56

The most important source of funds for any new business is the employees.

Question 57

Franchisees pay the franchiser a monthly or annual fee based on a percentage of sales or profits.

Question 58

The money used to start a business and keep it running is also called

A)capital.
B)trade.
C)currency.
D)leverage.
E)stock.

Question 59

What is undercapitalization,and why would it contribute to the failure of a small business?

Question 60

The shortest path to small-business failure is undercapitalization.

Question 61

Which industries will likely continue to grow as baby boomers age?

A)Clothing and entertainment
B)Travel,financial planning,and health care
C)Cosmetics and food
D)Clothing,travel,and cosmetics
E)Recreation and sports equipment

Question 62

Small businesses typically are not vulnerable to turbulence and change in the marketplace.

Question 63

Echo boomers

A)were born between 1977 and 1994.
B)are the market of the future.
C)are also known as baby boomers.
D)are immigrants.
E)are over age 50.

Question 64

All of the following have helped to create new opportunities abroad for small businesses except

A)technological advances.
B)an increase in service exports.
C)free trade agreements.
D)communication advances.
E)deregulation.

Question 65

What is a business plan and why is it important?

Question 66

What demographic trends will have the most impact on small business in the future?

Question 67

Which segment of the population is one of the wealthiest in the U.S.?

A)Echo boomers
B)Generation Y
C)Baby boomers
D)Millennials
E)Generation Z

Question 68

Technological advances have resulted in fewer opportunities for small businesses abroad.

Question 69

A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is a

A)mission statement.
B)corporate charter.
C)business plan.
D)corporate statement.
E)balance sheet.

Question 70

A license to sell another's products or to use another's name in business is called a

A)franchise.
B)franchisee.
C)franchiser development system.
D)franchise logo.
E)franchiser.

Question 71

Millennials number around 75 million and represent a huge business opportunity in the US.Who are they?

A)It is another term for baby boomer
B)First generation immigrants
C)People born at the turn of the millennium between 1999-2001
D)People born between 1977 and 1994
E)It is a synonym for Generation X

Question 72

The most important source of funds for any new business is

A)the Chamber of Commerce.
B)the Eximbank.
C)stockholders.
D)the owner.
E)donations.

Question 73

Recently,_________ have spawned many small businesses.

A)the decline of the high technology market
B)deregulation of energy markets and demand for renewable energy
C)decreased sales at large chain retailers
D)increases in Chinese demand for coal
E)economic fluctuations and uncertainty

Question 74

A mortgage is an example of

A)owners' equity.
B)debt financing.
C)venture capitalism.
D)equity financing.
E)none of the above.

Question 75

Echo boomers are sometimes called millennials or Generation Y and are an important market for small businesses.

Question 76

Venture capitalists are an example of

A)debt financing.
B)owners' equity.
C)preferred stockholders.
D)equity financing.
E)none of the above.

Question 77

Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called

A)entrepreneurs.
B)corporate raiders.
C)venture capitalists.
D)stockholders.
E)shareholders.

Question 78

The future for small business looks bleak.

Question 79

Since Eva Chang has the capital and decided to purchase the rights to own and operate a McDonald's fast-food restaurant rather than start her own operation,she is probably a(n)

A)trade creditor.
B)franchisee.
C)industrialist.
D)franchiser.
E)venture capitalist.

Question 80

Advances in _____ have opened many new markets for small businesses,allowing them to more effectively expand their businesses and marketing efforts into new markets.

A)government regulation
B)demand for services
C)technology
D)consumer tastes
E)chain retail stores