Deck 5: Small Business, entrepreneurship, and Franchising

Question 1

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

Answer 1

True
Explanation: It is difficult to define small because it is relative.

Question 2

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

Answer 2

Students answers may vary,but they should discuss the changing demographics in the United States and how this is reflected in small businesses.As the country becomes more diverse in general,so have the owners of businesses in the U.S.Small businesses make up the majority of businesses in the United States,and they necessarily reflect the changing face of the country as a whole.As consumers become more diverse,so do their needs and wants.

Question 3

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 no advantages over large ones

Answer 3

A
Explanation: Entrepreneurs provide fresh ideas and usually have greater flexibility to change than do large companies.

Question 4

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

A) It employs 1,000 or more employees.
B) It employs fewer than 500 employees.
C) It is independently owned.
D) It is not dominant in its field.
E) It is independently operated.

Question 5

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

Question 6

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

Question 7

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 8

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 9

What is a small business?

Question 10

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

Question 11

The entrepreneurship movement is declining because of technological advances.

Question 12

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.

Question 13

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 14

Which of the following groups is increasing their presence in the business world at the greatest rate?

A) Women
B) Minorities
C) White males
D) People under 30
E) People over 65

Question 15

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

Question 16

________ 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 17

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

Question 18

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

Question 19

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

Question 20

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 21

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 22

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 23

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

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

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

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) It is easy to compete with large chains.
D) Gaining knowledge and experience in retailing is relatively easy.
E) The owner can capitalize on personal expertise or interests.

Question 27

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

Question 28

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 29

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 30

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

Question 31

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 and storage.
C) bookkeeping.
D) stationery.
E) advertising.

Question 32

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

A) Lower cost of formation
B) Stress level
C) Failure rate
D) Lack of flexibility
E) Poor reputation

Question 33

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

Question 34

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

Question 35

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

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

Question 36

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

A) a poor reputation.
B) lower startup costs.
C) higher costs.
D) flexibility.
E) an enviable reputation for quality and service.

Question 37

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

Question 38

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) Low failure rate
E) Ability to gain a solid reputation

Question 39

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 lots of personal time.
D) have an easy life.
E) eliminate all pressure.

Question 40

Small businesses have a high success rate.

Question 41

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 42

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

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

Question 43

Why do small businesses have a high failure rate?

Question 44

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 45

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

Question 46

The shortest path to small-business failure is undercapitalization.

Question 47

A key element of business success is a business plan.

Question 48

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 49

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

A) Little flexibility
B) Low stress level
C) High failure rate
D) Low failure rate
E) Inability to focus

Question 50

Managerial inexperience can lead to business failure.

Question 51

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) decreasing costs.
D) undercapitalization.
E) a low stress level.

Question 52

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 53

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

Question 54

The lack of funds to operate a business normally is called

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

Question 55

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

Question 56

To start any business you must first have

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

Question 57

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

Question 58

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 59

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 60

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

Question 61

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

Question 62

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 63

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

Question 64

Small retailers who specialize in ethnic products and small service providers who have bi- or multilingual employees will be able to tap the business potential of which of the following demographic segments?

A) Immigrants
B) Echo boomers
C) Baby boomers
D) Generation X
E) Generation Y

Question 65

A mortgage is an example of

A) owners' equity.
B) debt financing.
C) venture capitalism.
D) equity financing.
E) franchising.

Question 66

The most important source of funds for any new business is

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

Question 67

Which of the following is not a source of equity financing?

A) Reinvested profits
B) Personal computer
C) Personal vehicle
D) Loan from a family member
E) Venture capitalists

Question 68

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

Question 69

What is a business plan and why is it important?

Question 70

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 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

Recently,_________ have (has)spawned many small businesses.

A) the decline of the high technology market
B) deregulation of energy markets and interest in alternative energy sources
C) increased sales at large chain retailers
D) increases in Chinese demand for coal
E) a period of economic prosperity

Question 73

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 manufacturing
C) technology
D) consumer tastes
E) chain retail stores

Question 74

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

Question 75

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 76

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 77

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

A) franchise.
B) franchisee.
C) venture capital.
D) mortgage.
E) franchiser.

Question 78

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 79

The future for small business looks bleak.

Question 80

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

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