Question 1

The board is headed by the chairperson, who, in a new, private venture, is typically the lead entrepreneur.

Accepted Answer

In a new, private venture, the chairperson is often the lead entrepreneur because they usually have the vision, passion, and commitment to drive the venture forward, making them a natural choice to lead the board.

Question 2

A board of directors can be made up of inside or outside members or a combination of the two.

Accepted Answer

A board of directors can indeed include inside members (such as company executives) and outside members (such as independent or external directors), or a mix of both, to ensure a balance of internal perspective and external independence.

Question 3

Among the reasons why startup teams fail are all of these except:

Accepted Answer

The statement "All of these choices are reasons why startup teams fail" is incorrect because all the other options (A, B, C, D) are indeed common reasons why startup teams might struggle or fail. Each of these points to a specific challenge that startups can face, such as premature organization structuring, overestimating early customer interest, being overwhelmed by too many opportunities, or licensing technology before fully understanding its market potential or application. Therefore, saying that all of these are reasons for startup failure contradicts the prompt asking for an exception.

Question 4

____ staff is a way for a new business to enjoy the advantages of having the kind of skilled work force available to major corporations without incurring so many of the expenses.

Accepted Answer

Leasing staff allows a business to temporarily hire skilled workers from a staffing agency, providing flexibility and reducing costs associated with permanent hires.

Question 5

Which of the following is not an independent contractor you would expect to find on an entrepreneur's extended team?

Accepted Answer

Board of advisors are typically not considered independent contractors. They are usually selected to provide strategic advice and guidance rather than contracted services.

Question 6

The single most important factor in the success or failure of founding teams is:

Accepted Answer

Effective communication is crucial for the success of founding teams as it enables clear understanding, alignment on goals, and effective problem-solving among team members.

Question 7

Choosing a good attorney is a time-consuming but vital task that should be accomplished immediately after startup.

Accepted Answer

Choosing a good attorney is indeed vital, but it's not necessarily a task that needs to be accomplished immediately after startup. The timing can depend on the specific legal needs and circumstances of the business.

Question 8

An accountant is your advocate, but your lawyer is bound by rules and ethics that do not permit advocacy.

Accepted Answer

Both accountants and lawyers are bound by their respective professional rules and ethics, but both can act as advocates for their clients within the scope of their professional roles. Lawyers, in particular, are well-known for their role as advocates in legal matters.

Question 9

All of the following are part of an entrepreneur's extended network except ____.

Accepted Answer

Customers are considered part of an entrepreneur's immediate network or direct business environment, not the extended network. The extended network typically includes support and advisory roles, such as government agencies, personal advisors, manufacturing, and sales support, which provide external assistance and resources rather than being the direct target of the business's products or services.

Question 10

Because consultants tend to be fairly expensive, they are best used for critical, one-time advising or problem-solving assignments.

Accepted Answer

Consultants are often utilized for their specialized expertise and can provide valuable insights for critical, one-time projects or to solve specific problems, making their higher cost justifiable for these important, non-recurring needs.

Question 11

Most entrepreneurs try to avoid hiring employees as long as possible, because employees are the single biggest expense in the business.

Accepted Answer

Many entrepreneurs aim to keep their operating costs low during the initial stages of their business, and since payroll can significantly contribute to expenses, they often delay hiring employees to avoid this financial burden.

Question 12

When an entrepreneur decides to use a team effort to create the new venture, he or she generally looks for people who have ____ skills.

Accepted Answer

Entrepreneurs seek individuals with complementary skills to ensure that all necessary roles and functions are effectively covered, allowing the team to work efficiently towards common goals.

Question 13

Which of the following is not a professional advisor to an entrepreneur?

Accepted Answer

The board of directors is not a professional advisor but rather a group that governs the organization, making strategic decisions rather than providing specialized professional advice like an attorney, accountant, banker, or insurance agent would.

Question 14

____ are more likely to make the mistake of putting structure on the organization before its time.

Accepted Answer

Startup teams often make the mistake of imposing structure too early, which can stifle innovation and flexibility needed in the early stages of a company.

Question 15

If a new venture is a corporation, a board of directors is required.

Accepted Answer

In a corporation, a board of directors is a legal requirement to oversee the corporation's affairs and make major decisions.

Question 16

Working boards are crucial in the startup phase.

Accepted Answer

The answer of Working boards are crucial in the startup...

Question 17

The intense effort required of a startup can be shared when the entrepreneur uses a ____.

Accepted Answer

A founding team can share the workload and responsibilities of a startup, reducing the burden on the entrepreneur. This team can bring diverse skills and perspectives to the table, making the startup more likely to succeed.

Question 18

The chances of success are greater when the lead entrepreneur and the team share the same ____ for the new venture.

Accepted Answer

The chances of success for a new venture are significantly higher when the lead entrepreneur and the team share the same vision. A shared vision ensures that everyone is aligned towards the same goals and objectives, fostering unity and driving collective effort towards achieving the venture's objectives.

Question 19

In a wholly owned or closely held corporation, there really is little distinction between the functions of a board of directors and those of a board of advisers.

Accepted Answer

In a wholly owned or closely held corporation, the distinction between the functions of a board of directors and a board of advisers can be minimal because both bodies may be composed of similar individuals who provide strategic guidance and oversight, and the formal separation of roles may not be as strictly maintained as in larger, publicly traded companies.

Question 20

When choosing a banker, the entrepreneur planning a new venture should seek out an officer with the rank of assistant vice president or higher.

Accepted Answer

Bankers with the rank of assistant vice president or higher typically have more authority to make lending decisions and can provide more personalized service, which is beneficial for entrepreneurs planning new ventures.

Quiz 8: Calculating Startup Capital Requirements