Question 1

When choosing a banker or lender,at the end of the day,having the very best bank will be more important than having an excellent banker.

Accepted Answer

Having an excellent banker can often be more important than the bank itself because a good banker can provide personalized service, understand your specific needs, and offer tailored advice and solutions that a bank as an institution may not uniformly provide across all its branches or representatives.

Question 2

Directors of a company can be held personally liable for its actions and those of its officers.

Accepted Answer

Directors of a company have a legal duty to act in the best interests of the company and its shareholders. If they fail to do so and cause harm to the company or its stakeholders, they can be held personally liable for their actions. This is known as "director's liability." Additionally, directors can be held liable for the actions of the company's officers if they were aware of or participated in those actions.

Question 3

Marshaling maximum resources is otherwise colloquially known as bootstrapping.

Accepted Answer

Bootstrapping refers to starting a business or project with minimal resources or help, not marshaling maximum resources.

Question 4

Effective entrepreneurs set aside time for purely random activities-things done with no specific problem in mind.

Accepted Answer

This is true. Taking breaks for random activities can help refresh the mind and promote creativity.

Question 5

When choosing a consultant,an entrepreneur should expect a short-term relationship as the consultant is a third party for the venture.

Accepted Answer

Choosing a consultant can lead to both short-term and long-term relationships depending on the needs of the venture and the quality of the consultancy provided. Consultants can offer ongoing support and become integral to a business's growth strategy.

Question 6

Extending accounts receivable is one of the primary sources of working capital for many startups and growing firms.

Accepted Answer

Accounts receivable represents money owed to a company by its customers, and extending it does not directly provide working capital. Instead, it can tie up capital, as the company waits to receive payment. Working capital is typically sourced from cash, inventory, and short-term liabilities management.

Question 7

Courts have held that even if a director of a company can prove that he or she acted in good faith,the director cannot be excused from liability.

Accepted Answer

Courts have recognized the concept of "business judgment rule," which provides a level of protection to directors who act in good faith and with reasonable care in making business decisions. Thus, if a director can prove that he or she acted in good faith and made an informed decision, the court may excuse the director from liability.

Question 8

When seeking out advisors and specialists,entrepreneurs should involve them at an early stage and be skeptical of their credentials and advice.

Accepted Answer

Involving advisors and specialists at an early stage can provide valuable insights, but entrepreneurs should also be cautious about blindly following advice without properly vetting the credentials and considering whether it aligns with their goals and vision for their business.

Question 9

In a study of boards,and specifically venture capitalists' contributions to them,entrepreneurs tended to value financial expertise over operating experience.

Accepted Answer

Entrepreneurs often value operating experience over financial expertise because they believe individuals with operational backgrounds can offer more practical advice and support in the day-to-day running and scaling of the business.

Question 10

Intellectual honesty to an entrepreneur means realizing what he or she knows and what he or she needs to know.

Accepted Answer

Intellectual honesty acknowledges one's limits and the need to continuously learn and acquire new knowledge and skills. It involves being truthful about one's abilities and shortcomings, and seeking out resources and expertise to fill any gaps.

Question 11

One advantage of owning resources during the startup is that it puts the entrepreneur in a better position to commit and de-commit quickly.

Accepted Answer

Owning resources can actually make it harder for an entrepreneur to pivot or change direction quickly because they may be tied down by the investments in those resources.

Question 12

Consultants should not be employed by a startup to compensate for a lower level of professional experience in the team.

Accepted Answer

Consultants can bring valuable expertise and experience to a startup team. In some cases, it may make sense for a startup to hire a consultant to supplement their team's skills or knowledge gaps. However, it is important for the startup team to have a strong foundation of experience and skills in their core areas of business in order to effectively manage and utilize any external consultants.

Question 13

The best place to start in selecting an attorney is with acquaintances of the lead entrepreneur,of members of the management team,or of directors.

Accepted Answer

It is often best to start with personal recommendations when selecting an attorney, and acquaintances of the lead entrepreneur, management team, or directors can be a good source for these recommendations.

Question 14

Effective entrepreneurs are able to check network density,so as to avoid too many overlaps,while still attaining solidarity and cohesiveness.

Accepted Answer

Checking network density allows entrepreneurs to understand the level of connections and relationships between individuals in a network. This can help them identify potential overlaps and areas where collaboration and cooperation can be fostered without creating too much redundancy. Achieving solidarity and cohesiveness within a network is a key element for successful entrepreneurship.

Question 15

A board of advisors is an especially good alternative to a board of directors because they are authorized to make legal decisions.

Accepted Answer

A board of advisors does not usually have legal decision-making power, unlike a board of directors. Advisors provide guidance and counsel, but they are not responsible for making legal decisions or enforcing corporate policies.

Question 16

Entrepreneurs in high-potential startups should secure resources enough for the task at hand and a cushion against adversity.

Accepted Answer

The answer of Entrepreneurs in high-potential startups should secure resources...

Question 17

Whenever possible,effective entrepreneurs seek to control rather than own the resources they need.

Accepted Answer

Effective entrepreneurs recognize that ownership of resources can be costly and lead to unnecessary risks. Instead, they seek to control resources by forming strategic partnerships, outsourcing, or using other contractual arrangements. This allows them to have access to the resources they need without taking on the full ownership burden.

Question 18

As is the case with legal and accounting professionals,it is easy to judge consultants solely on the basis of their fees.

Accepted Answer

Judging consultants solely on the basis of their fees is not comprehensive as it overlooks other critical factors such as expertise, experience, the quality of work, and the value they bring to a project.

Question 19

During the chaotic startup phase of a venture,entrepreneurs should outsource the legal aspects of decisions and agreements to an expert attorney.

Accepted Answer

The answer of During the chaotic startup phase of a...

Question 20

Since a board of advisors is designed to dispense advice rather than make decisions,its liability is limited.

Accepted Answer

A board of advisors is not responsible for making decisions, but rather for providing recommendations and advice. Therefore, their liability is limited, as they do not have the final say in the matters at hand.

Quiz 10: Resource Requirements