Question 1

One advantage of owning resources during the start-up is that it puts the team in a better position to commit and decommit quickly.

Accepted Answer

Owning resources can make it harder to commit and decommit quickly, as it involves more fixed costs and obligations compared to leasing or outsourcing resources.

Question 2

Entrepreneurs in high-potential start-ups should secure resources enough for the task at hand plus a cushion against adversity.

Accepted Answer

False

Question 3

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

Accepted Answer

Taking time for random activities can help entrepreneurs refresh their minds and potentially lead to new ideas or solutions.

Question 4

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

Accepted Answer

Directors have a legal duty to act in the best interests of the company and to comply with applicable laws and regulations. If they breach these duties, they can be held personally liable for any losses or damages incurred by the company or its stakeholders. This includes liability for the actions of other officers or employees of the company if the directors knew or ought to have known about these actions and failed to take appropriate steps to prevent or remedy them.

Question 5

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 have the legal authority to make decisions, whereas a board of directors does. However, a board of advisors provides valuable guidance and expertise to a company without the legal and fiduciary responsibilities of a board of directors.

Question 6

A entrepreneur is legally bound by the decisions of a formal board of directors.

Accepted Answer

The answer of A entrepreneur is legally bound by the...

Question 7

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

Accepted Answer

Effective entrepreneurs understand that owning resources can lead to high overhead costs and other liabilities. Therefore, they prioritize controlling resources through partnerships, collaborations, and outsourcing to optimize efficiency and minimize risk.

Question 8

Directors are expected to pay for their own expenses that they incur in preparing for and attending meetings.

Accepted Answer

Directors are typically reimbursed for reasonable expenses they incur in carrying out their director duties, such as travel and lodging for attending meetings. It is not expected that they pay for these expenses out of pocket.

Question 9

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

Accepted Answer

Consultants can bring a level of expertise and specific knowledge that may be lacking in a new team, and can also help with strategic planning and decision-making. However, it is important for start-ups to also invest in hiring skilled and experienced team members for long-term success.

Question 10

When deciding on a bank or lender,it is better for entrepreneurs to choose an excellent financial institution with just an OK banker or lender than an OK financial institution with an excellent banker or lender.

Accepted Answer

The quality of the banker or lender can significantly impact the entrepreneur's experience and success, as they provide personalized advice and support, which can be more crucial than the institution's overall reputation.

Question 11

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

Accepted Answer

Starting with acquaintances of the lead entrepreneur, members of the management team, or the directors is a good way to get referrals and recommendations for attorneys who may have experience in the relevant industry or field of law.

Question 12

In choosing a board of directors,entrepreneurs tend to value financial expertise over operating experience.

Accepted Answer

Entrepreneurs often value operating experience more because it provides practical insights into running and growing a business, which can be crucial for startups.

Question 13

As is the case with legal and accounting professionals,the fees that consultants charge correlate closely with the quality of their services.

Accepted Answer

The fees consultants charge do not always correlate closely with the quality of their services, as pricing can be influenced by factors such as market demand, reputation, and branding rather than just service quality.

Question 14

During the chaotic start-up 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 start-up phase of a...

Question 15

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

Accepted Answer

It is important for entrepreneurs to involve advisors and specialists at an early stage, but they should also be cautious of their credentials and advice.

Question 16

Network density relates to the efficiency and cohesiveness of an entrepreneur's bank of contacts and advisors.

Accepted Answer

Network density refers to the number of connections within a network, and a higher density often results in more efficient communication and collaboration among members. Therefore, the density of an entrepreneur's network can impact the effectiveness of their contacts and advisors in supporting their business activities.

Question 17

Competent law firms rarely agree to defer charges or initially provide services at a lower than normal rate as a means of attracting new clients.

Accepted Answer

Competent law firms may agree to defer charges or offer lower rates initially to attract new clients, especially in competitive markets or to build long-term relationships.

Question 18

A board of advisors is not exposed to personal liability stemming from decisions made at the company.

Accepted Answer

A board of advisors is not typically involved in the day-to-day operations of the company, and therefore is not exposed to personal liability for decisions made by the company. However, this can vary depending on the specific role and legal structure of the company.

Question 19

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

Accepted Answer

The answer of Extending accounts receivable is one of the...

Question 20

Courts have held that even if a director can prove that he or she acted in good faith,that director can still be held personally responsible for the actions of officers.

Accepted Answer

The answer of Courts have held that even if a...

Quiz 11: Resource Requirements