Deck 14: Icebergs and Escapes

Question 1

Insurance providers do not consider pictures of an organization's physical facilities, equipment, buildings, or plant for processing insurance claims.

Answer 1

False

Question 2

An Economic Injury Disaster Loan of up to $2 million can be granted to meet necessary financial obligations-expenses the business would have paid if the disaster had not occurred.

Answer 2

True

Question 3

Having a disaster plan can mean the difference between being shut down for a few days and going out of business entirely.

Answer 3

True

Question 4

Small to medium-sized businesses are the most vulnerable in the event of a disaster.

Question 5

An organization's critical documents are required to start the organization over again in case a disaster occurs.

Question 6

In all instances of liquidation, the proceeds from the sale of assets must first be used to repay partners.

Question 7

The SBA can help small businesses that are damaged physically, but not the ones that have suffered economically.

Question 8

Business interruption insurance protects a business in the event of extenuating circumstances that affect the ability of a company to conduct business.

Question 9

In the case of a physical disaster, a small business owner may apply for a low-interest SBA loan of up to $2 million to repair or replace damaged real estate, equipment, inventory, and fixtures.

Question 10

During liquidation, the shareholders of a firm are given the next priority after the creditors are paid.

Question 11

To make any money with the liquidation exit strategy, a business must have valuable assets to sell.

Question 12

A small business is not eligible for financial assistance from the Small Business Administration (SBA) if it has sustained economic injury after a disaster.

Question 13

An exit strategy should be reviewed and changed periodically because conditions change.

Question 14

provides confidential business counseling services at no charge.

Question 15

If an owner is interested only in money, selling the business on the open market or to another business is the best choice.

Question 16

The types of disasters that might affect a business internally are sufficient for preparing a risk assessment.

Question 17

The IRS provides disaster assistance and emergency relief for businesses through special tax law provisions.

Question 18

The Small Business Administration (SBA) recommends that vital business records be copied and saved at an offsite location at least fifty miles away from the main business site.

Question 19

Man-made disasters are disastrous events caused directly and principally by one or more identifiable deliberate or negligent human actions.

Question 20

Documenting an organization's external contacts is not a part of disaster planning.

Question 21

If a company's brand has a good value, there is a loyal or sizeable customer base, or there is a stable core of employees, an owner would be significantly better off selling the company than liquidating it.

Question 22

A walkaway is a liquidation with all debts paid.

Question 23

Which of the following recommendations for disaster planning fall under the area of planning to stay in business?

A) Involve coworkers
B) Crisis communication
C) Employee health
D) Insurance coverage
E) Continuity planning

Question 24

Which of the following areas of disaster planning includes being informed about possible risks?

A) Talking to employees
B) Setting up cybersecurity
C) Ensuring good employee health
D) Planning to stay in business
E) Involving coworkers

Question 25

The walkaway is the cleanest and best way to exit-when possible.

Question 26

If a business is simply closed, the value of the goodwill will drop.

Question 27

Man-made disasters can be defined as the:

A) destructive effects felt by a company when it is found out that a company has done something not in accord with good business practices.
B) unfortunate investments made in floundering firms in the hope that they will turn around.
C) adverse results caused by sudden decisions to hand over a business to a family member.
D) devastating events caused directly and principally by one or more identifiable deliberate or negligent human actions.
E) struggle for making money and controlling a debt-ridden business.

Question 28

A vulture capitalist is an investor who either provides capital to start-up ventures or supports small companies to expand but does not have access to public funding.

Question 29

Not all bankruptcies are voluntary; creditors can petition the court for a business to declare bankruptcy.

Question 30

Which of the following areas of disaster planning includes securing facilities, buildings, and plants?

A) Continuity planning
B) Protecting organizational investment
C) Planning to stay in business
D) Involving coworkers
E) Being informed about possible risks

Question 31

Which of the following areas of disaster planning includes ensuring employee health?

A) Continuity planning
B) Protecting employee investment
C) Planning to stay in business
D) Talking to employees
E) Being informed about possible risks

Question 32

Succession in family firms is a simple process that should ideally begin after the heirs enter the business.

Question 33

Which of the following recommendations for disaster planning fall under the area of talking to employees?

A) Employee health
B) Cybersecurity of employees
C) Being informed
D) Insurance coverage
E) Protecting employee investment

Question 34

Liquidation is appropriate when a business is failing, has no future, and has no substantial assets.

Question 35

Which of the following recommendations for disaster planning fall under the area of protecting organizational investment?

A) Employee health
B) Crisis communication
C) Insurance coverage
D) Continuity planning
E) Coworker involvement

Question 36

Arson, radiation contamination, terrorism, structural collapse due to engineering failures, civil disorder, and industrial hazards are examples of:

A) strategic disadvantages.
B) man-made disasters.
C) founder's dilemma.
D) walkaway.
E) investor's dilemma.

Question 37

The Internal Revenue Service (IRS) provides:

A) confidential business counseling services at no charge.
B) appropriate liquidation facilities when a business is failing, has no future, and has no substantial assets.
C) disaster assistance and emergency relief for businesses through special tax law provisions.
D) education to entrepreneurs and helps small businesses start, grow, and succeed nationwide.
E) assistance in transference of leadership from one generation to the next to ensure continuity of family ownership of the business.

Question 38

In an acquisition, there is no limit on the perceived value of the business.

Question 39

Which of the following is NOT one of the four key facts about disaster planning?

A) Disasters will occur.
B) An owner must have a plan before the disaster occurs.
C) Every situation must be treated similarly, regardless of their complexity.
D) React with urgency but do not panic.
E) Ride it out.

Question 40

If a business is a corporation, a limited liability company, or some form of a partnership, the owner's personal assets are protected and cannot be used to pay off business debts.

Question 41

A walkaway refers to the:

A) negative effect felt by a company when it is found out that a company has done something not in accord with good business practices.
B) choice between making money or controlling and running a business.
C) closing of a small business with all debts paid.
D) passing the business to the next generation.
E) investments made in floundering firms in the hope that they will turn around.

Question 42

Founder's dilemma refers to the choice between:

A) making money or controlling and running a business.
B) paying money to the creditors or the partners of a business.
C) maintaining a small business or closing it with all debts paid.
D) retaining a business or passing it to the next generation.
E) investing or not investing in floundering firms.

Question 43

After the creditors, who amongst the following are given priority of being repaid next during a firm's liquidation?

A) Partners
B) Shareholders
C) Owners
D) Allies
E) Customers

Question 44

Succession planning means planning for the:

A) nonprofit associations dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide.
B) buying of one business by another business.
C) venture capitalists who invest in floundering firms in the hope that they will turn around.
D) closing of a small business with all debts paid.
E) family business to be transferred to a family member or members.

Question 45

SCORE (Service Corps of Retired Executives) refers to the:

A) transference of leadership from one generation to the next to ensure continuity of family ownership of the business.
B) nonprofit associations dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide.
C) insurance scheme that protects a business in the event of a natural disaster that affect the ability of a company to conduct business.
D) venture capitalists who invest in floundering firms in the hope that they will turn around.
E) organizations that provide disaster assistance and emergency relief for businesses through special tax law provisions.

Question 46

Which of the following defines goodwill?

A) The transference of leadership from one generation to the next to ensure continuity of family ownership of the business
B) Nonprofit associations dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide
C) An insurance that protects a business in the event of a natural disaster that affects the ability of a company to conduct business
D) An intangible asset that reflects the value of intangible assets
E) The closing of a small business with all debts paid

Question 47

Which of the following occurs in an ideal walkaway situation?

A) All bills are paid off or scheduled.
B) Taxes are not completely paid.
C) Contracts, leases, and the like are continued.
D) Employees are retained.
E) Assets or inventory keep functioning.

Question 48

In an ideal walkaway situation:

A) taxes are not completely paid.
B) contracts, leases, and the like are continued.
C) employees are retained.
D) assets or inventory keep functioning.
E) customers are placed so that they get needed goods or services.

Question 49

The negative effect felt by a company when it is found out that the company has gone through poor business practices is the definition of:

A) bankruptcy.
B) founder's dilemma.
C) walkaway.
D) liquidation.
E) badwill.

Question 50

Which of the following is relevant to make a succession successful?

A) Liquidating the business
B) Sale of a business's assets
C) Closing of the business with all debts paid
D) Good interpersonal relationships
E) Venture capitalists investing in the business

Question 51

Liquidation refers to the:

A) negative effect felt by a company when it is found out that a company has done something not in accord with good business practices.
B) choice between making money or controlling and running a business.
C) sale of a business's assets.
D) passing the business to the next generation.
E) Process through which venture capitalists invest in floundering firms in the hope that they will turn around.

Question 52

A strong brand name, good customer and employee relationships, patents, intellectual property, size and quality of the customer list, and market penetration help an organization to generate:

A) SCORE.
B) goodwill.
C) Six sigma levels.
D) Deming cycles.
E) liquidation.

Question 53

Bankruptcy refers to the:

A) negative effect felt by a company when it is found out that a company has done something not in accord with good business practices.
B) extreme form of business termination that uses a legal method for closing a business and paying off creditors when a business is failing and the debts are substantially greater than the assets.
C) process through which venture capitalists invest in floundering firms in the hope that they will turn around.
D) choice between making money or controlling and running a business.
E) sudden decision to hand over a debt-ridden business to a family member.

Question 54

Which of the following is true about liquidations?

A) No negotiations are involved.
B) Worries about the transfer of control linger.
C) Client lists are retained with an opportunity to recover their value.
D) Assets or inventory keep functioning.
E) Employees are retained.

Question 55

The amount of money invested in a firm is known as:

A) attribution.
B) base stabilization.
C) equity.
D) liquidation.
E) goodwill.

Question 56

Succession refers to the:

A) nonprofit associations dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide.
B) transference of leadership from one generation to the next to ensure continuity of family ownership of the business.
C) buying of one business by another business.
D) process through which venture capitalists invest in floundering firms in the hope that they will turn around.
E) closing of a small business with all debts paid.

Question 57

During liquidation, the proceeds from the sale of assets must first be used to repay:

A) shareholders.
B) partners.
C) owners.
D) creditors.
E) customers.

Question 58

The Chapter 7 small business form of bankruptcy makes sense only if:

A) the owner wants to walk away.
B) the business has valuable assets to sell.
C) the family members become its successors.
D) the business closes down with all debts paid.
E) the business attracts venture capitalists.

Question 59

Decreased revenue; the loss of clients, customers, and suppliers; the loss of market share; the loss of credit; federal or state indictments for crimes committed, and censure by the community reinforces an organization's:

A) SCORE.
B) Six sigma levels.
C) badwill.
D) Deming cycles.
E) liquidation.

Question 60

To make money with liquidation exit strategy, a business must have:

A) taxes that are left to be paid.
B) contracts and leases to be continued.
C) valuable assets to sell.
D) family members as its successors.
E) venture capitalists investing in it.

Question 61

Which of the following defines friendly buyout?

A) The closing of a small business with all debts paid
B) The transfer of ownership to family members, customers, employees, children, etc.
C) Insurance that protects a business in the event of a natural disaster that affects the ability of a company to conduct business
D) A nonprofit association dedicated to educating friends and helping their small businesses start, grow, and succeed nationwide
E) A stock offering in which the owner or owners of equity in a formerly private company have their private holdings transferred into issues tradable in public markets

Question 62

The founder's _____ deals with the fact that wanting to make a lot of money while still controlling and running the business are not compatible goals.

Question 63

Liquidation or walk away, family succession, selling the business, bankruptcy, and taking the company public are examples of _____ strategy.

Question 64

_____ is an extreme form of business termination that uses a legal method for closing a business and paying off creditors when the business is failing and the debts are substantially greater than the assets.

Question 65

Which of the following defines work-owned cooperative?

A) Interested employees who become members of a cooperative that buys the business
B) The transfer of ownership of a cooperative to family members, customers, employees, children, or friends
C) A nonprofit association dedicated to educating cooperatives and helping their small businesses start, grow, and succeed nationwide
D) A stock offering in which the owner or owners of equity of a cooperative have their holdings transferred into issues tradable in public markets
E) The transference of leadership from one generation to the next to ensure continuity of family ownership of the cooperative

Question 66

_____ disasters include such things as arson, radiation contamination, terrorism, structural collapse due to engineering failures, civil disorder, and industrial hazards.

Question 67

Chapter 11 small business bankruptcy allows an owner to run a business with _____ oversight.

Question 68

Describe employee health as an element of a business's disaster plan.

Question 69

Describe a crisis communication plan.

Question 70

What are the ways in which a business can involve its employees in disaster planning?

Question 71

Initial public offering (IPO) is the:

A) insurance that protects a business in the event of a natural disaster that affects the ability of a company to conduct business.
B) transference of leadership from one generation to the next to ensure continuity of family ownership of the business.
C) first sale of stock by a formerly private company.
D) nonprofit association dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide.
E) intangible asset that reflects the value of intangible assets.

Question 72

Under Chapter 7 bankruptcy law, a(n) _____ will take a business apart, selling assets to satisfy outstanding debts and discharging debts that cannot be satisfied with the assets that are available.

Question 73

When a firm is bankrupt, its debts are substantially ____ than its assets.

Question 74

Which of the following is a disadvantage of a friendly buyout?

A) The owner will be more objective about the buyer.
B) It destroys the owner's reputation without an opportunity to recover its value.
C) The firm's assets or inventory is depleted.
D) They are frequently accompanied by noncompete agreements and other strings.
E) The buyer might discover a bulk of unpaid taxes.

Question 75

Explain the disaster assistance provided by the Internal Revenue Service.

Question 76

Planning for the family business to be transferred to a family member or members is called _____ planning.

Question 77

A _____ capitalist is an investor who provides capital to start-up ventures.

Question 78

The _____ is the last one to be repaid when a business or firm is liquidated.

Question 79

When one business buys another business, it is called:

A) a friendly buyout.
B) an obtainment.
C) a succession.
D) a merger.
E) an acquisition.

Question 80

Why is disaster planning important to a small business?