Deck 8: The Entrepreneurial Leader and the Team

Question 1

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

Answer 1

True

Question 2

Effective entrepreneurs are more likely than others to undertake actions toward decreasing their network density and diversity.

Answer 2

False

Question 3

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.

Answer 3

False

Question 4

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

Question 5

Building a company by minimizing resources is referred to in colloquial terms as bootstrapping.

Question 6

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

Question 7

Outside stockholders can have unrealistic expectations about the risk involved in a new venture, the speed at which a return can be utilized, as well as the size of the return.

Question 8

According to some experts, because of the prominent role it plays in venture it may be wise for entrepreneurs to pursue a law degree.

Question 9

Entrepreneurs in high-potential start-ups seek to have not only enough committed resources for the task at hand but also a cushion against adversity.

Question 10

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

Question 11

Effective entrepreneurs should seek to own the resources they need.

Question 12

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

Question 13

Acquiring resources, particularly in the start-up and early-growth stages of a venture, is an important approach for entrepreneurs.

Question 14

Effective entrepreneurs avoid losing focus by spending time on purely random activities-things done with no specific problem in mind.

Question 15

Quality directors become involved for the learning and professional development opportunities, rather than for the money.

Question 16

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

Question 17

A brain trust is a group of close advisors selected for their various expertises.

Question 18

Stock in a start-up company is a common incentive to attract and reward directors.

Question 19

Some contend that Canada is too conservative, resistant to innovation and risk, and stuck on its history of natural resources for competitive advantage.

Question 20

Courts have held that even if a director acts in good faith, he or she cannot be excused from liability.

Question 21

Bootstrapping is a tried and true approach. Which of the following is not one of its strengths?

A) Less capital is required
B) More flexibility
C) Reduced risk
D) Increased profitability
E) Lower sunk costs

Question 22

The major advantage of using spreadsheets to analyze capital requirements is having the ability to quickly examine different scenarios.

Question 23

The only way for a country like Canada to stay competitive and keep attracting work without suppressing wages is to:

A) increase productivity
B) decrease costs
C) invest in innovation
D) increase productivity and decrease costs
E) increase productivity and invest in innovation

Question 24

People who could be potential board members are increasingly cautious about getting involved for all the following reasons except:

A) Liability
B) Compensation
C) Harassment
D) Time and Risk

Question 25

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

Question 26

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.

Question 27

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

Question 28

A top-notch outside director usually spends a minimum of ____ days per year on his or her responsibilities.

A) 5
B) 10
C) 15
D) 20
E) 25

Question 29

Charity auctions often attract high-income individuals and freely donated, high-quality items.

Question 30

A board of advisors is not exposed to personal liability.

Question 31

What percent of a start-up is common as an incentive to attract and reward a director?

A) Less than 1 percent
B) 2 to 5 percent
C) 5 to 10 percent
D) 10 to 15 percent
E) Directors should not be given shares as an incentive

Question 32

Courts have held that even if a director has acted in good faith, he or she can still be held personally responsible.

Question 33

Which of the following is not recommended as part of a productive board of directors?

A) A compensation committee
B) An audit committee
C) An executive committee
D) All are recommended

Question 34

Analysis that is not grounded in sound perceptions about an opportunity is most likely to be confused.

Question 35

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

Question 36

The entrepreneur is legally bound by the decisions of his or her counsel and advice from outsiders.

Question 37

Other people's resources do not include which of the following?

A) Advice from friends or relatives
B) Government-funded management assistance programs
C) Free books and pamphlets
D) Material loaned or provided inexpensively or free by customers
E) Bartered services

Question 38

Resources include all of the following except:

A) people
B) financial resources
C) intellectual property
D) an identified market opportunity
E) assets (such as plant and equipment)

Question 39

Which of the following legal issues should be of least concern to an entrepreneur building a high-growth venture?

A) Employee ownership plans
B) Federal and provincial regulations and reporting
C) Contracts and agreements
D) Tax planning and review
E) Liability protection

Question 40

An entrepreneur can greatly increase his or her reach for resources via the Internet.

Question 41

Why will the Internet become an increasingly important gateway to controlling resources?

Question 42

One solution for liability concerns regarding directors is to:

A) admonish them to be careful
B) purchase indemnity insurance
C) not have directors
D) have them sign waivers
E) have them monitor each other closely

Question 43

Discuss some of the positive aspects of using advisors rather than a formal board of directors

Question 44

What are the main reasons for building a brain trust for a new venture?

Question 45

Successful entrepreneurs know that rather than own the resources they need, they seek to control them. Entrepreneurs with this approach reduce some of the risk in pursuing opportunities. What are some of those reduced risks?

Question 46

Effective entrepreneurs are more like than others to systematically do what?

Question 47

Bootstrapping refers to what?

Question 48

What is the best referral system for locating consultants?

Question 49

Describe some ways of using other people's resources.

Question 50

If an entrepreneur of a high-potential firm will be seeking venture capital, she should give first consideration to which of the following solutions for accounting expertise?

A) A smaller, local firm
B) A regional firm
C) A national firm
D) She needs to hire a full-time accountant
E) She should learn to do it herself