Question 1

Direct Small Business Administration (SBA)loans are rewarded to owners of small businesses 90% of the time.

Accepted Answer

The Small Business Administration (SBA) primarily guarantees loans rather than directly lending to small business owners, and not 90% of applicants receive loans.

Question 2

The firm's mission and goals are identified in its business plans.

Accepted Answer

Business plans outline a firm's mission, goals, and strategies for achieving those goals, serving as a roadmap for the organization's operations and growth.

Question 3

The Small Business Administration has programs targeted to minority-owned small businesses.

Accepted Answer

The Small Business Administration (SBA) offers various programs specifically designed to support minority-owned small businesses, including access to capital, business mentoring, and training to help these businesses start, grow, and compete in the marketplace.

Question 4

The set-aside program designates that a percentage of government contracts must be awarded to qualifying small businesses.

Accepted Answer

The set-aside program is designed to ensure that a certain percentage of government contracts are awarded to qualifying small businesses, including those owned by women, minorities, and veterans, to help them compete in the federal marketplace.

Question 5

A business plan should include résumés of the company's principal owners.

Accepted Answer

Including résumés of the principal owners in a business plan helps demonstrate the management team's qualifications and experience to potential investors or lenders, showcasing the team's ability to successfully run the business.

Question 6

Nearly 7 out of every 10 new businesses survive at least two years and about 50% make it to the five-year mark.

Accepted Answer

According to data from the U.S. Bureau of Labor Statistics, about 70% of new businesses survive at least two years, and around 50% survive five years or more, indicating a significant number of new enterprises do manage to sustain operations beyond the initial stages.

Question 7

Most of the small businesses today are run by Caucasian males.

Accepted Answer

Small businesses today are increasingly diverse, with significant representation from women, racial minorities, and immigrants, reflecting broader demographic shifts in the business landscape.

Question 8

Taxes and government regulations are more significant issues for small businesses than for large businesses.

Accepted Answer

Small businesses often have fewer resources and less flexibility to absorb the costs and administrative burdens associated with taxes and government regulations, making these issues more significant for them compared to large businesses, which typically have dedicated teams to manage such matters and can more easily absorb related costs.

Question 9

A major problem for most small businesses is securing adequate financing.

Accepted Answer

Small businesses often struggle to secure adequate financing due to limited operating history, lower credit scores, and lack of collateral, making it difficult for them to obtain loans and investment.

Question 10

Most owners of small businesses rely on loans from financial institutions for their start-up funds.

Accepted Answer

Many small business owners do not have the necessary capital on hand to cover the initial costs of starting a business, so they often rely on loans from financial institutions to finance their start-up expenses.

Question 11

Not-for-profit organizations focused on economic development operate most business incubators.

Accepted Answer

Most business incubators, which are programs designed to support the successful development of entrepreneurial companies through an array of business support resources and services, are indeed operated by not-for-profit organizations with a focus on economic development. These organizations aim to stimulate economic growth by supporting new and small businesses.

Question 12

Unfortunately,more than half of all small businesses fail within the first year.

Accepted Answer

Most small businesses do not fail within the first year; statistics show that about 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years.

Question 13

One of the most important tasks for an entrepreneur is to create a business plan.

Accepted Answer

A business plan is crucial for an entrepreneur as it outlines the business's goals, strategies, financial needs, and market analysis, serving as a roadmap for success and a tool to attract investors.

Question 14

With less money to spend on employees,marketing,inventory,and other business costs,successful small companies need to be creative.

Accepted Answer

Successful small companies often operate with limited budgets, requiring them to be innovative and creative in managing expenses such as employee salaries, marketing, inventory, and other operational costs to remain competitive and successful.

Question 15

The average amount rewarded to owners of small businesses through Small Business Administration (SBA)microloans is $13,000.

Accepted Answer

The average amount awarded through the Small Business Administration (SBA) microloan program is indeed around $13,000. This program provides small loans to new or growing businesses.

Question 16

A mission statement is a written document that provides an orderly statement of a company's goals,the methods by which it intends to achieve these goals,and the standards by which it will measure its achievements.

Accepted Answer

A mission statement typically outlines a company's purpose, core values, and primary objectives, but it does not usually include detailed methods or standards for measuring achievements.

Question 17

Fortunately,small businesses are not required to pay workers' compensation or Social Security.

Accepted Answer

Small businesses are generally required to pay workers' compensation and Social Security for their employees, depending on the laws of the country they operate in and the number of employees they have.

Question 18

First-time business owners often overestimate the funds their firms will generate from initial sales to allow for operations to continue.

Accepted Answer

First-time business owners frequently overestimate initial sales and the resulting cash flow, which can lead to challenges in maintaining operations due to a lack of sufficient funds.

Question 19

The major lending source for small businesses needing additional funds is the Small Business Administration (SBA).

Accepted Answer

While the Small Business Administration (SBA) does provide crucial support and guarantees for loans to small businesses, the major lending sources for small businesses needing additional funds are typically banks and credit unions. The SBA partners with these institutions to guarantee loans, reducing the risk for lenders and making it easier for small businesses to obtain financing.

Question 20

Small Business Investment Company (SBIC)loans are actually government loans funneled through a private organization.

Accepted Answer

SBICs are privately owned and managed investment funds that are licensed and regulated by the Small Business Administration (SBA). They use their own capital, plus funds borrowed with an SBA guarantee, to make equity and debt investments in qualifying small businesses.

Quiz 5: Forms of Business Ownership and Organization