Question 1

What would a commercial lender expect to find in a business plan?

Accepted Answer

A commercial lender would expect to find a thorough description of the business, a competitive analysis, operating procedures, and financial data in a business plan. This information will help the lender determine the viability of the business and make a decision on whether to lend money to the business or not.

Question 2

What is a possible drawback to buying an existing business?

Accepted Answer

When buying an existing business, there is a risk that you may inherit the mistakes made by the previous owner. For example, the business may have a poor reputation or have incurred significant debts or legal issues that you would be responsible for.

Question 3

Bernard has been a very successful sales rep for a big corporation and has managed to save up a large sum of money. He's tired of working for the big company and is wondering if he should sink his savings into a new business. He is willing to work hard and has very good people skills. But he hasn't been able to develop a good business concept from scratch. He also realizes that he doesn't have strong financial skills and might need some training and assistance in this area. Which of the following would best describe someone like Bernard?

Accepted Answer

Bernard has excellent people skills but lacks financial skills and is struggling to come up with a strong business concept. Franchising would be a good option for him because it would provide him with a proven business model, training, and ongoing support. This would allow him to focus on his strengths and rely on the franchisor for assistance with areas where he has less expertise.

Question 4

Which of the following is a significant drawback of getting into business by entering into a franchise arrangement?

Accepted Answer

One of the significant drawbacks of entering into a franchise arrangement is that the owner must pay an ongoing royalty to the franchiser, which can be a considerable expense. This ongoing fee is typically a percentage of the franchisee's revenue or sometimes a fixed amount.

Question 5

A business plan should include which of the following topics?

Accepted Answer

The answer of A business plan should include which of...

Question 6

Which of the following is a formal document that describes a business concept and outlines the core business objectives while detailing the strategies and timelines for achieving those objectives?

Accepted Answer

A business plan is a formal document that outlines a business concept, core objectives, strategies, and timelines for achieving those objectives. It is a roadmap for the business's success and typically includes sections on marketing, finance, and operations. The other options either do not describe a complete business plan or are not commonly used business terms.

Question 7

Which of the following is the federal government agency dedicated to maintaining and strengthening the national economy by aiding, counselling, assisting, and protecting the interests of small business?

Accepted Answer

The Canada Business Network is the federal government agency dedicated to maintaining and strengthening the national economy by aiding, counselling, assisting, and protecting the interests of small business. The Federal Small Enterprise Resource Centre and National Centre for Business Development do not exist. The Federal Trade Commission is a US government agency and does not operate in Canada.

Question 8

Which of the following is a drawback of becoming a small business owner by buying a franchise?

Accepted Answer

The initial purchase price for a franchise can be very steep, which can be a significant drawback for someone looking to become a small business owner. The other options (A, B, and C) are not drawbacks, but rather potential advantages of owning a franchise.

Question 9

Export Canada defines small business as companies exporting less than what amount?

Accepted Answer

Export Canada defines small business as companies exporting less than $1,000,000.

Question 10

What are Burger King, McDonald's, Wendy's, and Harvey's all examples of?

Accepted Answer

Burger King, McDonald's, Wendy's, and Harvey's are all examples of business franchising, where a company grants the right to operate its business model, brand, and products/services to another party in exchange for a fee and a percentage of profits.

Question 11

Dana is thinking about starting her own graphics design business but is keenly aware of the fact that she lacks much business experience. A friend has suggested that she consider going to work for someone else in the same type of business before going out on her own. Which of the following would best describe this advice?

Accepted Answer

Working for someone else in the same type of business can provide valuable experience and insights into how to run a successful company. However, it's important to strike a balance between learning from the experience and not getting too comfortable in a secure job to actually launch your own business. Therefore, option D is the best choice because it acknowledges both the benefits and potential pitfalls of working for someone else before starting your own business.

Question 12

Why do many entrepreneurs write a business plan after they have exhausted their personal funds?

Accepted Answer

Writing a business plan after exhausting personal funds is a common strategy to obtain outside funding from investors, lenders, or partners. A business plan outlines the company's goals, strategies, market research, financial projections, and other key information that is critical for investors to evaluate the feasibility and potential return on investment. Without a well-written business plan, it is difficult to communicate the value proposition and convince others to invest in the business.

Question 13

Industry Canada defines small businesses in the goods-producing sector as companies having fewer than how many employees?

Accepted Answer

Industry Canada defines small businesses in the goods-producing sector as companies having fewer than 100 employees.

Question 14

Which of the following is the best description of a typical business plan for a small business?

Accepted Answer

A typical business plan for a small business is a formal document that describes the company, sets forth its key objectives, and provides details as to how and when the organization plans to achieve these objectives. It is usually 25-50 pages in length and includes information on market research, management structure, financial projections, and marketing strategies, among other things.

Question 15

When it comes to learning more about starting and running a small business, which of the following best describes available sources?

Accepted Answer

Canada Business Network, industry associations, blogs, and websites are reliable sources for learning about starting and running a small business. It is important to seek advice from successful business owners who have experience in the field. While hands-on experience is valuable, it is not necessary to work for seven years before starting your own business.

Question 16

What does a look at survival rates for small businesses over their first ten years show?

Accepted Answer

Small businesses typically face the highest risk of failure within the first five years. After this initial period, the survival rate tends to stabilize, indicating that businesses that survive the early years have a better chance of continuing operations in the long term.

Question 17

Sheila loves taking care of animals and has thought about starting her own pet grooming business. However, she doesn't know much about the growth potential for this type of business or the amount of competition she would face. She also wants to find out if there are any government regulations she would need to deal with. Where would she be able to find answers to many of her questions?

Accepted Answer

The Canada Business Network provides information and resources for starting and growing a business in Canada, including information on regulations, competition, and industry trends. They also offer free consultations with business experts. The other options listed do not specifically focus on small business development and may not have the information Sheila is seeking.

Question 18

Who are the primary outside users of business plans?

Accepted Answer

Investors and lenders are typically the primary outside users of business plans as they need to assess the potential success and profitability of the business in order to make decisions about investing or lending money. Vendors and suppliers, customers, and small business administrators may also view the business plan, but they are not usually the primary users.

Question 19

For individuals starting a small business, which of the following best describes writing a business plan?

Accepted Answer

Writing a business plan is not always necessary for every small business, especially if they do not require external financing. However, for those that do need to secure loans or investments, a well-crafted business plan is essential. It demonstrates to potential financiers that the business has a clear direction and strategy for achieving its goals.

Question 20

Which organization would be most likely to help you develop a business plan?

Accepted Answer

Canada Business Network provides services and resources to help start and grow a business, including assistance with developing a business plan. Venture capitalists and angel investors typically invest in established businesses and may not provide assistance with business planning. While a local small business banker may be able to provide financing options, they may not specialize in business plan development.

Quiz 6: Small Business and Entrepreneurship: Economic Rocket Fuel