Question 1

The best time to plan an exit strategy from your venture is ________.

Accepted Answer

Planning an exit strategy at the same time you enter into a venture allows you to set clear goals and understand the path to achieving them, including how and when you might exit the business. This foresight can help in making informed decisions that align with your long-term objectives.

Question 2

Exiting a venture when an entrepreneur hopes to capitalize financially on the investment in the venture is known as ________.

Accepted Answer

Harvesting is the process of exiting a venture when an entrepreneur hopes to capitalize financially on the investment in the venture. This can be done through a variety of methods, including selling the venture outright, going public with an initial public offering (IPO), or engaging in a management buyout. Contingency planning involves preparing for unexpected events or circumstances that could impact the business. Liquidation is the process of selling off the assets of a business in order to pay off creditors or investors. Strategic planning involves setting goals and developing a plan to achieve those goals.

Question 3

Rob is the new bookkeeper at your one-year-old company.Your business provides travellers in North America with access to people's apartments for rent for short-term accommodation.Your biggest competition is Air BnB.You have noticed that your website traffic is going up exponentially as word is spreading,and there are starting to be occasional system crashes and lost reservations.You need to rebuild your servers and related infrastructure,but your cash flow is not keeping up with the reinvestment required.Because you had planned carefully for this event,you knew this time might come.It is time to call in a potential investor to provide a capital injection because your ________ is/are lagging behind increasing demand.

Accepted Answer

The scenario mentions that the company's cash flow is not keeping up with the reinvestment required to rebuild their servers and related infrastructure. This indicates that their annual profits are lagging behind the increasing demand. Therefore, the best choice in this scenario is D) annual profits.

Question 4

One study showed that visionary companies financially outperformed nonvisionary ones six times over.

Accepted Answer

The statement is true. One study found that visionary companies financially outperformed nonvisionary ones by six times.

Question 5

Entrepreneurs need to address growth strategies as part of their business planning and should not be ________ in that planning.

Accepted Answer

Being overly rigid in planning can limit an entrepreneur's ability to adapt to market changes and opportunities for growth. Flexibility and openness to new strategies are important in achieving long-term success.

Question 6

You are running a new raw-food café,and all evidence indicates the business is growing faster than anticipated.You bring in an accountant to discuss what you need to do next to keep the business stable.She mentions that you,as well as most entrepreneurs,face three unique control issues: managing growth,managing downturns,and ________.

Accepted Answer

Exiting the venture is a unique control issue entrepreneurs face, alongside managing growth and downturns. It involves planning for how and when to leave the business, either by selling it, passing it on, or closing it down.

Question 7

In a short essay,describe the three main types of research that could be conducted by an entrepreneurial venture,with the knowledge that a venture could be involved in any one of the three and not necessarily all of them at any one time.Please provide a clear example (or scenario)that illustrates each of the three types.

Accepted Answer

The answer of In a short essay,describe the three main...

Question 8

A contingency plan is there to help the entrepreneur be prepared if there are problems or if an emergency occurs.The plan needs to focus on specific details for controlling the most fundamental aspects of running the organization: cash flow,accounts receivables,________ and ________.

Accepted Answer

Contingency plans are designed to help manage unforeseen issues effectively. Focusing on costs and debt is crucial as these areas directly impact an organization's financial health and ability to respond to emergencies or problems. Managing costs ensures that the business can maintain operations during tough times, while managing debt is essential to prevent financial crises. Potential sales and market penetration, while important for growth, are not as immediately critical for emergency or problem management as costs and debt.

Question 9

Once a new venture establishes good financial controls,the next step is to ________ them.

Accepted Answer

Once a new venture establishes good financial controls, the next step would be to reinforce them to ensure they are consistently followed and maintained. Easing up on or letting employees be solely responsible for financial controls could lead to a breakdown in the system, while revising projections may be necessary in the future but is not directly related to maintaining the established financial controls.

Question 10

A Mature Café (Scenario)
Sarah has been operating and growing her café in an upscale neighbourhood for almost five years. She is happy with how the business has continued to increase in revenues as her customer base has become loyal over the years. She has just over 30 employees, two of whom are managers.
The lease on the space is coming up for renewal and this has brought up the notion of leaving the business and exploring other interests she has in travelling through Africa and Southeast Asia. Sarah has worked hard and she wants to be sure she gets as much out of the business as she put into it.
Another factor is the increasing competition in the area and the sinking feeling she has that it will be next to impossible to differentiate her business from the big chains opening on several street corners. Her fear is that her sales may have plateaued and there in fact will be a decrease in sales in the near future.
-It is difficult for Sarah to sell her business,as it would be for many entrepreneurs.She has created it from nothing and sees all of her heart and soul in the venture.She has consoled herself that it is at least worth a lot of money-perhaps enough for her to retire on (and she is only 42).She needs to be sure she gets a(n)________ so she can decide clearly if it is worthwhile to sell the business.

Accepted Answer

Sarah needs a business valuation by a professional to determine the true worth of her business. This will provide her with an objective assessment of the value of her company that takes into consideration various factors such as financials, market conditions, and competition. This information will help her make an informed decision on whether or not to sell and at what price point she should consider. It will also ensure that she does not undersell her business and receives a fair and reasonable price for her hard work and investment.

Question 11

As their ventures grow,entrepreneurs need to put certain controls in place to ensure the organization runs smoothly.This does not come easy for many of them.A typical growth challenge of an entrepreneurial venture is ________.

Accepted Answer

The answer of As their ventures grow,entrepreneurs need to put...

Question 12

For the past year,Jessie has been running her sports marketing/advertising agency and has managed to retain four significant clients-one more than she needed to break even for the year.She is thinking about how to organize the growth of her business in a way that will allow for bringing in the talented people she wants without creating too much chaos all at once.Jessie realizes that she needs to look at three key areas to support her growth,and if she does this properly,her business will expand with greater ease.She needs to focus on ensuring she has enough capital,hiring the right people before she needs them,and,most importantly,________.

Accepted Answer

Strengthening the organizational culture is crucial for sustainable growth, as it helps integrate new hires smoothly and maintains a cohesive work environment.

Question 13

In a short essay,describe the importance of innovation to an entrepreneurial venture and how the right kind of leadership contributes to continuing innovation for the success of the enterprise.Give examples of innovative companies and their leaders to support your answers.

Accepted Answer

The answer of In a short essay,describe the importance of...

Question 14

The ability of the entrepreneur to articulate a coherent and inspiring vision of the future is,in practice,not a very important part of his or her leadership.If recruiting is done well,the employees will begin to see the future of the organization on their own.

Accepted Answer

The ability of the entrepreneur to articulate a coherent and inspiring vision of the future is actually an important part of his or her leadership. While recruiting can help employees buy into the organization's vision, it is ultimately the entrepreneur's responsibility to guide the company towards its goals.

Question 15

Besides focusing on controlling critical inflows and outflows,a contingency plan needs to also include identification of specific strategies for cutting costs as well as the possible ________.

Accepted Answer

The only relevant choice that completes the sentence and follows the logic of the statement is "restructuring of the venture." The other choices, such as selling the business or aggressive expansion, do not necessarily belong in a contingency plan for cutting costs during a downturn. Changing the company name is also irrelevant to the discussion of cost-cutting strategies.

Question 16

According to our textbook,the best growth strategy is ________.

Accepted Answer

A well-planned growth strategy is the best option as it involves thoroughly analyzing the market and competition, setting clear goals, and creating a feasible plan of action for achieving those goals. A well-executed strategy is also important but is dependent on the quality of the planning stage. Copying from competitors may not be effective as every business has unique strengths and weaknesses, and an unchangeable strategy may not adapt to changing market conditions.

Question 17

In order to survive and prosper entrepreneurs must look at ________.

Accepted Answer

The answer of In order to survive and prosper entrepreneurs...

Question 18

Along with business planning,it is imperative that an entrepreneur think ahead about what would happen if things do not go well.In order to know how to deal with a worst-case situation or crisis,he or she should create a(n)________ or plan B.

Accepted Answer

A contingency plan is specifically designed to address potential crises or worst-case scenarios. It outlines the steps that should be taken in case of an emergency or unexpected situation, and helps to minimize the impact of the crisis on the business. The other options - operational plan, sustainability plan, and feasibility study - are important aspects of business planning, but they do not specifically address crisis management.

Question 19

A Mature Café (Scenario)
Sarah has been operating and growing her café in an upscale neighbourhood for almost five years. She is happy with how the business has continued to increase in revenues as her customer base has become loyal over the years. She has just over 30 employees, two of whom are managers.
The lease on the space is coming up for renewal and this has brought up the notion of leaving the business and exploring other interests she has in travelling through Africa and Southeast Asia. Sarah has worked hard and she wants to be sure she gets as much out of the business as she put into it.
Another factor is the increasing competition in the area and the sinking feeling she has that it will be next to impossible to differentiate her business from the big chains opening on several street corners. Her fear is that her sales may have plateaued and there in fact will be a decrease in sales in the near future.
-She is at the point of seriously considering ________ in hopes to capitalize financially on the investment in her cafe.

Accepted Answer

Harvesting refers to a strategy in which an entrepreneur extracts value from a business by cutting costs, increasing profit margins, and selling assets, without necessarily reinvesting those profits back into the business. Given Sarah's desire to explore other interests and her concerns about increasing competition, harvesting may be the best option for her to maximize the financial return on her investment in the café. She can focus on streamlining operations and reducing expenses to generate more profit, while also selling any assets that are no longer necessary for the business. This strategy can allow her to exit the business on a high note, with a significant return on her investment. Merging, refinancing, or diversifying may not be the best options for Sarah given her current situation.

Question 20

Janice was thrilled with the first two years of operations.Her new company-specializing in manufacturing and distributing yoga mats,props,and yoga wear-had been growing steadily and was on track to make a 14 percent profit at the end of this,her second year.Then she started to notice sales slipping in the 11th month of the year.This is a month that normally starts to see sales increases.She had just hired a key employee to work on business development,and she wondered if this downturn would trend into the 12th month and then into her third year of business.Thankfully Janice had some good advice when she launched her venture because she knew exactly how to handle the situation.Along with her business plan,she had created a(n)________.

Accepted Answer

A contingency plan is a backup plan that outlines specific actions to be taken in the event of unforeseen circumstances or unexpected changes in the market. Janice's notice of slipping sales and the uncertainty of whether this trend would continue into the next year is precisely the kind of situation a contingency plan can help address. It's possible that other plans like employee management, downsizing or strategic may have been helpful, but the scenario presented in the passage aligns most closely with contingency planning.

Quiz 5: Managing Entrepreneurially