Question 1

What percentage of businesses in the United States is classified as small businesses?

Accepted Answer

According to the Small Business Administration, small businesses make up more than 90 percent of businesses in the United States.

Question 2

The FDIC filed a civil lawsuit against for former executives of IndyMac Bank,accusing them of negligence in making loans to homebuilders that had slim chances of being repaid.This indicates getting bank loans for a start up will get easier.

Accepted Answer

The FDIC's lawsuit against former executives of IndyMac Bank suggests that banks may become more cautious in making loans, which could make obtaining bank loans for start-ups more difficult, rather than easier.

Question 3

Which of the following activities is essential to the role of entrepreneur?

Accepted Answer

All of these activities are essential to the role of an entrepreneur. Assuming the risks of operating a business, being actively involved in operating the business, being one's own boss and starting a new business venture are all crucial aspects of entrepreneurship.

Question 4

The most common source of financing for entrepreneurs is bank loans because they require the least amount of work.

Accepted Answer

Bank loans may require a significant amount of work, including providing collateral, creating a detailed business plan, and undergoing a credit check. Other sources of financing, such as crowdfunding, grants, and venture capital, may also be available to entrepreneurs.

Question 5

Women tend to start their own businesses because they really like being their own bosses.

Accepted Answer

Studies have shown that women entrepreneurs often cite the desire for autonomy and control over their work as a major motivator for starting their own businesses.

Question 6

More people are discouraged to test their skills as entrepreneurs because the failure rate among small businesses has been increasing in recent years.

Accepted Answer

While it's true that starting a business carries risks and the failure rate can be high, the increasing availability of resources, support networks, and technology has continued to encourage more people to test their entrepreneurial skills. Additionally, the desire for independence and personal fulfillment often outweighs the fear of failure for many aspiring entrepreneurs.

Question 7

Teresa Walsh and Bonnie Kelly started Silpada Designs,jewelry sold through home parties.They are best classified as a(n)

Accepted Answer

Teresa Walsh and Bonnie Kelly started their own business, Silpada Designs, which classifies them as entrepreneurs.

Question 8

What is the difference between a small business and a business owned by an entrepreneur?

Accepted Answer

The answer of What is the difference between a small...

Question 9

The definition of "small business" requires that the business's sales and assets

Accepted Answer

A small business is typically defined as one that is too small to influence the external environment, meaning it does not have a significant impact on market trends or industry standards.

Question 10

The growth in electronic commerce (also called e-business or online business)has had little impact on small businesses in the United States.

Accepted Answer

The growth in electronic commerce has had a significant impact on small businesses in the United States, as it has provided opportunities for them to reach new customers and expand their market reach without the need for large investments in physical infrastructure. Many small businesses have also been able to compete more effectively with larger companies by leveraging online platforms to offer unique products or services to niche markets.

Question 11

In a survey of small business owners 58% said "I would recommend the small-business opportunity as a career to my own children." This shows that entrepreneurship is easy.

Accepted Answer

The statement is a fallacy. The fact that 58% of small business owners would recommend it as a career to their children does not imply that entrepreneurship is easy. It only shows that they believe it can be a viable and fulfilling career path.

Question 12

The risks of starting a new business from scratch are greater than those of buying an existing firm.

Accepted Answer

Starting a new business involves uncertainties such as market acceptance, brand establishment, and operational setup, whereas buying an existing firm provides an established customer base, brand, and operational processes, reducing some risks.

Question 13

An entrepreneur does all of the following EXCEPT

Accepted Answer

Hiring a professional manager is not a requirement for being an entrepreneur. Entrepreneurs are typically involved in operating, organizing, planning, and assuming risk in their business ventures.

Question 14

In terms of the number of new jobs formed each year,how does small business compare with big business?

Accepted Answer

Entrepreneurial ventures and small businesses are often credited with creating a significant portion of new jobs, as they are more dynamic and adaptable compared to larger, established companies.

Question 15

A manufacturing firm with common stock that is publicly traded has 100 employees and $10 million in sales.The firm would not qualify as a "small business," according to the definition in your text,because

Accepted Answer

A publicly traded company does not qualify as a "small business" because it is not privately held, regardless of its sales or number of employees.

Question 16

Claire Morris,founder of Charmed by Claire,has used only personal resources to finance her business.This is the most common form of entrepreneurial financing.

Accepted Answer

The statement is true. Claire Morris has used only her personal resources to finance her business, which is a common form of entrepreneurial financing known as bootstrapping.

Question 17

Hundreds of small businesses are under contract to make parts for Honda.This is an example of which of the following roles of small businesses?

Accepted Answer

This is an example of how small businesses can be important to large businesses like Honda by providing essential parts and contributing to their supply chain. While small businesses may also play a role in innovation and job creation, this particular example is focused on their significance to a larger company.

Question 18

Which of the following is a role performed by successful small businesses?

Accepted Answer

Successful small businesses often create new jobs in their communities, contributing to local economic growth and reducing unemployment rates.

Answer: B
 Small businesses can also develop and implement new management techniques, processes, and technologies that can help to improve the overall efficiency and productivity of the industry.

Answer: D
 Some small businesses may specialize in inventory storage and management services, helping larger businesses to efficiently store and manage their inventory.

Therefore, the best choices are A and B.

Question 19

The Small Business Administration (SBA)offers management counseling and training for new business owners at very low or no cost.

Accepted Answer

The Small Business Administration does offer management counseling and training for new business owners at very low or no cost.

Question 20

The purpose of the Small Business Administration's SCORE program is to evaluate the managerial performance of small businesses and then to assign scores that are used to determine the amount of loans those individual businesses can obtain.

Accepted Answer

The purpose of the Small Business Administration's SCORE program is to provide free mentoring and support to small business owners, not to evaluate their managerial performance or determine loan amounts.

Quiz 5: Entrepreneurship and New Venture Management