Chapter 5

Your textbook uses the term small business to refer to an owner-managed business that employs not more than

500 people

Which of the following is not a common cause of small business failure?

Entrepreneurial vision

Small businesses cannot be operated from an individual's home.

False

Targeting small niches or product needs is a dangerous strategy for a small business to follow.

False

Technological advances have resulted in fewer opportunities for small businesses abroad.

False

The entrepreneurship movement is declining because of technological advances.

False

Which of the following is not a source of equity financing?

Loan from a family member

Some larger corporations have acted like small businesses from their inception with great success. Which company is a famous example cited in your text?

Southwest Airlines

What are intrapreneurs?

They champion innovation from within larger organizations.

Which industries will likely continue to grow as baby boomers age?

Travel, financial planning, and health car

The Small Business Administration offers managerial and financial assistance to small businesses.

True

Worries about new equipment, expanding inventory, rent increases, competition, changing market conditions, and the like may contribute to

a high stress level

The business plan should do all of the following except

act as a constraint that limits the business's flexibility and decision making.

Downsizing is one way firms try to enhance their competitiveness.

true

Franchisees pay the franchiser a monthly or annual fee based on a percentage of sales or profits.

true

Intrapreneurs take responsibility for the development of innovations of any kind within larger organizations.

true

Managerial inexperience can lead to business failure.

true

Retailing, services, manufacturing, and high technology are attractive to entrepreneurs because these fields tend to be relatively easy to enter and require low initial financing.

true

What is one thing Jack and Bruce know that a good startup company does not need?

undercapitalization

Although some businesses are less risky than others, overall the financial risks of running a small business are

very high

Recently, _________ have (has) spawned many small businesses.

deregulation of energy markets and interest in alternative energy sources

Small businesses have a high success rate.

false

When market conditions change rapidly, a small business usually has fewer layers of management to work through in making decisions. This advantage of small business is

flexibility

Small businesses usually only have one layer of management, making them more ______ and able to adapt to market demands.

flexible

A license to sell another's products or to use another's name in business is called a

franchise

The most important source of funds for any new business is

the owner

The Small Business Administration

is an independent agency of the federal government to provide managerial and financial assistance to small businesses.

Many service businesses are considered retailers because they

sell their services to consumers.

The ______ sector accounts for the majority of jobs in the United States.

service

The majority of all new jobs created in the United States in recent years were generated by

small businesses