Chapter 7 Concept Check

____ are companies that invest in start-up businesses with high growth potential in exchange for a share of ownership.

venture capital firms

In the context of various launching options when starting a new business, which of the following statements is a drawback associated with buying a franchise?

It has less opportunity for creativity.

Which of the following is a drawback of buying an established business?

It may entail inheriting the previous owner's mistakes.

Which of the following statements is true of small businesses?

They have more scope to provide personal customer service than large businesses.

Which of the following is a reason why many members of the European Union have low entrepreneurship rates?

They provide strong unemployment insurance to their citizens.

When starting a business from scratch, _____.

the logistics can be challenging

Which of the following is a threat to small businesses?

A bigger regulatory burden compared to large businesses

In the context of small businesses and the economy of a country, which of the following factors can bring down entrepreneurship rates?

A high level of employment protection

In the context of funding options for small businesses, which of the following statements is true of crowdfunding?

Its sites are used to funds nonprofits.

Which of the following is one of the largest crowdfunding sites in terms of traffic?

Kickstarter.com

Entrepreneurs must understand that no conventional lender, whether private or public, will:

Lend all of a start-up's funding.

____ are small segments of a market with fewer competitors than the market as a whole.

Market niches

Which of the following is an advantage of starting a business from scratch?

The entrepreneur gets to build his or her own business concept and structure.

Which of the following statements is true of people with an external locus of control?

They believe that the actions of others can control their fate.

Entrepreneurs who mortgage their homes for the business and stake their reputation on the success of an unproven product demonstrate:

a high tolerance of uncertainty

____ are individuals who finance start-up companies with high growth potential in exchange for a share of ownership.

angel investors

Which of the following is a characteristic of successful entrepreneurs?

confidence

____ is a characteristic that most successful entrepreneurs possess.

energy

people who risk their time, money, and other resources to start and manage a business are known as ____.

entrepreneurs

Which of the following is an appealing benefit that entrepreneurs enjoy?

flexible schedule

According to the U.S. Small Business Administration (SBA), to officially count as a small business the:

number of employees should range from fewer than 100 to 1,500.