Management 3360 Chapter 20

In every small business effort, there is always an element of risk.

True

Most small businesses never go through the takeoff stage.

True

Successions and business sales generally occur only among the largest small businesses.

True

Terminations are more likely for young firms, who are four years old or less.

True

. Identify the businesses that start and stay very small, often operating seasonally or when the owner wants to work in the business.

Lifestyle firms

Being among the people your customers have seen in the past few days refers to which of these components from Zig Ziglar?

Recency

_____ refers to a form of business termination in which the firm's legal or financial obligations are not fully met at closing.

Workout

When one firm absorbs another through purchase, it is called a(n)

acquisition.

The solutions for liabilities of newness come from getting _____ as quickly as possible.

expertise

Tax management

focuses on minimizing estate tax payments.

The challenges of the emergence stage is

getting from entrepreneurial thinking to entrepreneurial action.

. High-performing small businesses

often grow through multiple locations and higher levels of professionalization.

Entrepreneurial success is measured with all of these bottom lines EXCEPT

the government.

Which of these techniques can help an individual move from entrepreneurial thought to actions?

BRIE

A(n) _____ is a formalized legal method to transfer some or all of the ownership of a business to its employees.

ESOP

Which of these is a type of transfer?

Pass off

Identify the small firm life cycle stage that Quality Air Inc. is at.

Success

Bankruptcy is the legal form of insolvency, where liabilities are greater than assets.

True

. Which of these is a type of termination?

Workout.

Business terminations in which the entrepreneur ends the business with its obligations met is called a

walkaway.

. If Kevin wants to explore transfer, he should consider a

workout.

Recency, frequency, urgency, and potency are four key recommendations for staving off customer complacency.

False

Survival is the second riskiest period after emergence.

False

Which of these is a common idea among the different models for the life cycle of the small business firm?

There are multiple stages

Which of these are the smallest full-time businesses with schedules defined by customer, not owner, needs?

Traditional small businesses

The resource maturity stage is characterized by a stable level of sales and profits over several years.

True

The single most typical way businesses close down is by a walkaway.

True

Identify the type of termination that is employed when the entrepreneur feels that the business was less than successful, usually because of the result of poor use of the firms' assets combined with an unsatisfying business experience.

Workout

The existence stage is defined by

a lack of stability in terms of markets, operations, or finances.

In the hierarchy of business outcomes, the worst possible outcome is

bankruptcy

A transfer method in which a small firm is bought by a larger firm for the purpose of quickly growing the larger firm refers to

consolidation.

The main challenge of the resource maturity stage is to avoid

customer complacency.

In a successful walkaway

employees are let go as they find other jobs.

Grantor retained annuity trusts can be used in

estate freezes.

Of the four generic growth strategies, most small businesses are

lifestyle or part-time firms.

Lifestyle firms are also known as

part-time firms.

A _____ happens when the owner realizes there is little chance of being able to sell the firm and gives the firm to someone as a gift, without compensation.

pass off

According to the components from Zig Ziglar, a message that is remembered and remembered for the right reasons is said to be

potent.

Most small businesses never go through the _____ stage.

takeoff

An endgame strategy in which the owner closes down a business is called

termination.

These are processes, benchmarks, or components of the business that are essential for the business to be profitable and competitive in its market

CSFs

_____ is the second riskiest period after emergence.

Existence

In the hierarchy of business outcomes, the worst possible outcome is leaving the firm with no debt.

False

Lifestyle firms are the smallest full-time businesses.

False

Managerial role needs to be focused during the emergence and existence stage of the small business life cycle.

False

People who open multiple businesses throughout their career are called unsatisfied entrepreneurs.

False

When one firm absorbs another, it is called a merger.

False

Which of the following statements is true regarding success stage of the small firm life cycle?

Firms develop the information, skills, and the routines to grow the business's profits.

Staying in touch with customers on a regular basis via visits, phone calls, e-mails, newsletters, and so on refers to which of these components from Zig Ziglar?

Frequency

This represents the owner's last major return from the firm and a key pool of money for retirement or further businesses.

Harvest

_____ refers to the recovery of value through the sale of a firm or its assets.

Harvest

These businesses typically go through all the stages, but include takeoff before going through resource maturity.

High-growth ventures

_____ aim to achieve growth rates of 25 percent or more a year, with sales of more than $1 million.

High-growth ventures

A transfer method describing the first-time public sale of a stock listed on a public stock exchange is called a(n)

IPO.

For most owners these profits are called flexibility.

Slack resources

_____ are firms intended to provide a living income to the owner, and operating in a manner and on a schedule consistent with other firms in the industry and market.

Traditional small businesses

The two broad types that CSFs fall into are outside help and A. entrepreneurial experience.

entrepreneurial experience.

Kevin's goal appears to be one where he is able to

harvest.

A _____ is a firm started with the intent of eventually going public, following the pattern of growth and operations of a big business.

high-growth venture

Of the four generic growth strategies, _____ represents the smallest category.

high-growth ventures.

From a growth strategy perspective, Quality Air can be described as a

high-performing small business.

The most straightforward way to achieve sales growth

is by increasing sales to existing steady customers.

Profits that are available to be used to satisfy the preferences of the owner in how the business is run refers to

slack resources.

Profits which are not taken in the form of money are known as

slack resources.

Which is the form of business termination that uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets?

Bankruptcy

Entrepreneurial role is most needed or focused upon during which stage of the small firm life cycle?

Emergence

For most small businesses, which of these represent the usual sequence of stages in the business life cycle?

Emergence, existence, survival, success, and resource maturity

For most small businesses existence will follow the success stage.

False

For start-ups, the short-term measure of success is profits and the long-term measure of success is survival.

False

High-growth ventures aim to achieve growth rates of 5-10 percent a year, with sales of $100,000.

False

If Kevin decides to terminate his business, a possible methods is a(n)

IPO

Which of these businesses typically have sales of $25,000 a year or less and are intended to provide partial or subsistence financial support for the existing lifestyle of the owner?

Lifestyle firms

_____ is the popular name for a_____ bankruptcy in which a bankrupt firm's assets are sold by the bankruptcy trustee and the proceeds used to pay the firm's debts.

Liquidation; Chapter 7

____ is an estate planning strategy which focuses on generating cash to cover likely estate taxes.

Liquidity enhancement

Which of these is NOT a CSF that can help identify those businesses more likely to survive?

Moderate start-up capital

This refers to the profitability of the business, figured from the financial statements. A. The resource maturity

The bottom line

_____ are the smallest full-time businesses.

Traditional small businesses

All models for the life cycle of the small business firm have multiple stages.

True

Businesses starting with no start-up capital and those starting with more than $50,000 are among those most likely to survive long-term.

True

For the owners, a central goal of a harvest is to get the maximum value they can for their business.

True

For most businesses, _____ will follow the success stage.

resource maturity

In a _____ the assets of a firm are sold to another business, with the proceeds used to pay off the firm's remaining debts, and perhaps leaving the owner some small profit.

sell off

. People who open multiple businesses throughout their career are called

serial entrepreneurs.

Returns intended to equal and replace the salary or wages the entrepreneur could draw working for someone else refers to _____ profits.

substitution

Returns at levels higher than the entrepreneur could make working for others refers to _____ profits.

success

Which of these grow at rates more like 5 to 15 percent a year, adding employees and often gaining through multiple locations?

High-performing small business

The set of risks faced by firms early in their life cycles that come from a lack of knowledge by the owners about the business they are in and by customers about the new business is called the

liability of newness.

Returns at levels higher than the entrepreneur could make working for others is known as

success profits.

Returns above costs intended as a secondary income for entrepreneurs refers to _____ profits.

supplemental

Managing _____ involves working extensively with potential sources of funding and other key resources, as well as working with markets outside and employees within the firm. It also often entails relearning the processes that led to this level of success.

takeoff