Module 5 Questions

The critical financial concept of cash flow tracks money coming in as well as money going out of a business. True False

true

A small business that buys flowers from a local grower and sells them to a grocery store is an example of a wholesaler. False True

true, retail=grocery

Among the disadvantages of business ownership, both brothers would probably balk at the prospect of _____. financial risk undesirable duties time commitment stress

undesirable duties

The _____ section of the business plan describes the purpose of the proposed business—its reason for existence. "Core Values" "Justification Analysis" "Executive Summary" "Mission Statement"

"Mission Statement"

The service-producing sector includes manufacturing, construction, and agriculture. False True

false, goods

_____ companies provide valuable services to _____ companies by acting as sales agents for their products. Entrepreneurial / corporate Large / small Small / large Wholesale / retail

small/large

Mary Gonzalez recently expanded her chain of flower shops. As the only small flower shop located in major airports in the Midwest, she has a unique operation. She has 72 employees in 30 shops, and although her company isn't dominant in its industry, her shops are busy year round. To accommodate her unique clientele, Mary developed the idea of packaging flowers in small waterproof pots that won't leak either in the airport or aboard planes. Because Gonzalez's company is independently operated, the Small Business Administration would consider it a large business.

false

As a business owner, you're in charge and can decide when and where you want to work. This managerial freedom best reflects the _____ advantage of small business ownership. time-management financial intellectual lifestyle

lifestyle

While many _____ ventures are based on innovative ideas, others revolve around improvements to existing goods or services. a.entrepreneurial b.governmental c.franchise d.not-for-profit

a. entrepreneurial

Which of the following is the most important question you need to ask yourself when you're thinking about starting a business? Do I want to buy an existing business? Can I manage a business by myself? What will customers want to buy? d. Where will the startup funds come from?

What will customers want to buy?

If you were a business advisor, what would you probably recommend for Ronnie? Start a business from scratch. Go into business with his brother. Buy an existing business. Buy a franchise.

buy a franchise

Because an owner can delegate both authority and responsibility, entrepreneurs often have more free time than people who work for someone else. False True

false

The startup phase of a business usually lasts for more than _____. 3 years 6 months 1 year 5 years

1 year

The _____ section of the business plan specifies the proposed legal form of the organization—sole proprietorship, partnership, or corporation. "Management Plan" "Description of Proposed Business" "Executive Summary" "Mission Statement"

"Management Plan"

Small businesses in the U.S. generate about 50% of our gross domestic product (GDP). True False

true

The most important step in the process of starting a business is _____ generating a mission statement getting financing creating a business plan assembling a team of managers

creating a business plan

Unfortunately, most small business owners ultimately fail and regard the decision to start a small business as an unwise choice. False True

false

Which of the following is not a reason that many business fail? They grow too rapidly They focus on the customer rather than their product or service The owners lack managerial experience They run into cash flow problems

They focus on the customer rather than their product or service

If you want to start a new business, which of the following enterprises would be the best choice? Automobile manufacturer Aluminum processor Steel refinery Car dealership

car dealership (service)

The majority of small businesses in the USA are owned by ____. white females black females white males black males

white males

Which of the following topics is/are included in the "Marketing" section of the business plan? Pricing Target market Promotion All of these

All of these

The dollars and cents of the business plan are especially important to loan committees. Jones is well aware that an entrepreneur must show how, when, and why the business will make a profit. He thus ensures that his _____ section details his startup costs and sources of funding, his projections of sales revenue, cost of goods sold, operating and financing expenses, profits, and his forecasts of cash flow. a. marketing b. production and operations c. financial plan d. management

C

Franchises are often quite _____. expensive easily acquired legally simple attractive from a tax standpoint

expensive

Among small businesses, the service-producing sector is larger than the goods-producing sector. True False

true

As a business owner, if you need individualized advice from experienced executives on how to manage your business, you can get it through the Service Corps of Retired Executives (SCORE). True False

true

As someone who has identified a business opportunity and assumed the risk of creating and running a business to take advantage of it, Rick Jurmain is an entrepreneur. False True

true

Because Green Thumb Landscapers buys goods from other firms and sells them to consumers, the company is a retailer. True False

true

Mary Gonzalez recently expanded her chain of flower shops. As the only small flower shop located in major airports in the Midwest, she has a unique operation. She has 72 employees in 30 shops, and although her company isn't dominant in its industry, her shops are busy year round. To accommodate her unique clientele, Mary developed the idea of packaging flowers in small waterproof pots that won't leak either in the airport or aboard planes. Gonzalez's company should be considered a small business. False True

true

Unfortunately for small business, the service-producing sector has been steadily decreasing in revenues over the past 10 years True False

false (??)

A small business that buys goods from other firms and sells them to consumers is known as a _____. franchiser retailer wholesaler distributor

retailer

At the end of the day, entrepreneurs' successes will depend on their ability to manage and grow the organizations that they created to implement their visions. True False

true

Which of the following is the most common but riskiest option in becoming a small business owner? Starting from scratch Obtaining a franchise Marketing an unknown product Buying an existing business

Starting from scratch

Managing the money that comes in and goes out of a business means managing _____. the bottom line debits and credits equity cash flow

cash flow

Jones includes a(n) _____ section in his business plan to cover items of interest that aren't otherwise covered in it—his résumé, copies of sales contracts, a copy of his lease, and so on. a. appendix b. personal c. marketing d. production and operations

A

Jones knows that busy loan officers don't have the time to read his entire plan and prefer instead a synopsis or a condensed version that summarizes it. To address this fact, Jones: a. thoroughly documented all research findings and projections. b. limited his plan to 8-10 pages. c. included a well-written executive summary. d. turned the project over to a professional writer.

C

Which of the following best describes entrepreneurs? a. They're retired businesspeople working on a voluntary basis b. They're usually onetime managers who open up a business for the sole purpose of providing an income for themselves and their family c. None of these d. They're risk takers who can adjust to changing situations

d. They're risk takers who can adjust to changing situations

Which of the following is among the disadvantages of small business ownership? Steep learning curve Family values Lifestyle uncertainty Heavy time commitment

heavy time commitment

The purpose of starting a business is to satisfy customers. False True

true

Under the Small Business Administration's SCORE program, retired executives help business people who need advice. True False

true

One advantage of working for someone else is the likelihood of making more money than if you were running your own business. True False

false, more money own business

A rewarding aspect of being a business owner is that you can't get fired—an advantage that comes under the heading of "Creative Freedom and Personal Satisfaction." False True

false, you work and enjoy and satisfied

In which industries would you find a heavy concentration of small businesses? Veterinary services and Florist Aluminum manufacturing Florist Veterinary services

Veterinary services and Florist

The key to coming up with a great business idea is to: develop an innovative product or service. offer a product that is similar to others. fill an unmet need. provide a product or service that no one else offers.

fill an unmet need

The Small Business Administration offers an array of programs to help small business owners and prospective business owners. Services include all of the following except assistance in_____. obtaining financing interviewing job candidates managing operations developing a business plan

interviewing job candidates

Owners of small businesses are responsible for much of the _____ of U.S. business. product innovation healthcare shortfall short-term debt wage escalation

product innovation

As Jacob's business advisor, what would you probably advise him to do? Start a business from scratch. Buy a franchise. Buy an existing business. Go into business with his brother

start business from scratch

Mary Gonzalez recently expanded her chain of flower shops. As the only small flower shop located in major airports in the Midwest, she has a unique operation. She has 72 employees in 30 shops, and although her company isn't dominant in its industry, her shops are busy year round. To accommodate her unique clientele, Mary developed the idea of packaging flowers in small waterproof pots that won't leak either in the airport or aboard planes. Gonzalez's business is not a small business because it's unique in the flower-shop industry. False True

false

About 80 percent of small businesses in the U.S. are concentrated in the _____ sector. service-producing retail professional goods-producing

service producing

To understand where _____ businesses are concentrated, you need to divide them into the goods-producing sector and the service-producing sector. innovative profitable small struggling

small

A survey conducted by the Wall Street Journal indicates that _____ have a more satisfying business experience. top-level executives franchise owners team members small business owners

small business owners

A survey conducted by the Wall Street Journal indicates that, by and large, small business owners have had more satisfying business experiences than they would have had as top-level executives. True False

true

The largest areas of the goods-producing sector are construction and manufacturing. True False

true

A(n) _____ is someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it. a.small business owner b.entrepreneur c.executive d.marketer

b. entrepreneur

In her business plan, Shelia Pataki has included a two-page overview called the _____. "Business Summary" "Production Overview" "Executive Summary" "Mission Statement"

"Executive Summary"

In order to meet the financial needs for future business growth as well as current demands, TruWood Cabinet Makers must secure a business loan of $125,000 from a local bank. The loan committee has asked owner and general manager Jarret Jones to write a comprehensive business plan that meets all of First Security Bank's requirements for such a large loan. After a lot of research and careful writing, the plan is constructed and ready for presentation to the loan committee. The section of his business plan in which Jones sets forth the purpose of his cabinet-making business—its reason for existing—is called the _____. "Vision Statement" "Statement of Goals" "Mission Statement" "Executive Summary"

"Mission Statement"

Donna Graves has just completed research to determine the types of advertising to use in her proposed business. She will discuss advertising under the _____ heading in the "Marketing" section of her business plan. "Promotion" "Distribution" "Pricing" "Target Market"

"Promotion" ***

Clarke Santiago and his wife Teresa, parents of two children, opened a buffet restaurant last year. They've been so successful with their family-style atmosphere that some investor friends have offered funding to expand into two additional locations. The investors also want to consider opening several more restaurants each year. After thinking it over, the Santiagos decided to stick with one restaurant and add catering services—a move that should provide them with a satisfactory income. The Santiagos' business is a good example of a _____. a. lifestyle business b. sole proprietorship c. start-up business d. franchise

a. lifestyle business

Which of the following is not a characteristic of an entrepreneur? a. Is confident in their innovation or business idea b. Is willing to work under a certain degree of uncertainty c. Has the flexibility to adjust to changing situations d. Avoids risk

d. Avoids risk

Entrepreneurs typically stay their charted courses rather than cater to changing situations. False True

false

Mary Gonzalez recently expanded her chain of flower shops. As the only small flower shop located in major airports in the Midwest, she has a unique operation. She has 72 employees in 30 shops, and although her company isn't dominant in its industry, her shops are busy year round. To accommodate her unique clientele, Mary developed the idea of packaging flowers in small waterproof pots that won't leak either in the airport or aboard planes. Small businesses like Gonzalez's account for about 50 percent of the U.S. gross domestic product each year. True False

true

As a practical businessman, Jones knows that his business plan must demonstrate his knowledge of his customers (including the demographics of various customer segments), product promotion, pricing, and the essentials of distribution. Thus his inclusion of a strong _____ plan. a. industry analysis b. promotion and advertising c. marketing d. financial and management

C

Among the disadvantages of business ownership, Jacob would probably balk at the prospect of_____. financial risk unlimited liability time commitment stress

unlimited liability

In order to limit your financial risk, it's usually advisable to pour limited financial resources into a new business. True False

false **

Entrepreneurs usually start with few resources but build their businesses with the collective help of family members and investors. True False

false ***

Brothers Ronnie and Jacob are both in college; Ronnie is a senior and Jacob a sophomore. They're both majoring in business administration and want to open a small business a few years after graduation. They understand that it's important to gain more management experience and build good credit ratings. Ronnie wants more security in his work and would be satisfied working with an older partner until he "learns the ropes." More than Jacob, he'd prefer a business that's been established for a few years. Although he likes a certain degree of independence, he's willing to follow directions and take advice. Jacob, on the other hand, wants more freedom to make his own choices and to succeed or fail on his own merits. He's quite creative and likes to set his own rules. By following your advice, Ronnie would probably enjoy all of the advantages of *small business ownership* except _____. lifestyle freedom creative freedom and personal satisfaction time commitment financial rewards

time commitment

Which of the following is an advantage to starting a business? Lower stress level Avoidance of unpleasant work tasks Financial security Opportunity to gain an understanding of all aspects of a business

Opportunity to gain an understanding of all aspects of a business

To succeed in a business, a new owner must understand _____. the principles of cash flow the basics of business management the essentials of time management all of these

all of these

As a business owner, you're responsible for making the decisions that pertain to the profitability of your business. This decision-making freedom best reflects the _____ advantage of small business ownership. financial independence lifestyle first-mover

independence

Mary Gonzalez recently expanded her chain of flower shops. As the only small flower shop located in major airports in the Midwest, she has a unique operation. She has 72 employees in 30 shops, and although her company isn't dominant in its industry, her shops are busy year round. To accommodate her unique clientele, Mary developed the idea of packaging flowers in small waterproof pots that won't leak either in the airport or aboard planes. Gonzalez's shop managers regularly think of new ways to market their products, improve their quality, keep them fresher, and meet consumer needs. In this respect, Gonzalez's business is unusual among small businesses. False True

false