Chapter 5 Quizlet

The baby boomer generation is very important to small business due to its large size of approximately ______ Americans.

70 million

Excluding farmworkers, the service sector accounts for what percentage of jobs in the United States?

80 percent

Small firms represent ______ of the U.S. exporters of goods.

98 percent

An agreement by which a financial institution promises to lend a business a predetermined sum on demand is called ______.

a line of credit

Which three items are considered equity financing?

a personal laptop the accumulated value in a life-insurance policy the savings account of the owner

A business plan outlines which two of the following?

a precise statement of the rationale for the business a step-by-step explanation of how the business will achieve its goals

A would-be entrepreneur might choose retailing, services, and high technology industries to start their businesses because these fields ______.

are relatively easy to enter

Born between 1946 and 1964, ______ is/are relatively wealthy. Many small businesses do not actively pursue this group but many experts believe it to be the market of the future.

baby boomers

For a small-business entrepreneur, independence refers to ______.

being your own boss

A ______ is a precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals.

business plan

Angela saved $20,000 and acquired another $20,000 as a short-term loan from her parents to start a kid-friendly coffee shop. The $40,000 that Angela is ready to invest in this new venture is known as ______.

capital

Undercapitalization essentially means that without sufficient _______, even the best small-business idea in the world will fail.

capital

Which three are personal resources an owner might utilize as sources of funds for his or her business?

cash value of the owner's life insurance policy equity value in the owner's home money in the owner's savings account

Which of the following are concerns of small-business owners that can contribute toward high-stress levels?

changing market demand employee problems worries about competition

In order to take quick advantage of opportunities that require external funding, a business owner who is short on cash may get a line of _______ from a bank or other financial institution.

credit

Financial assistance by the Small Business Administration (SBA) for a new startup company is a form of ______ financing.

debt

A(n) ______ is someone who risks his or her wealth, time, and effort to develop a product or service for profit.

entrepreneur

Trey has $25,000 in savings, two new laptops, two laser printers, and a variety of quality office furniture that he's using to start his new Internet auction startup business. This array of assets brought into a company is known as _______ financing because Trey is using real personal assets rather than borrowing funds from outside sources.

equity

Which of the following are forms of debt financing for Jena who is starting a new online training program business for counselors?

exchanging computers, printers, and other technology for a share of the business a $15,000 SBA loan a $10,000 loan from her local bank

True or false: Rarely, if ever, does an owner of a new, startup business invest his or her own money in the venture.

false

True or false: Technological advances and an increase in service exports have created additional challenges for small companies to expand their operations abroad.

false

Sara has decided that she is ready to start the small formal wear shoe store that she's dreamed about for years. She is also aware that approximately half of all new startup firms fail within the first _______ years.

five

Half of all new companies fail within the first ______.

five years

The company that sells a franchise is called the ______.

franchiser

A small-business owner must deal with ongoing worries about competition, employee problems, rent increases, or changing market demand. All of these are contributing factors to which disadvantage of small-business ownership?

high-stress levels

Being able to be your own boss is one of the leading reasons that entrepreneurs choose to go into business for themselves. This advantage of small-business ownership is referred to as ______.

independence

Creative people who work as entrepreneurs within corporations are known as _____.

intrapreneurs

All of the following are characteristics of a small business except ______.

it carries only one product line

Small businesses often require ______ money to start and maintain than do larger businesses.

less

What are the two top sources of financing for small businesses?

loans from family members personal savings

Just because an entrepreneur has a brilliant vision for a small business does not mean that person has the knowledge or experience to manage a growing business effectively. This is described as ______.

managerial incompetence

A small business makes goods and customizes its products to meet specific customer needs and wants. This business is a ______.

manufacturer

Juanita makes organic salsa that she sells directly to stores around the country. She customizes the salsa to her customers' tastes. For example, she makes peach salsa for her customers in Georgia and green chile salsa for customers in New Mexico. Juanita is a small business woman who is also a ______.

manufacturer

While large corporations must compete for large market segments, small firms can focus their efforts on a precisely defined group of customers known as a market ______, which allows them to satisfy a need that other companies have not addressed.

niche

Which functions are most typical of a wholesaler?

promoting planning and negotiating for supplies distributing

What are typical businesses found in the service sector?

real-estate agencies barbershops accounting firms

Advantages of buying an existing business include which of the following?

reduces some of the guesswork inherent in starting a new business from ground up built-in network of customers, suppliers, and distributors

How a firm is perceived by its various stakeholders is its ______.

reputation

Which industry is characterized by the acquiring of goods from producers or wholesalers and then selling them to consumers?

retailing

The _______ sector includes real estate, barbershops, banks, and computer repair shops.

service

In a _______ economy, entrepreneurs earn income by renting out an underutilized resource such as lodging or vehicles.

sharing

Companies like Uber or Lyft are part of the ______.

sharing economy

Businesses that are independently owned and operated, not dominant in their field of operation, and meet certain standards of size in regard to the number of employees are referred to as _______ businesses.

small

Comparing the decision-making process between large and small firms, which of the following statements is true?

small businesses usually have only one layer of management which helps speed decision making

Which of the following is true regarding flexibility and small-business ownership?

small-business owners can make and execute decisions quickly

Due to changes in communication and advancements in _______ (such as cell phones, the Internet, and social media), small companies can better customize their services quickly for international customers.

technology

The most important source of funds for any new business comes from ______.

the owner of the business

Daniel wanted to start his own small business. After spending his own money on marketing research, Daniel asked his friend Chase to be his accountant since he was lacking skills in that area. They spent a few months writing a business plan, which then they presented to a bank to obtain funding. What does this example illustrate?

Daniel understands the steps needed to start a small business

______ is the process of creating and managing a business to achieve desired objectives.

Entrepreneurship

______ use a company's existing resources to launch new products and generate new profits. They are the creative people who work as entrepreneurs within corporations.

Intrapreneurs

Which two statements are true about the role of small business in the U.S. economy?

More than 99 percent of U.S. firms are classified as small businesses. Small businesses employ nearly half of all private workers.

Which of the following are considered debt financing?

SBA loan trade credit line of credit

Which agency is comprised of retired executives willing to provide advice and knowledge to owners of small firms?

SCORE

What are two volunteer agencies funded by the SBA to provide advice for owners of small firms?

SCORE ACE

______ supply products to industrial, retail, and institutional users for resale or for use in making other products.

Wholesalers

Tony is interested in starting a Subway in the Pearl district of Portland, Oregon. The license to sell another's products or use another's name in a business (in this case Subway) is referred to as ______.

a franchise

A small firm can develop ______ if it provides quality products and excellent service.

a good reputation

When Jim obtains needed computer maintenance services from a supplier who agrees to receive payment for those services within two months, Jim is obtaining ______.

trade credit

______ is when suppliers allow a business to take possession of needed goods and pay for them at a later date or in installments.

trade credit

True or false: In order to save the expense of maintaining various departments, small-business owners may hire other firms to supply services on an as-needed basis.

true

Angelo was all set to start his new business. Although he did not have as much cash as he would have liked, he figured that once the business got going, the cash generated from sales would keep the business running. He was surprised, however, that sales weren't as strong as he thought and now he is cash-strapped. Angelo is experiencing a common problem known as ______.

undercapitalization

The lack of funds to operate a business in a normal and potentially successful manner is known as ______.

undercapitalization

People or organizations that agree to help fund a business provided they receive an ownership interest or stock in a firm are called ______.

venture capitalists

The popular TV show Shark Tank features wealthy individuals looking to part with some of their money in order to help others start a new business. In return for giving these would-be business owners money, the investors will receive part ownership in their business. These investors are called ______.

venture capitalists

All of the following are typically true of acquiring an existing business except ______.

you are free from the existing problems of the previous owner, if any

Which example describes a market niche?

young male, thrill-seekers who enjoy rock climbing