Chapter 7
earn more money
The primary reason people choose to become entrepreneurs is to: avoid difficult challenges avoid uncertainty earn more money develop evolutionary business models
too little money
Timothy wanted to start a coffeehouse. However, he could not buy a space to start his business because of lack of funds. Which of the following threats is highlighted in the given scenario? bigger regulatory burden high risk of failure too little money lack of knowledge
business plan
A__________is a formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives. business warrant business resource business directory business plan
essential to keep the relationship as professional as possible
According to small business experts, while raising start-up funds from friends and relatives, it is: acceptable to not repay them essential to involve them in company dealings acceptable to not document the financing essential to keep the relationship as professional as possible
providing personal customer service
Bertha runs a fashion boutique. She prefers to personally interact with her customers to gauge the styles that would suit their personality. Her customers also prefer talking to her in person to share their preferences in colors, designs, styles, and fabric as they value her suggestions. The opportunity of _____ is highlighted in the given scenario. having lower overhead costs using technology exploiting market niches providing personal customer service
self-reliance
Charles owns a restaurant that is thematically modeled into representing the pop culture of the 1980s. While setting up the restaurant, Charles took care of everything himself, from interior decoration to menu and music. He even got the permit for the restaurant himself. Which entrepreneurial characteristic is highlighted in the given scenario? conformity subservience vision self-reliance
too little money
David wants to open a new gymnasium with state-of-the-art equipment and qualified trainers. However, he can only afford either of the two. He decides to get the equipment first to start the gym. However, without qualified trainers to operate the equipment, David loses his customers and is forced to shut down the gym. Which of the following threats is most likely highlighted in the given scenario? high risk failure too little money lack of knowledge bigger regulatory burden
it is a venture capital firm
Gemini Inc., a large conglomerate, offered Timothy's new logistics company the much required financial support in exchange for a 40% ownership in the company. It also provided Timothy with an experienced group of people to help him make crucial decisions for the company. In the given scenario, which of the following statements is true of Gemini Inc.? it is an angel investor it is a venture capital firm it is a sole proprietor it provides commercial loans
he is confident but not overconfident regarding his abilities
Howard is a young entrepreneur who is invested in creating a new form of social media. He is sure of his idea and believes that it will be successful in the long run. However, he is careful not to be overoptimistic about it and works on other ideas as well. In the given scenario, which of the following statements is true of Howard? he has an external locus of control he is docile he is conformist he is confident but not overconfident regarding his abilities
necessity entrepreneurs
In low-income countries, a high percentage of entrepreneurs are considered__________. necessity entrepreneurs rational entrepreneurs social entrepreneurs voluntary entrepreneurs
An internal locus of control involves personal responsibility, whereas an external locus of control does not.
In the context of entrepreneurs, which of the following statements is a difference between an internal locus of control and an external locus of control? An internal locus of control is an entrepreneurial trait, whereas an external locus of control is not. An internal locus of control does not involve self-reliance, whereas an external locus of control does. An internal locus of control involves personal responsibility, whereas an external locus of control does not. An internal locus of control is not applicable in market niches, whereas an external locus of control is.
are often the first to contract when times are tough
In the context of the U.S. economy, small businesses: do not create a significant percentage of new jobs do not contribute significantly to gross domestic product are often the first to contract when times are tough have an insignificant impact on the state of the economy
Angel investors are wealthy individuals, whereas venture capital firms are companies.
In the context of various funding options for small businesses, which of the following statements is a difference between angel investors and venture capital firms? Angel investors fund only nonprofits, whereas venture capital firms do not fund nonprofits. Angel investors include private organizations, whereas venture capital firms include only government organizations. Angel investors focus on start-ups in their later stages, whereas venture capital firms focus on low-potential start-ups. Angel investors are wealthy individuals, whereas venture capital firms are companies
are called necessity entrepreneurs
In the event that a large company has to downsize, the middle-aged workers who are laid off find it difficult to find new jobs. When such workers decide to start their own businesses, they: become welfare recipients are called necessity entrepreneurs become post-retirement workers are called baby boomers
personal resources
Julian wants to open a bakery. He uses his savings and borrows some funds from his family to start his business. In the given scenario, Julian uses _____ to fund his business. venture capital crowdfunding commercial loans personal resources
energy
Lowell runs a unisex salon and has six 10-hour workdays. If a customer requests him to stay open on the seventh day, he always obliges. He also provides home services if requested. Which entrepreneurial characteristic is most likely highlighted in the given scenario? self-reliance docility energy vision
independence
Maude worked as a lead animator in an animation company. However, she could not exercise her freedom while working on projects because she was bound by the decisions made by the company. Fed up with this, Maude quit her job and started an independent animation firm where she accepts only those projects that allow her a free rein in terms of creativity. In the given scenario, Maude most likely started her own firm because it offered _____. independence uniformity greater challenge greater financial success
exploiting market niches
Mauve starts a business that specializes in procuring and selling antique items. Her business caters specifically to individuals who have high-income jobs and who like collecting unique artifacts. Mauve does not have much competition and can decide the prices of her products without any external influence. The opportunity of _____ is highlighted in the given scenario. providing personal customer service exploiting market niches using technology having lower overhead costs
having lower overhead costs
Olivia runs a spa for women. She employs only two helpers and one receptionist. This enables her to focus most of her resources on procuring products required to provide comfort and high-quality services to customers. The opportunity of _____ is highlighted in the given scenario. providing personal customer service using technology exploiting market niches having lower overhead costs
feel buffeted by forces such as random luck
People with an external locus of control: are extremely self-reliant are more likely to take responsibility for their own failures feel that they have complete control over their lives feel buffeted by forces such as random luck
tolerance of uncertainty
Priscilla is a trader of silver and diamond jewelry. Due to a recessionary trend in the industry, her business has not been making any profits for a few months. As the end of this economic trend cannot be easily ascertained, she decides to get her house mortgaged so that she can add a new line of business of trading in semi-precious stones. This financial risk appetite of Priscilla illustrates her _____ as an entrepreneur. high energy levels tolerance of uncertainty tolerance of failure deep visionary sense
exploiting market niches
Rahul owns a guitar store that is famous for customizing guitars. From choosing the wood for the body to the type of pickups, everything can be selected by the customer. This feature attracts beginners and professionals alike to Rahul's store. The specific nature of the business makes it unique and results in fewer competitors. This allows Rahul to choose the prices for his services. The opportunity of _____ is highlighted in the given scenario. exploiting market niches having lower overhead costs providing homogenous service using technology
a chance of survival
Raoul is an illiterate who does not have proper skills for any job. As a result, he is unable to find permanent employment. As a last resort, Raoul starts a diner in his home to earn a regular income for his family. In the given scenario, Raoul most likely started the diner because it offered _____. greater flexibility a challenge a chance of survival independence
personal resources
Ruben owns an astronomy-themed restaurant. The entire restaurant resembles a planetarium. He has also installed a projector that transforms the ceiling into a night sky. Ruben used most of his savings to fund this venture and also borrowed funds from his friends and family. In the given scenario, Ruben used _____ to fund his business. crowdfunding commercial loans personal resources venture capital
eliminating complex regulations placed on businesses
The nation of Rhodasia has the lowest entrepreneurship rate globally. A new government, headed by President Harold David Wengerd, aims to make the country's business environment more supportive toward burgeoning entrepreneurs. Which of the following measures should be taken to increase the entrepreneurship rate in Rhodasia? increasing unemployment insurance available to employees eliminating complex regulations placed on businesses mandating that all businesses must provide employee health insurance initiating employment protection laws