Com ch.2

E

1. Which of the following could be a "trigger" for the entrepreneurial process? A) Being fired by an employer B) Deep frustration with one's career C) A conversation with a friend or peer D) An unexpected financial windfall E) All of the above

True

Entrepreneurial companies should consider outsourcing responsibilities and functions that are not critical to the company's success.

False

Entrepreneurs possess highly specialized behavioral attributes that are distinct from those of non-entrepreneurs.

False

Entrepreneurship reduces the overall health of an economy by destroying jobs in traditional industries.

D

6. The 8 year survival rate for new businesses is: A) 1% B) 12% C) 25% D) 50% E) 73%

...

A majority of companies require at least $100,000 to begin operations.

False

A majority of the businesses started each year will eventually go bankrupt.

True

Access to entrepreneurial role models can be a significant factor in determining whether or not someone will become an entrepreneur.

False

Low-tech businesses, such as convenience stores, are not typically considered part of entrepreneurship because of their lack of innovation and intellectual property.

False

Raising venture capital is a critical step for most successful ventures.

True

Secrecy about one's idea is more likely to hurt the development of the business than help it.

False

Startups that tend to focus on multiple markets are the most successful.

False

If companies A and B are in the same industry, and A has $200,000 in sales per employee while B has $325,000 in sales per employee, then B is the more productive company.

C

24. The situation that arises when an entrepreneur is reliant on his or her company for a salary and has most of his or her personal net worth tied up in the company is called: A) Sweat equity B) Venture capital C) Double jeopardy D) Factoring E) Locus of control

A

25. A $150,000 dollar investment in a company that yielded a $30,000 dividend in the first year would have achieved which of the following returns on investment? A) 2% B) 5% C) 15% D) 20% E) 30%

D

26. In 2008, Microsoft earned an operational cash flow of approximately what amount per second? A) $450 B) $930 C) $1,200 D) $2,900 E) $12,200

...

27. Which of the following is not one of the global conditions increasing the rate of change in business? A) Managerial specialization and layering. B) The industrial sector's reliance on advanced knowledge. C) Advancements in communications. D) Changes in government regulations. E) All of the above

A

3. Which of the following is not cited by the chapter as a primary reason that entrepreneurs choose to go into business for themselves? A) Fame B) Innovation C) Financial success D) Independence E) Self-realization

A

4. Which of the following would be the best explanation for the lack of minority owned businesses in the United States? A) Lack of entrepreneurial role models B) Small market potential for minority owned businesses C) Lack of business ideas in this population D) Legal roadblocks to minority ownership E) Satisfaction with one's present job

False

For fledgling entrepreneurs, there are few free resources available for input and guidance.

False

Anyone who wishes to pursue an entrepreneurial venture would be wise to take at least three of the widely distributed entrepreneur-attribute tests beforehand.

...

For a company that goes public, the founding entrepreneur typically owns a majority of the shares of the corporation.

True

The two types of startup capital are debt and equity.

True

The vast majority of entrepreneurs start their companies with their own personal savings.

False

To be successful, a company must possess a unique and novel idea

False

A serial entrepreneur is someone who starts multiple companies, one right after the other.

True

Only the most skilled entrepreneurs should attempt to build a business around social or cultural fads.

False

Ross Perot, the former US presidential candidate, decided, as a young man, to pursue a life long career in politics and never utilized his talent for entrepreneurship.

False

Whether a company is successful is largely a matter of luck.

A

10. When determining how to allocate scarce resources, an entrepreneur should: A) Focus on the company's key success factors B) Spread resources around to gain experience C) Focus exclusively on marketing D) Focus exclusively on technology E) None of the above

D

11. For an entrepreneurial company, leasing is better than buying because: A) Leasing can lead to more favorable terms B) Leasing preserves cash by spreading out payments C) Owning and maintaining property and equipment is rarely a company's specialty D) All of the above E) None of the above

E

12. Which of the following is not a common stage in the financing of new businesses? A) Investing personal savings B) Building sweat equity C) Private investment by 'angels' D) Bank debt E) Initial public offering

B

13. When a venture capital firm invests in a company, they typically expect which of the following in return: A) Cash B) Shares of the company C) Debt D) A personal guarantee E) Intellectual property

E

14. What ratio best reflects the number of companies that begin with venture capital in hand? A) 1 in 2 companies B) 1 in 20 companies C) 1 in 500 companies D) 1 in 2000 companies E) 1 in 10,000 companies

B

15. What is the average net profit margin for companies in the US? A) 1% B) 5% C) 25% D) 50% E) 90%

D

16. Investors typically expect an annual rate of return in the range of _______, from a growing startup: A) -20% to 0% B) 0% to 10% C) 5% to 25% D) 40% to 60% E) 80% to 120%

C

17. The term 'free cash flow' generally refers to: A) Money that is raised through grants and donations B) Debt that requires no initial interest payments C) Cash that is generated in excess of funds required to sustain operations and purchase assets D) Capital raised through an initial public offering or other equity financing E) None of the above

D

18. Which of the following is not one of the Nine Fs of Entrepreneurial Success? A) Focused B) Frugal C) Flexible D) Frenetic E) Fun

A

19. Which of the following is not one of the 10 Ds of Successful Entrepreneurs? A) Driven B) Details C) Dedicated D) Distribute E) Dream

C

2. Where do most entrepreneurs get the idea for their businesses? A) Through brainstorming B) From mentors C) From exposure to an industry D) By reading entrepreneurship books E) From venture capitalists

E

20. In entrepreneurship, luck is where ______________ and opportunity meet. A) Intelligence B) Fortune C) Strategy D) Focus E) Preparation

A

21. Which of the following is not a characteristic of most entrepreneurial ideas? A) They are unique B) They offer improved performance C) They offer lower pricing D) They offer higher quality E) They offer better service

B

22. The best would-be entrepreneur will have a track record of: A) Working consistently at one company B) Increasing sales and profits C) Managing multiple employees D) Work in numerous industries E) Strong relationships with managers

D

23. Commonly outsourced responsibilities include all of the following except: A) Payroll B) Accounting C) Legal work D) Customer service E) Janitorial Services

E

5. Which of the following contacts can be critical to the startup phase of a new business? A) Potential customers B) Lawyers C) Bankers D) Accountants E) All of the above

E

7. What percentage of venture backed companies survive to the five year mark? A) 12% B) 20% C) 50% D) 67% E) 80%

C

8. Which of the following is not a critical component for a successful new business? A) The opportunity B) The management team C) The age of the lead entrepreneur D) The resources available E) None of the above

C

9. A good example of entrepreneurial frugality is: A) Providing cell phones for all employees B) Leasing more space than is immediately necessary C) Purchasing used office equipment and machinery D) Limiting employees to strict job responsibilities E) Renting top notch facilities

True

It is possible for a company to have a positive cash flow and be unprofitable.

False

Entrepreneurs should always seek to own the resources that they utilize while building a company.

True

Entrepreneurship is a process that can be learned.

True

Generally speaking, entrepreneurs have a stronger need to be in control of their own fate.

False

Having multiple layers of management is the best way to ensure that a startup is flexible and quick to react to changes.

False

Investors in small, growing startups typically expect to earn the same rate of return as they would if they invested in a public company that is listed on the New York Stock Exchange.

False

Marginal cost is a term that refers to expenses that are difficult to justify in an entrepreneurial environment.

False

The most costly expense that seed-stage biotechnology companies face in their early years is the initial expenditure on manufacturing equipment.

True

The most famous geographic region for high-tech entrepreneurship is in California and often referred to as, "Silicon Valley."