Ent 3003 Exam 2 part 1

____ status or legitimacy is derived principally from the entrepreneur's education and experience

Achieved

An informal panel of experts and other people who are interested in seeing the new venture succeed is a/an ____.

Advisory Board

The firm's ____ should be thought of as a business partner who can be a source of information and networking; help make decisions regarding capital needs; and assist in preparing pro forma operations and cash-flow analyses.

Banker

____ are primarily interested in the company's margins and cash flow projections.

Bankers/lenders

Which of the following is not an independent contractor you would expect to find on an entrepreneur's extended team?

Board of Advisors

Which of the following is not a professional advisor to an entrepreneur?

Board of Directors

Entrepreneurs can reach a price that can be tested in the market by considering costs, competitor pricing, and ____.

Both "feedback from customers" and "feedback from value chain partners"

Which of the following is a service that consultants do not provide?

Bringing the activity in house

Entrepreneurs typically face two types of POC: the technology or product POC, and the ____ POC.

Business Model

A ____ depends on a feasible business model that has been market-tested and is reliable.

Business Plan

Pro forma financials are a key part of the ____.

Business Plan

There are two types of ____ agreements: a cross-purchase agreement and a stock redemption agreement.

Buy-Sell

When an entrepreneur decides to use a team effort to create the new venture, he or she generally looks for people who have ____ skills.

Complementary

In manufacturing businesses, forecasting expenditures is a bit more complex because ____ must be derived first.

Cost of goods sold

Because they tend to be fairly expensive, consultants are best used for ____.

Critical one-time advice or problem solving

All of the following are part of an entrepreneur's extended network except ____.

Customers

A/an ____ statement is, essentially, a cash budget or sources and uses statement.

Direct Cash flow

Entrepreneurs need to remember that ____ costs are the biggest costs the business will bear.

Employee

One of the biggest incentives for taking on the risk of a startup venture is the opportunity to acquire a/an ____ stake and participate in the potential upside if the startup is a success.

Equity

A high-tech venture with significant up-front funding and the potential for exponential growth requires a management team of ____.

Experienced Professionals

A highly focused executive summary and pitch presentation are best developed from a completed business plan.

False

A new venture's health is measured by its balance sheet.

False

An accountant is your advocate, but your lawyer is bound by rules and ethics that do not permit advocacy.

False

Choosing a good attorney is a time-consuming but vital task that should be accomplished immediately after startup.

False

Investors tend to look for technology-driven companies rather than market-driven companies

False

Price skimming is finding out what customers are willing to pay for the product and pricing it accordingly

False

The executive summary of the business plan should be no more than two pages long

False

The least important part of any financial plan is the assumptions on which it is based

False

The strongest product POC is a working prototype.

False

Working boards are crucial in the startup phase

False

Determining what resources are needed, when they are needed, and how to acquire them is a critical piece of the

Feasibility analysis

Which of the following would not be considered a startup resource?

Feasibility analysis

A good way to test a new concept in the marketplace is through a ____.

Feasibility study

The intense effort required of a startup can be shared when the entrepreneur uses a

Founding Team

The best way, and sometimes the only way, to accurately gauge customer demand is to

Go into limited production

Parties who run their own businesses and are hired by the entrepreneur to do a specific job are ____.

Independent Contractors

A board member who is a founder, employee, or retired manager of the firm is a/an

Inside Board Member

The board is headed by the chairperson, who, in a new, private venture, is typically the ____.

Lead Entrepreneur

The new environment for business planning makes the case for the importance of a feasibility study and ____ to prove the concept and enable the founding team to launch the venture before completing the formal business plan.

Micro Stratagies

____ represent(s) how the startup uses its cash to cover its overhead before it generates a positive cash flow from operations.

Monthly burn rate

The Law of Agency defines the terms employee and independent contractor ____.

On issues of trade

A board member with no direct connection to the business is a/an ____.

Outside Board Member

A/An ____ consists of individuals whom the entrepreneur respects and trusts. They serve as a sounding board for ideas and act as coaches.

Personal Mentor Board

The bottom line for any new venture is to have ____.

Positive Cash Flow

Indirect selling expenses are not linked to the sale of a specific product and include interest, telephone expenses, and

Postal Charges

Attorneys can provide the new venture with a wealth of support, which includes all the following except ____.

Preparing financial statements

____ starts with a high price to establish uniqueness; then drops the price as competitors enter the market

Price Skimming

Creating a ____ is the first step in calculating startup capital requirements.

Process Map

In service businesses, the cost of goods sold (COGS) is equivalent to the time expended to ____ and ____ the service.

Produce/deliver

It is important to ensure that the final price to the customer or end user is tolerable, given all the mark-ups along the value chain. This is called ____.

Product bundle Pricing

In a manufacturing business, which of the following is not part of the calculations used to forecast the costs of goods sold (COGS)?

Product delivery

A ____ is simply evidence that a technology, product, business model, or idea is feasible

Proof of concept

The ____ is an amount of cash that is often based on the sales and collection cycle of the business.

Safety Margin

For ____ companies, the actual delivery costs must be based initially on information gathered from other companies in the industry.

Service

___ are more likely to make the mistake of putting structure on the organization before its time.

Startup Teams

Increasingly, we are seeing more firms founded by ____ going international from startup

Starup Teams

Once the entrepreneur determines where the new venture lies in the value chain, he or she must create a

Timeline

One mistake that entrepreneurs make is to set their prices so that they cover ____ costs plus a margin the entrepreneur is expecting to achieve.

Total

A month-by-month timeline shows a year in the life of a business with key milestones and anticipated ____.

Triggers

A board of directors can be made up of inside or outside members or a combination of the two

True

A process map details how information flows through the business.

True

As long as the market is growing, it is more important that the entrepreneur is solving a critical pain with a value proposition the customer quickly understands

True

Because consultants tend to be fairly expensive, they are best used for critical, one-time advising or problem-solving assignments.

True

Bootstrapping refers to minimizing of resources at startup in order to keep fixed costs as low as possible.

True

Building a POC prototype reduces the risk of failure and clarifies customer needs.

True

Determining what resources are needed, when they are needed, and how to acquire them is a critical piece of the feasibility puzzle.

True

How a product or service is priced is a function of a company's goals.

True

If a new venture is a corporation, a board of directors is required.

True

In a wholly owned or closely held corporation, there really is little distinction between the functions of a board of directors and those of a board of advisers.

True

Most entrepreneurs try to avoid hiring employees as long as possible, because employees are the single biggest expense in the business.

True

POC tests involve field work with the customer.

True

Pricing is not designed to cover total costs but to maximize total contribution⎯that is, unit price minus unit variable costs.

True

Somewhere in the micro strategy process, the business is actually launched in a small, controlled way.

True

Submitting a professionally crafted business plan is less important than making it clear what the entrepreneur has accomplished in the way of starting the business.

True

The board is headed by the chairperson, who, in a new, private venture, is typically the lead entrepreneur

True

When an entrepreneur is attempting to gauge levels of demand, the customer is the prime source of information

True

When choosing a banker, the entrepreneur planning a new venture should seek out an officer with the rank of assistant vice president or higher.

True

Where the new venture lies in the value chain will determine what its margins are, who its customer is, and how much it can charge for its products and services.

True

Which of the following is not one of the categories into which the resources of a company are often divided?

Value Chain

To determine whether the accounting and control procedures are adequate once the new venture is beyond the startup phase and is growing consistently, ____.

an annual audit is needed

A ____ will tell the entrepreneur whether people are interested in the product/ service and prove that it's worth the time and money to build out a more elaborate site.

beta site

____ is found by subtracting variable costs from revenues and dividing the difference by revenues to yield a percentage.

contribution margin

In figuring ____, entrepreneurs must convert time to dollars and consider an opportunity cost.

customer acquisition cost

Anyone investing in a new venture has four principal concerns: rate of growth, return on investment, ____ and ____.

degree of risk / protection

Internet ventures have unique metrics because they typically start with three types of "customers": visitors, contributors, and ____.

distributors

When choosing people to serve on the board of directors, consider those who have all of the following characteristics except ____.

exploitive behavior

So that entrepreneurs do not have to incur the tremendous cost of purchasing equipment for a manufacturing plant, they may ____.

form a strategic alliance

How a product or service is priced is a function of the company's ____.

goals

A/an ____ is an advocate, but a/an ____ is bound by rules and ethics that do not permit advocacy

lawyer/accountant

____ staff is a way for a new business to enjoy the advantages of having the kind of skilled work force available to major corporations without incurring so many of the expenses.

leasing

Whenever there is competitive rivalry, prices tend to be ____.

lower

The ____ for POC consists of three primary elements: outcomes, assets, and actions.

micro strategy

To avoid ____, the team needs to change its angle of vision by looking at the situation in a new way and then testing alternative hypotheses.

pattern recognition bias

Which of the following is not a technique that can help entrepreneurs arrive at a realistic forecast of demand for their product or service?

prepare revenue forecasts

An accountant can help a growing business in all of the following except ____.

preparing documents for acquisition of intellectual-property rights

The entrepreneurial team owns all or the majority of the stock in a ____.

privately owned corporation

The micro strategy process repeats itself over and over again and with each successful outcome, the new business is moved toward a complete ____.

proof of concept

Which of these pricing strategies will help a new firm maximize cash flow?

raise price and reduce direct costs

Which of the following is not part of direct selling expenses?

telephone expenses

The chances of success are greater when the lead entrepreneur and the team share the same ____ for the new venture.

vision