Exam 2

A carefully constructed guide for the person starting a business.

Business Plan

Manju asks for your advice in opening a new business. She plans to provide tax-related services to individuals and small-business owners in her community. Of course, she wants an attractive means of staring and operating her business with a reasonable hope of succeeding in it. What will be your advice?

Consider purchasing a franchise.

A small-business investment company (SBIC) is a government agency that provides venture capital to small enterprises.

False

An agreement between two franchisors in which the two franchisors offer their products together is called double franchising.

False

Economically, the U.S. government is not concerned with whether or not small businesses make it.

False

SCORE is a group of active business executives offering their services to small businesses for a fee.

False

Small businesses are generally managed by professional managers.

False

The purchaser of a franchise is called the franchisor.

False

The various types of businesses attracting small business are generally grouped into service industries, distribution industries, and financial industries.

False

A license to operate an individually owned business as though it were a part of a chain of outlets or stores.

Franchise

A person or organization purchasing a franchise.

Franchisee

The actual granting of a franchise.

Franchising

An individual or organization granting a franchise.

Franchisor

An individual or organization granting license to operate an individually owned business as though it were part of a chain of outlets or stores is a(n)

Franchisor

Businesses such as flower shops, restaurants, bed and breakfasts, and automobile repair are good candidates for entrepreneurs because they

Have a relatively low initial investment.

What is the primary reason that so many new businesses fail?

Mismanagement resulting from lack of business know-how.

In her small retail shop, Jocelyn knows most of her best customers by name and know their preferences in clothing and shoes. This demonstrates which advantage of a small business?

Personal relationships with customers

Volunteers for SCORE are

Retired and active business people from different industries.

A government agency that assists, counsels, and protects the interests of small businesses in the United States.

SBA

A group of retired and active business people who volunteer their services to small businesses through the SBA.

SCORE

Shonta started a graphic design firm a year ago. The business has done well, but it needs a lot more equipment, computers, and employees to continue expanding. Shonta thinks she can get all the money she will need from her bank. What advice might you give her?

She should consider alternative sources of sources of financing because banks provide only a portion of the total capital to small businesses.

A business that is independently owned and operated for profit and is not dominant in its field.

Small business

Group of senior and graduate students in business administration who provide management counseling to small businesses.

Small-business Institutes (SBIs)

The fact that insulin and power steering both originated with individual inventors and small companies is testimony to the power of small businesses as providers of:

Technical innovation

An individual's desire to create new business is referred to as

The entrepreneurial spirit.

What is a common mistake that small-business owners make when their businesses begin growing?

They over-expand without proper planning

International trade will become more important to small-business owners in the new century.

True

Small firms have traditionally added more than their proportional share of new jobs to the economy.

True

The SBA has defined a small business as one independently owned, operated for profit, and not dominant in its field.

True

Money that is invested in small (and sometimes struggling) firms that have the potential to become very successful.

venture capital