Intro To Business Chapter 6 Test

Which is NOT true about entrepreneurs?

Few women are entrepreneurs

A designed change that increases the usefulness of a product or service

Improvement

An invention or creation that is brand new

Innovation

Which industry makes up the highest percentage of small business in the U.S.?

Professional/Service

A small business is defined as having ________ employees or less.

500

The National Federation of Independent Business says , ______ of new businesses are profitable.

1/3

The majority of small business owners are over ______ years old.

40

Over a ten year period, it is estimated that _____ of new businesses are discontinued.

50%

Small businesses are responsible for nearly _______ of the U.S. GDP.

50%

A written description of a business idea and how it will be carried out.

Business plan

Someone who takes a risk in starting a business to earn a profit.

Entrepreneur

Which of the following is NOT a reason that small businesses fail?

Experience in business

T or F: Large businesses are more efficient in meeting specific, specialized customer needs.

False

T or F? A small business operates in ONE location only.

False

Money needed for the main resources of the business (buildings, equipment, etc.)

Long term financing

Consumers are always looking for new and better choices to meet their wants and _____.

Needs

Business plans are typically developed for a __________ year period.

One

Money needed to pay for the current operating expenses for the year (or less).

Short term financing

What government agency offers information, publication and counseling to small businesses?

Small Business Administration (SBA)

What are some reasons why businesses fail?

Some of the reasons why businesses fail are, the lack of adequate capital (money), low sales, higher than expected expenses, competition, and the owner is unprepared (lack of experience).

The amount of money needed to open a business.

Start up financing

What are the five components of starting a small business? Briefly describe each.

The five components of starting a small business are, an idea, experience, right place and time, team approach, and preparation and research. Ideas come from hobbies, interests, business experiences, books/magazines, and franchises offered. The experience is that working in a small business is recommended before starting your own small business. The components of the right time and place is, to find the right place to open your business, for good customer traffic, to be easy to find, to have easy access to vendors or manufacturers (who you're getting your products or services from). The team approach is, that owners will need to hire a few full-time and/or part-time employees, choosing "team members", and to hire people who are as passionate about the product/service as you are. The preparation and research is, to have enough information to make good decisions, to gather and study information before the business is started, and to have information needed about competitors, customers, etc.

What OPPORTUNITIES and RISKS are involved with entrepreneurship?

The opportunities that are involved with entrepreneurship are, personal control over your own business, satisfaction if ideas are successful and profitable, and financial benefits of successful a product/service. The risks that are involved with entrepreneurship are, giving up a regular job, giving up a stable income, and the risk that the product/service will be unsuccessful.

What are three types of financing? Briefly describe each.

The three types of financing are, start-up, short-term, and long-term financing. Start-up financing is the amount of money needed to open the business (building, equipment, inventory, supplies, licenses, etc.). Short-term financing is money needed to pay for the current operating expenses (less than a year). Long-term financing is money needed for the main resources of a business (land, building, equipment - will last many years (capital).

T or F: Friends/Family provide most of the money to start an entrepreneurship.

True

T or F? Experience working in a small business is recommended before starting a small business

True

Which of the following in NOT a characteristic of an entrepreneur?

Unreliable

Money provided by large investors to finance new businesses

Venture Capital

Which is NOT a factor in finding the right place and time to start a small business?

Where the owner lives

What are key features included in a business plan?

he key features included in a business plan are, the general description of the company, credentials of the owner(s), description of the product or service, analysis of the market (competitors, demand, customers), and financial plan.