Small Business Management

The startup cost for a McDonald's franchise is:

$1-2 million

Social entrepreneurship is best defined as:

Applying already established principles of good business to social problems.

The consumer-to-consumer model that allows individuals and companies to list products for sale to potential bidders is called a/an:

Auction site.

Which of the following is foundational to a company's ability to satisfy its stakeholders?

Being profitable

Which of the following e-commerce business models do not actually sell anything online?

Both Information-based and Content-based.

______bring together buyers and sellers of businesses.

Business Brokers

A______is a document that outlines the basic concept of a business and a course of action that will make that business a reality.

Business Plan

A facility that rents space specifically to new businesses or to people wishing to start a business is called a:

Business incubator.

Which of the following statements is most accurate concerning financing for businesses?

Businesses that have an established track record are more likely to receive financing from banks and other financial institutions.

In _______accounting, transactions are reported when they actually occur.

Cash-basis

Choosing a focus strategy has its advantages, but it can also lead to:

Competition from other companies that decide to imitate the same strategy.

The most accurate statement concerning socially responsible actions and firm profitability is:

Evidence concerning the link between social responsibility and profit is mixed.

The best definition of cost of goods sold is:

Expenses associated directly with the production of products and/or services.

A/n ________ is a business model that involves a business owner who license trademarks and methods to an independent entrepreneur.

Franchise

_________ are entrepreneurs who make contractual arrangements with established business chains rather than doing everything themselves.

Franchisers

Which of the following is the result of a firm having sufficient net working capital?

It indicates an ability to pay debt commitments as they come due.

According to Frank Moyes, a successful entrepreneur and former teacher at the University of Colorado, the most important reason for business planning is that:

It requires the entrepreneur to get the answers to some difficult questions.

A __________involves at least one general partner and one or more limited partners.

Limited partnership

A _________corporation is set up in order to accommodate individuals whose profession requires licensure.

Professional

Spotting trends can come from all of the following EXCEPT:

Tinkering with products features alone

The best guide to use when deciding how long and detailed a plan should be is:

Write the plan in accordance with what the particular audience will find helpful.

Which of the following are advantages of buying a franchise as opposed to starting one's own business from scratch?

a. Brand recognition b. Use of a recognized trademark c. The operations manual d. All of the above (All of the above)

A/n _________ must have an income of at least $200,000 or a net worth of at least $1 million, not including the primary residence.

accredited investor

______is acting in ways that are congruent with the values you espouse.

Integrity

New businesses often find it necessary to_______when the original idea is found to have flaws.

Pivot

Which of the following statements is the most accurate concerning personal factors in a business?

A business should align with its owner's personal goals.

Which of the following statements is NOT one of the desirable traits of entrepreneurs listed by Spinelli and Adams?

A domineering attitude

Integrity is best defined as:

A general sense of honesty and reliability that is expressed in a strong commitment to doing the right thing, regardless of the circumstances.

Which of the following is NOT a cost normally associated with franchise ownership?

A personal vehicle

The right to buy new shares of stock in a company in proportion to the number of shares already owned before the stock is offered for public sale is called:

A preemptive right

The demise of Blockbuster Video stemmed from which of the following vulnerabilities?

All of the above played a part in their demise.

Which of the following is MOST descriptive of entrepreneurial passion?

An entrepreneur must have passion, but unchecked passion can be destructive.

The best description of the difference between angel investors and venture capitalists is:

Angels invest their own money in early-stage businesses; venture capitalists invest other peoples' money in later-stage businesses.

Which of the following marketing philosophies is likely to lead to success in many areas, not just marketing?

Consumer-oriented

Restrictions that limit or require certain activities as conditions of a loan are called:

Covenants.

The _________ ratio is traditionally used to measure a company's liquidity.

Current

A ______identifies the characteristics necessary to locate and describe potential customers.

Customer profile

Small companies are particularly adept at competing with larger companies when they focus on:

Customer service.

Which of the following is NOT an advantage of opening a home-based business?

Customers feel more comfortable in your home.

Which of the following is NOT a purpose of developing pro forma financial statements?

Defining the demographic that will describe most customers

A strategy of _______ involves bypassing retailers and going to the customer directly through online operations.

Disintermediation

Tom took great care in investigating his purchase of an existing business. He was engaging in:

Due diligence.

_______is an arrangement with a loaning entity that purchases a business's accounts receivable and advances the business a percentage.

Factoring

A new business should not expect to exceed the ________in profit margins.

Industry average

_____ is advantage created by an individual's connections with a network of social relationships.

Social Capital

The simplest and cheapest legal form of organization is a:

Sole proprietorship

The most effective strategy for a newcomer to use when entering a market is:

To offer benefits that allow you to charge a premium

Current assets are also known as:

working capital

Which of the following statements most accurately describes the financial liability of a corporate stockholder?

. It is limited to the amount of money invested in the business unless the owner has signed personally for a corporate loan.

A sales forecast can best be described as:

A fact-based prediction of the best, worst, and most-likely sales levels of a business.

A_______ is a meeting of family members held (usually off-premises) to discuss family business matters.

Family Retreat

A _________ is a preliminary look at how well a business might do if it were opened.

Feasibility analysis

Which of the following is NOT one of the "Big Three" stakeholders?

Government regulators

The best description of business model risk is:

How changing circumstances may affect the business and how the business model can be adjusted to cope with them.

Which of the following best describes the difference between integrity and ethics?

Integrity is based on internal principles that guide behavior; ethics is based on external guides to behavior.

______is the term used to describe specific knowledge and/or abilities that enable a firm to uniquely and exclusively offer a particular benefit to a customer.

Intellectual property

A corporation has a distinct advantage when raising new equity capital due to:

Its ease of transferring ownership and distributing shares.

The aspect of partnerships that involves each partner's being held accountable for the decisions of the others even if they were not consulted is called:

Joint and several liability.

________specify the hard assets and working capital a firm will need to achieve its mission.

Key Resource Requirements

lies are those that are specifically designed to make a new business look bigger and busier than it really is.

Legitimacy

Businesses that do not attract investors, but allow their owners to live the way they want to live are called________businesses.

Lifestyle

A ______ is an informal agreement between a borrower and a bank concerning the maximum amount of funds the lender will provide at any given time.

Line of credit

_____involves taking the steps necessary to locate and describe potential customers.

MArket Analysis

Entrepreneurs generally think differently about resources than do employee-managers in which of the following ways?

Managers want larger budgets; entrepreneurs work to do more with less

The number that results when taxes are subtracted from profits (before taxes) is called ______ and represents money that can be reinvested in the firm or paid out to owners (assuming enough cash is on hand).

Net Profits

Ideas based on selling existing products or services in a new context are called:

New market ideas.

Which of the following is NOT an element of SWOT analysis?

Obligations

The best description of the current (as of early 2015) state of equity-based crowdfunding is:

Only accredited investors can make actual equity investments.

The main difference between lifestyle business owners and entrepreneurs is the way they perceive

Opportunity

During early-stages of a business, equity financing is preferred to debt financing because:

Outside investors like to see a founder put "skin in the game." and Paying interest on debt is generally unaffordable for a new business

The definition of a family used in the context of this chapter is:

People bound by a shared history who are committed to a future together.

Stating the assets-to-sales relationship as a ratio is called the _______ technique.

Percentage of Sales

Michael opened a franchise restaurant within an existing business. He did what is known as:

Piggyback franchising

Which of the following is the most frequent source of new ideas for a business?

Prior work experience

The "hockey stick" sales forecast is best described as:

Projections that start out flat then skyrocket unrealistically.

The culturally supported sense of obligation to repay in kind what another has done for us is called:

Reciprocation

A/n _____identifies the nature and types of income expected to come into the firm from the sale of products and services.

Revenue Model

Which of the following statements best describes the proper way to purchase equipment and furnishings for a new business?

Save money when possible, but make sure the company looks stable and professional.

Juanita wants to know whether her new hair products business will be profitable. So far, she has made them at home in her basement. Now she wants to open a small retail space and make them in the back room of the store. She estimates that each jar of product will cost $5.00 to make and can be sold at a price of $7.00. What can Juanita safely conclude so far about her financial projections?

She can make money, but she still needs to calculate her projected sales volume to see if she can pay her other expenses.

The______commitment of family members refers to ties that extend beyond the financial rewards of being in the business. They include things like solidarity, identification with the family, and a sense of history.

Socioemotional

______equipment has a limited use and is only justified at high volumes of output.

Special-purposes

Which of the following is NOT one of the three main financial statements?

Statement of Changes in Owners' Equity

Which of the following is most likely to result in increased self-confidence in grown children who are thinking about entering the family business?

Succeeding in another firm on one's own

Liquidity can also be described as:

The availability of cash to meet maturing debt obligations.

The single most important planning document for a small company's survival is .

The cash budget

The fundamental benefit a customer gains from a product or service is called:

The core product/service.

The greater a firm's sales, the greater the asset requirements and thus the greater its financing requirements. Another way of saying this is:

The need for additional assets, including current assets (cash, inventory, and accounts receivable) and sometimes long-term assets such as (buildings, equipment, etc.), accompanies higher sales. These assets require taking on debt to purchase tangible items or to buffer cash flow fluctuations.

The predator/parasite conflict can best be described as:

The perception by family members who work in the firm that family members who do not work in the firm are benefitting unfairly and the perception by family members who work outside the firm that inside members are benefiting unfairly.

Which of the following statements most accurately describes the relationship between planning and doing in a business?

They are both important and must be balanced intelligently.

Profits are not the same as cash flows because:

They are calculated on an accrual rather than a cash basis.

Family businesses are best described as:

Those in which the strategic direction of the firm is influenced significantly by family members.

Recent research findings suggest that companies that are successful in making the transition from one generation to the next are:

Those whose new leaders act on their own, take risks, and support innovation.

The chief benefit of a marketing plan is:

To reduce the number of costly errors you make in your marketing.

restrict and/or limit the operations of home-based businesses.

Zoning Ordinances

Problems with nepotism include:

a. Difficulty in disciplining wayward employee/family members. b. The perception by non-family members that family members are treated differently. c. The fact that it is illegal in most states. d. A and B (BOTH A AND B)

Sally has opened five successful candy shops and wishes to capitalize on the scalability of her business by franchising. Which of the following should she consider before going that route?

a. She should determine whether her business systems are well-defined and replicable. b. She should see if she can get sufficient financing to deploy the franchise. c. She should research government regulations regarding her obligations to disclose certain information to potential franchisees. d. She should do all of the above. (All of these are correct)

Entrepreneurs who start and lead small businesses contribute to the economy in which of the following ways?

a. They make up the overwhelming majority of all businesses. b. They hire nearly half of all high-tech employees. c. They are increasingly going global, representing 97 percent of all exporters. d. All of the above. (D)