Ba3305 Ch6

For small businesses, professional management is an issue of education, titles, and credentials. True or False

FALSE In the terms of small business, professional management is not an issue of education, titles, or credentials.

One disadvantage of purchasing an existing business is that it requires more cash outlay than creating a start-up. True or False

FALSE Purchasing a business often requires less cash outlay than does creating a start-up. The seller will often provide financing that makes it possible for you to buy the business.

One way to go about obtaining committed customers prior to start-up is to specifically go into competition with one's employer. True or False

True

A start-up can be kept small deliberately to limit the magnitude of possible losses. True or False

True

All entrepreneurs have at least four sets of resources: access to capital; their own skills and abilities; their own knowledge; and their network of friends and business associates True or False

True

Buyouts are restricted to businesses that have a formal legal form of organization. True or False

True

Closing a business with no outstanding debts is referred to as a walkaway. True or False

True

Due diligence is the process of investigating to determine the full and complete implications of buying a business. True or False

True

Key resource acquisitions, also called bulk asset purchases, are the only way a sole proprietorship may be purchased. True or False

True

Properly performing due diligence minimizes the risk of failure and maximizes the probability of success by identifying the strengths and weaknesses of the business. True or False

True

Serial entrepreneurs is a special term for those owners who start multiple businesses in their careers. True or False

True

The UFOC is a standard document franchises use to explain their operations, requirements, and costs to potential franchisees. True or False

True

The three principles of reasoning which are absolutely critical in the process of effectual reasoning are: affordable loss, strategic partnerships, and leveraging contingencies. True or False

True

Trade name franchising provides an organization through which interdependent businesses may combine resources. True or False

False Conversion franchising provides an organization through which independent businesses may combine resources.

Founders of small businesses often find it very difficult to give up decision-making authority to family members. True or False

True

Franchising a new business is one of the ways to business ownership. True or False

True

Many small businesses are just "put to sleep" by their owners when a better opportunity occurs. True or False

True

8. A start-up usually can easily gain revolving credit from suppliers and financial institutions. True or False

FALSE A start-up usually cannot easily gain revolving credit from suppliers and financial institutions.

The absolute lowest price that a buyer would be willing to pay is called the 'point of indifference' in the negotiation process. True or False

FALSE Along the way you, as the buyer, should have decided on the absolute highest price that you would be willing to pay. That highest price is called your point of indifference in the negotiation process.

A buyout refers to starting a business from scratch. True or False

FALSE The purchase of substantially all of an existing business is called a buyout.

A legal agreement that allows a business to be operated using the name and business procedures of another firm is referred to as a: A. franchise. B. blue ocean strategy. C. green field investment. D. cartel.

A. franchise. Franchising a business is one of the five ways to become a business owner.

Which of the following is one of the ways to get into small business management? A. Bricolage B. Franchising C. Expropriating D. Onboarding

B.Franchising The five ways to business ownership are: You may start a new business. You may buy an existing business. You may franchise a business. You may inherit a business. You may be hired to be the professional manager of a small business.

A new business that has begun from scratch is called a: A. buyout. B. franchise. C. start-up. D. buy-in.

C. start-up. A start-up is a new business that is started from scratch. Start-ups may be deliberate, well planned, and financed or they may "just happen".

6. Causal or predictive reasoning is a logical process in which one analyzes the resources available and restraints on the use of resources to create an attainable goal. True or False

FALSE This is the definition for effectual reasoning, not causal or predictive reasoning.

For the successor of a family business, ownership transfer is best accomplished after the death of the founder. True or False

FALSE Whether you are the founder or the successor, you certainly do not want to wait until the founder dies to transfer ownership.