Chapter 5 - Small Business, Entrepreneurship and Franchising

A(n) _____ is someone who risks his or her wealth, time, and effort to develop a product or service for profit.

entrepreneur

Which functions are most typical of a wholesaler? Multiple select question. planning and negotiating for supplies promoting selling to end consumers distributing manufacturing

planning and negotiating for supplies promoting distributing

______ supply products to industrial, retail, and institutional users for resale or for use in making other products.

wholesalers

True or false: Women and minorities have not had much success in owning and operating small businesses.

False

Excluding farmworkers, the service sector accounts for what percentage of jobs in the United States?

80 percent

Small firms represent ______ of the U.S. exporters of goods.

98 percent

Born between 1946 and 1964, _____ is/are relatively wealthy. Many small businesses do not actively pursue this group but many experts believe it to be the market of the future.

Baby Boomers

Daniel wanted to start his own small business. After spending his own money on marketing research, Daniel asked his friend Chase to be his accountant since he was lacking skills in that area. They spent a few months writing a business plan, which then they presented to a bank to obtain funding. What does this example illustrate?

Daniel understands the steps needed to start a small business.

_____ is the process of creating and managing a business to achieve desired objectives.

Entrepreneurship

What are two reasons that a retail business would be especially attractive to an entrepreneur? Multiple select question. It requires low initial financing. It is an underrepresented industry. It is a field that is relatively easy to enter. It is a field that doesn't take any special skill or knowledge.

It requires low initial financing. It is a field that is relatively easy to enter.

Which two statements are true about the role of small business in the U.S. economy? Multiple select question. More than 99 percent of U.S. firms are classified as small businesses. Small firms represent approximately 25 percent of exported goods from the United States. Small businesses employ nearly half of all private workers. Approximately 50 percent of all U.S. firms are small businesses.

More than 99 percent of U.S. firms are classified as small businesses. Small businesses employ nearly half of all private workers.

Which of the following is true regarding flexibility and small-business ownership?

Small-business owners can make and execute decisions quickly.

_____ is when suppliers allow a business to take possession of needed goods and pay for them at a later date or in installments.

Trade credit

True or false: In order to save the expense of maintaining various departments, small-business owners may hire other firms to supply services on an as-needed basis.

True

Which of the following are forms of debt financing for Jena who is starting a new online training program business for counselors? (Select all that apply.)

a $10,000 loan from her local bank a $15,000 SBA loan exchanging computers, printers, and other technology for a share of the business

An agreement by which a financial institution promises to lend a business a predetermined sum on demand is called ______.

a line of credit

A business plan outlines which two of the following? Multiple select question. a precise statement of the rationale for the business a step-by-step description of how the business' product will be produced a detailed description of how the business will be dissolved, should it fail a step-by-step explanation of how the business will achieve its goals

a precise statement of the rationale for the business a step-by-step explanation of how the business will achieve its goals

Women own more than 9 million businesses in the United States. They have had great success in a few focused areas which include which of the following? (Select four answers.) Multiple select question. manufacturing education administrative services communication professional services retail

administrative services communication professional services retail

A would-be entrepreneur might choose retailing, services, and high technology industries to start their businesses because these fields ______.

are relatively easy to enter

Pete is a contractor and Chico is a landscaper. Pete offers to build a storage shed for Chico's equipment if Chico will take care of Pete's lawn for the season. This is an example of ______.

bartering

A ______ is a precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals.

business plan

Angela saved $20,000 and acquired another $20,000 as a short-term loan from her parents to start a kid-friendly coffee shop. The $40,000 that Angela is ready to invest in this new venture is known as _____.

capital

What are the three advantages of franchising?

centralized buying power brand-name appeal greater chance for success

Which of the following most accurately describes Generation Y?

concerned with advancement, recognition, and improved capacities

Financial assistance by the Small Business Administration (SBA) for a new startup company is a form of _____ financing.

debt

Nadia has decided to start a business selling her handmade jewelry. To start out, she is hosting "parties" in the homes of her friends and family. At the parties Nadia can display her jewelry and directly interact with potential customers. This is an example of ____.

direct selling

Which of the following are concerns of small-business owners that can contribute toward high-stress levels? Multiple select question. employee problems concerns about being too independent having too much flexibility worries about competition changing market demand

employee problems worries about competition changing market demand

Half of all new companies fail within the first _____.

five years

Franchises offer people starting a business the advantage of a recognized name, management assistance, and ______.

greater chance for success

A small-business owner must deal with ongoing worries about competition, employee problems, rent increases, or changing market demand. All of these are contributing factors to which disadvantage of small-business ownership?

high-stress levels

Being able to be your own boss is one of the leading reasons that entrepreneurs choose to go into business for themselves. This advantage of small-business ownership is referred to as _______.

independence

Creative people who work as entrepreneurs within corporations are known as ______.

intrapreneurs

Flexibility for the small-business owner means that ______.

it can more easily adapt to changing market demands

All of the following are characteristics of a small business except ______. Multiple choice question. it carries only one product line it is not dominant in its field it is independently owned it is independently operated

it carries only one product line

Small businesses often require ______ money to start and maintain than do larger businesses.

less

Which of the following are considered debt financing? Multiple select question. personal savings line of credit trade credit SBA loan

line of credit trade credit SBA loan

A small business makes goods and customizes its products to meet specific customer needs and wants. This business is a ______.

manufacturer

Juanita makes organic salsa that she sells directly to stores around the country. She customizes the salsa to her customers' tastes. For example, she makes peach salsa for her customers in Georgia and green chile salsa for customers in New Mexico. Juanita is a small business woman who is also a ______.

manufacturer

Jim is working on starting his own small-business catering to the nutritional needs of large, mature dogs that live in tiny, inner-city spaces without opportunity for exercise. His small, specific group of customers is his ______.

market niche

While large corporations must compete for large market segments, small firms can focus their efforts on a precisely defined group of customers known as a market _____, which allows them to satisfy a need that other companies have not addressed.

niche

What are typical businesses found in the service sector? (Select all that apply.)

real-estate agencies barbershops accounting firms

Advantages of buying an existing business include which of the following? (Select as many as apply.) Multiple select question. entrepreneur takes on any problems the business already has reduces some of the guesswork inherent in starting a new business from ground up built-in network of customers, suppliers, and distributors a guarantee of steady profits from the start of ownership

reduces some of the guesswork inherent in starting a new business from ground up built-in network of customers, suppliers, and distributors

How a firm is perceived by its various stakeholders is its ______.

reputation

Restaurants, boutiques, and hardware stores are examples of ______.

retailers

Companies like Uber or Lyft are part of the ______.

sharing economy

Pranav would be a direct seller if he ____.

sold his products through face-to-face sales presentations

Which three items are considered equity financing? Multiple select question. the savings account of the owner financial support from a bank in the form of a loan a personal laptop the accumulated value in a life-insurance policy a Small Business Administration loan

the savings account of the owner a personal laptop the accumulated value in a life-insurance policy

When Jim obtains needed computer maintenance services from a supplier who agrees to receive payment for those services within two months, Jim is obtaining ______.

trade credit

When two businesses engage in bartering, they ______.

trade products they make or services they provide with each other

The SBA is the government agency that advises and assists small businesses by providing which three of the following? Multiple select question. legal assistance for the owner(s) training for owner(s) and their employees management assistance consulting on improving operations tax assistance for the owners

training for owner(s) and their employees management assistance consulting on improving operations

Angelo was all set to start his new business. Although he did not have as much cash as he would have liked, he figured that once the business got going, the cash generated from sales would keep the business running. He was surprised, however, that sales weren't as strong as he thought and now he is cash-strapped. Angelo is experiencing a common problem known as ______.

undercapitalization

What are common, primary reasons that small businesses fail? (Check all that apply.) Multiple select question. conducting market research undercapitalization inability to cope with growth managerial inexperience having a competitive niche

undercapitalization inability to cope with growth managerial inexperience

People or organizations that agree to help fund a business provided they receive an ownership interest or stock in a firm are called ______.

venture capitalists