Chapter 6 Entrepreneurship and Starting a Small Business

At what point is it most important to make your marketing decisions

Long before you introduce a product or open a store

What are some of the factors that could be associated with small- business success

Managerial competence Adequate financial planning

Which of the following regarding entrepreneurs are true

They are thoroughly comfortable being their own boss They are self-disciplined

The executive summary is the part of the _ plan that consists of a two- or three- page management summary of the proposed venture, including a short description of the business, and discusses major goals and objectives

business

Included in the comprehensive business plan, the _ plan provides five-year projections for income, expenses, and funding sources

financial

Planning, _, keeping good business records, knowing your customers, and managing employees are what it takes to start and run a small business

financing

Business _ are centers that offer businesses in the critical stage of early development low-cost offices and access to basic services such as accounting, legal advice, and secretarial help

incubators

Within the comprehensive business plan, the _ plan outlines sales, advertising, promotions, and public relations programs. This section also compares prices to competitors and forecasts sales in dollars and units

marketing

_ zones are specific geographic areas to which governments attract private business investment by offering lower taxes and other government support

enterprise

Chase has a great idea for a new business, but lacks the funs needed to pay rent and hire a part-time accountant and lawyer. Accordingly he decides to locate his offices temporarily in a business _ where he can receive accounting, legal, and secretarial help at little cost to him

incubator

A Self- Employment Assistance Program (SEA) offered by some states is designed to:

pay unemployment benefits while building a business provide training and counseling to the new business owner

There are 27.8 million _ in the United States, accounting for more than 50 percent of the GDP

small businesses

A small business is defined as:

one that meets certain standards of size in terms of employees or receipts one that is independently owned and operated one that is not dominant in its field

The SBA determines whether a business is considered "small" only after analyzing how a particular business measures up compared to other businesses in its _

industry

A necessary and invaluable aid to entrepreneurs is a competent, experienced _ who knows and understands small business. This person can help with leases, contracts, partnership agreements, and protection against liabilities

lawyer

The section of a business plan that describes minimum plant size, machinery required, production capacity, inventory and inventory-control methods, quality control, and plan personnel requirement is called the:

manufacturing plan

Ahmed is the owner of a small U.S. shoe manufacturing business. He knows he could export some of his shoes, but he does not know if they fit other markets. Also, he cannot afford to hire an international trade expert. What does this situation demonstrate

Why many small business have difficulty engaging in global business

There are a few hurdles that prevent many small businesses from engaging in the global market. Which of the following are examples of such problems

Would-be exporters do not know how to get started Financing is often difficult to find

Which of the following are indications a business idea is a good opportunity

You can sell the product at a price customers will pay and still make a profit It fills customers' needs

Venture capitalist try to safeguard their investment by taking some control over the business. What could happen if a venture capitalist takes too large a stake in your company

You could lose control of the business

While browsing Sara's Web page, Steve noticed a widget linked to a site selling stylish backpacks. Sara explained to him that she loves the brand and is actively promoting it. Moreover, Sara receives a commission on each client that clicks on the widget. Sara is engaged in:

affiliate marketing

If you want to be both independent and rich, you need to pursue a business with high:

growth

Select the characteristics of an entrepreneurial team that will be developing and marketing a new product

A group of experience people Each from different areas of business Members have complementary skills and are creative

Which of the following are some reasons for the growth of home-based businesses

Corporate downsizing Computer technology Tax laws that allow home office deductions

True or false: The principles of management are similar for a small neighborhood business and a giant global firm

True

A small business is considered "small" only in relationship to other _ in its industry

businesses

Individuals who posses such attributes as being self-directed, action-oriented, and tolerant of uncertainty can make excellent _ like Bill Gates and Steve Jobs

entrepreneurs

The part of a business plan that includes an organization chart, job descriptions of listed position, and detailed resumes of the current and proposed executives is called the _ section

management team

Some common causes of small business failure include:

underpricing or overpricing goods or services no experience in that business or industry starting with too little capital

Which of the following are some challenges of running a home-based business

Keeping work and family tasks separate Managing time

Select all that are true of entrepreneurs

create thousands of jobs help the country prosper strengthen the economy

Himanshu called his large U.S. supplier to ask for an urgent delivery to his firm in Japan, but his request needed the approval of a high-level manager in the supplying firm. After 10 minutes browsing the Internet, Himanshu found a small business in the U.S. offering the same product. Seconds later, he was talking to the owner. The shipment left for Japan that day. This example demonstrates:

the advances small businesses have over large businesses in international trade

In high school Li was captain of the women's basketball team, student council president, captain of the cheerleading squad, and on the debate team. Fresh out of college, Li wants to start her own business. By looking at Li's characteristics, what can one conclude

Li has some of the characteristics of an entrepreneur

The most important things investors want to know are what makes the product more desirable than what's already available and whether or not the product can be patented. In which section of the business plan should investors look to find this information

Marketing plan

The SBA office staffed with volunteers from industry, trade associations, and education who counsel small businesses at no cost (except for expenses) is called:

Service Corps of Retired Executives

Wayne is starting a small business, but needs help with management training, financial advice, and loans. He should contact the _

Small Business Administration

The program through which investment companies licensed by the Small Business Administration lend money to small businesses is called the:

Small Business Investment Company

True or false: Personal savings, venture capitalists, and government agencies such as the Small Business Administration (SBA) are possible sources of capital and information when starting a small business

True

_ are individuals or companies that invest in new businesses in exchange for partial ownership in those businesses

Venture capitalists

All consumers with unsatisfied wants and needs who have both resources and the willingness to buy are:

a market

One of the greatest advantages small business have is the ability to know their customers better and:

adapt quickly to their needs

Becoming a(n) _ is one of the best ways to learn about how to run a business

apprentice

David opened his own bicycle shop 30 years ago, and although he enjoyed his work, he needed more free time. When Josie requested to work as an apprentice, David was very willing. Before long Josie was able to run the store without any help. This is an example of how:

apprenticeships can benefit both the business owner and the apprentice

Working in a successful business is a good way to learn the operations and could:

be a step in buying out the owner

When writing a business plan, it is important to:

calculate how much money you need to start analyze the competition

The _ section of a business plan describes company operations to date (if any), potential legal considerations, and areas of risk and opportunity. This portion also summarizes the firm's financial condition, and includes past and current balance sheets, income and cash flow statements

company background

Started by the Small Business Administration in 1991, the _ program provides very small loans (up to $50,000) and technical assistance to small-business owners

microloan

Select reasons why people become entrepreneurs

opportunity profit independence

The phrase "poor management" covers a number of faults. Those faults include:

poor employee relations poor planning

Community Development Financial Institutions (CDFI) have been successful because they:

provide counseling on improving cash flow offer counseling on marketing strategies maintained financial discipline other lenders lack

Which section of a business plan provides a comprehensive demographic analysis of consumers in the area of the proposed business as well as traffic-pattern analysis and vehicular and pedestrian counts

Location Analysis

Which of the following regarding high-growth business (e.g.,technology firms) are true

They are difficult to start They are extremely difficult to keep going

Entrepreneurs must recognize that they need competent and motivated employees. Since they can't compete with larger firms' pay and benefits, they need to:

provide more challenging opportunities to learn be respectful of employees' opinions delegate more often

Which of the following is true regarding entrepreneurs

They have job-creating powers

Which of the following is true regarding businesses with low failure rates, such as veterinary services, dental practices, and medical practices

They often require advanced training to start They do not tend to produce much growth

Which of the following is true of entrepreneurs

They take moderate, calculated risks

If you want to start a business, you cannot be afraid to fail. Many well-known _ failed several times before achieving success. This is why these people are considered to tolerant of uncertainty

entrepreneurs

Managers have many functions, such as planning, financing. marketing, human resource development, and accounting. Of those, _ and _ are the two primary concerns in the start up phase

financing planning

Managing a small business became relatively easy with the advent of inexpensive personal computers. Inexpensive computer systems and off-the-shelf or even free, open-source software make it easy for small business manager to:

follow the daily sales and expenses manage customer records

The SBA micron program awards loans based on belief in the borrowers' integrity and:

the soundness of their business idea

A business plan is detailed written statement that describes:

the target market the resources and qualifications of its owner(s)

Managerial incompetence and inadequate financial planning are two common reasons for _-_ failure

small business

One of the most difficult tasks is raising money for a start-up. To raise money, entrepreneurs talk with bankers and other potential investors, and try to sell their ideas. In order to have a chance, most of the time, entrepreneurs have to present a(n) _

business plan

There are many good reasons for going global. Which of the following are examples of such reasons

Exporting can absorb excess inventory Exporting can extend product life

_ want to maintain a balanced life style while doing the kid of work they want to do

Micropreneurs

Which of the following are true regarding micropreneurs

They are interested in maintaining a balanced life style They do not want to grow their businesses into large corporations

Affiliate marketing involves an Internet- based marketing strategy in which a business:

rewards individuals for each customer the agent sends to its website

_ are entrepreneurs willing to accept the risk of starting and managing a business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle

Micropreneurs

Which section of the comprehensive business plan indicates the amount of capital needed to commence or continue operations, and describes how these funds are to be used

Capital required

_ must be emotionally, mentally, and physically able to work long and hard. However, they mostly seek achievement rather than power and are self-motivated

Entrepreneurs

There are many advantages small businesses have when engaging in international trade. Which of the following are examples of such advantages

Overseas buyers often enjoy dealing with individuals rather than with large corporate bureaucracies Small companies can give customers personal service and undivided attention

A(n) _ team is a group of experienced people form different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product

entrepreneurial

A comprehensive business plan will include cover letter, _ ,company background, management team, financial plan, capital required, marketing plan, location analysis, manufacturing plan, and an appendix

executive summary

Entrepreneurial _ may be better suited to run a business than individual entrepreneurs because members can combine creative skills from the start and it may ensure cooperative and coordination later among functions in the business

teams

How did the 1990 Immigration Act encourage entrepreneurs to relocate to the United States

By creating a category of investor visas

A(n) _ assumes risk when deciding to start and run a business

entrepreneur

Many _ use their time, money, and energy to turn their passions into sustainable businesses. They are comfortable being their own bosses and are not afraid of failure

entrepreneurs

Most entrepreneurs get ideas for products and services:

from asking questions from looking around

The expansion and development of the internet has sprouted a world of small web-based businesses. This, among other reasons, may explain why online sales are rapidly:

increasing

Kayla wanted to open her own dress design business. She spent a few hours putting together a marketing plan, then selected an award- winning dress she designed and wore it to the meeting with the bank. The most likely reason she did not receive a loan was:

she did not develop a thorough business plan

How do intrapreneurs launch new products and generate new profits

By using the company's existing resources

An inexpensive marketing research study may help you determine which of the following

Where to locate Whom to select as your target market What is an effective strategy for reaching your target market

Which part of the business plan summarizes the most attractive points of your project in as few words as possible

Cover letter

Which of the following characteristics are needed to become a successful entrepreneur

Tolerant of uncertainty Initiative Action-oriented

Select the characteristics of an intrapreneur

a creative person who works within a corporation he or she generates profits by leveraging a firm's human financial and physical resources someone who uses company's resources to launch new products

A good business plan takes a lot of time to write, but you have only a few minutes to convince readers not to throw it away. This is why your _ summary is very important

executive