ENT 3003 exam 2

An informal panel of experts and other people who are interested in seeing the new venture succeed is a/an ____.

Advisory Board

The ____ is different from the other financial statements in that it looks at the financial health of the business at a single point in time.

Balance Sheet

The firm's ____ should be thought of as a business partner who can be a source of information and networking; help make decisions regarding capital needs; and assist in preparing pro forma operations and cash-flow analyses.

Banker

____ are primarily interested in the company's margins and cash flow projections.

Bankers/lenders

Which of the following is not an independent contractor you would expect to find on an entrepreneur's extended team?

Board of advisors

Which of the following is not a professional advisor to an entrepreneur?

Board of directors

Entrepreneurs can reach a price that can be tested in the market by considering costs, competitor pricing, and ____.

Both "feedback from customers" and "feedback from value chain partners"

Which of the following is a service that consultants do not provide?

Bringing the activity in-house

Pro forma financials are a key part of the ____.

Business plan

A financial vehicle that enjoys limited liability in that its owners are liable for its debts and obligations only to the limit of their investment is a ____.

C-corporation

____ pay taxes on profits and their shareholders pay taxes on dividends they receive, resulting in double taxation.

C-corporations

Because they tend to be fairly expensive, consultants are best used for ____.

Critical one-time advice or problem solving

____ combine(s) technology, training, and business strategy in a system for gathering and using information on current and prospective customers.

Customer relationship management

All of the following are part of an entrepreneur's extended network except ____.

Customers

The rules for private placement are stated in SEC Regulation ____.

D

One of the biggest incentives for taking on the risk of a startup venture is the opportunity to acquire a/an ____ stake and participate in the potential upside if the startup is a success.

Equity

Today most investors want to see a well-written ____ that tells a compelling story and grabs their interest.

Executive Summery

When choosing people to serve on the board of directors, consider those who have all of the following characteristics except ____.

Exploitive Behavior

A feasibility study and a business plan are essentially the same.

False

A high-growth venture cannot be started as a sole proprietorship.

False

A highly focused executive summary and pitch presentation are best developed from a completed business plan.

False

A new venture's health is measured by its balance sheet.

False

Equity investors are guaranteed return of their investment and protection against loss

False

LLCs are becoming a popular vehicle for companies that may have global investors, because the C-corporation does not permit foreign ownership.

False

Nonprofit corporations are not allowed to make a profit, according to the Internal Revenue Service.

False

The executive summary of the business plan should be no more than two pages long

False

The least important part of any financial plan is the assumptions on which it is based

False

A board member who is a founder, employee, or retired manager of the firm is a/an

Inside board member

Which of the following is not a flaw that investors commonly find in business plans?

Lack of enthusiasm

A corporate form that enjoys the pass-through tax benefits of partnerships in addition to the limited liability of a C-corporation is known as a ____.

Limited liability company (LLC)

The Law of Agency defines the terms employee and independent contractor ____.

On issues of trade

A board member with no direct connection to the business is a/an ____.

Outside board member

Which of the following statements is not true of an S-corporation?

Partnerships may be shareholders.

A/An ____ consists of individuals whom the entrepreneur respects and trusts. They serve as a sounding board for ideas and act as coaches.

Personal mentor board

The bottom line for any new venture is to have ____.

Positive cash flow

Creating a ____ is the first step in calculating startup capital requirements.

Process map

Which section of the business plan details features and benefits as well as the plan for prototyping and testing?

Product/service plan

Which ratio uses net income and net sales from the income statement to give the percentage of each dollar of sales remaining after all costs of normal operations are accounted for?

Profit margin

A ____ is simply evidence that a technology, product, business model, or idea is feasible

Proof of Concept

Often small businesses such as pizza parlors and boutiques are run as ____.

Sole proprietorships

A month-by-month timeline shows a year in the life of a business with key milestones and anticipated ____.

Triggers

A board of directors can be made up of inside or outside members or a combination of the two

True

A company's core values derive from the personal values and beliefs of the founder

True

A process map details how information flows through the business.

True

As long as the market is growing, it is more important that the entrepreneur is solving a critical pain with a value proposition the customer quickly understands

True

Banks are not normally a readily available source of either working capital or seed capital to fund a startup venture.

True

Because consultants tend to be fairly expensive, they are best used for critical, one-time advising or problem-solving assignments.

True

Bootstrapping involves begging, borrowing, or leasing everything needed to start a venture

True

Bootstrapping refers to minimizing of resources at startup in order to keep fixed costs as low as possible.

True

Building a POC prototype reduces the risk of failure and clarifies customer needs.

True

Building brand equity requires that customers form an emotional attachment to a brand

True

If a new venture is a corporation, a board of directors is required.

True

In a sole proprietorship, the owner is the only person responsible for the activities of the business and, therefore, is the only one to enjoy the profits and suffer the losses.

True

In a wholly owned or closely held corporation, there really is little distinction between the functions of a board of directors and those of a board of advisers.

True

In terms of its treatment of income, expenses, and taxes, a partnership is essentially a sole proprietorship consisting of more than one person.

True

Sole proprietorships, partnerships, S-corporations, and limited liability companies all permit pass-through earnings and losses, but S-corporations and LLCs offer more protection from liability.

True

Submitting a professionally crafted business plan is less important than making it clear what the entrepreneur has accomplished in the way of starting the business.

True

The board is headed by the chairperson, who, in a new, private venture, is typically the lead entrepreneur

True

When choosing a banker, the entrepreneur planning a new venture should seek out an officer with the rank of assistant vice president or higher.

True

Where the new venture lies in the value chain will determine what its margins are, who its customer is, and how much it can charge for its products and services.

True

Which of the following is not one of the categories into which the resources of a company are often divided?

Value Chain

All of the following are steps to take prior to writing a marketing plan except

build brand equity

Entrepreneurs typically face two types of POC: the technology or product POC, and the ____ POC.

business model

A ____ depends on a feasible business model that has been market-tested and is reliable.

business plan

A financially healthy company will see its major source of ____ coming from operating sources, such as sales.

cash inflows

____ is found by subtracting variable costs from revenues and dividing the difference by revenues to yield a percentage.

contribution margin

Both mission and purpose are derived directly from a company's vision and ____.

core values

____ is/are the fundamental beliefs that a company holds about what is important in business and in life in genera

core values

The higher the ____, the more liquid the company is and the more easily these assets can be converted to cash to pay off short-term obligations.

current ratio

In figuring ____, entrepreneurs must convert time to dollars and consider an opportunity cost.

customer acquisition cost

Anyone investing in a new venture has four principal concerns: rate of growth, return on investment, ____ and ____.

degree of risk / protection

A/an ____ statement is, essentially, a cash budget or sources and uses statement,

direct cash flow

Sole proprietorships offer several advantages, which include all of the following except

dividends are paid to owners

Entrepreneurs should keep in mind that the purpose for doing a/an ____ is to sell the business

executive summary

Determining what resources are needed, when they are needed, and how to acquire them is a critical piece of the

feasibility analysis

Which of the following would not be considered a startup resource?

feasibility analysis

In a/an ____, all partners assume unlimited personal liability and responsibility for the management of the business.

general partnership

When one or more people agree to assume unlimited personal liability and responsibility for management of the business, a ____ exists.

general partnership

The section of the business plan that presents the strategy that will be used to ensure that the business is sustainable and continues to scale over its life is included in the ____.

growth plan

Income derived from for-profit activities in a nonprofit corporation is subject to

income taxation

The board is headed by the chairperson, who, in a new, private venture, is typically the ____.

lead entrepreneur

A living guide to how the company plans to build customer relationships over its life in order to fulfill the mission statement in the business plan is a ____.

marketing plan

The new environment for business planning makes the case for the importance of a feasibility study and ____ to prove the concept and enable the founding team to launch the venture before completing the formal business plan.

micro strategies

____ represent(s) how the startup uses its cash to cover its overhead before it generates a positive cash flow from operations.

monthly burn rate

A corporation established for charitable, public (scientific, literary, or educational), or religious purposes or for mutual benefit (trade associations, tennis clubs), as recognized by federal and state laws, is a ____.

nonprofit corporation

In forming a ____, the entrepreneur gives up proprietary interest in the organization and dedicates all the assets and resources of the corporation to tax-exempt activities.

nonprofit corporation

The ____ plan specifies the legal form of organization that the venture will take, whether that be sole proprietorship, partnership, LLC, or corporation.

organization

An executive summary should demonstrate a clear link between the ____ and the

pain / solution

Indirect selling expenses are not linked to the sale of a specific product and include interest, telephone expenses, and

postal charges

In service businesses, the cost of goods sold (COGS) is equivalent to the time expended to ____ and ____ the service.

produce / deliver

It is important to ensure that the final price to the customer or end user is tolerable, given all the mark-ups along the value chain. This is called ____.

product bundle pricing

In a manufacturing business, which of the following is not part of the calculations used to forecast the costs of goods sold (COGS)?

product delivery

Which of these pricing strategies will help a new firm maximize cash flow?

raise price and reduce direct costs

More than 76 percent of all businesses in the United States are ____.

sole proprietorship

The owner is the only person responsible for the activities of the business in a

sole proprietorship

Which of the following is not a strategy for bootstrapping?

structuring convertible debt

Which of the following is not part of direct selling expenses?

telephone expenses

Once the entrepreneur determines where the new venture lies in the value chain, he or she must create a

timeline

If a nonprofit corporation is ever dissolved, its assets must be distributed ____.

to another tax-exempt organization

By the second stage on investment, known as _____, the business is requiring capital to grow on the basis of a proven business model.

transition