ENTR-187 Exam 1 Study Set

The amount that revenues exceed expenses is referred to as _____. A. profit B. cash flow C. operating margin D. debt

A. profit

When pursuing a part-time entrepreneurship, there are usually two major questions: What kind of product or service do you want to offer and how do you want to organize your part-time business.

TRUE

In innovation, it is mandatory for a person to be sure how a new idea is going to turn out.

FALSE

Taking an idea and offering a way to do something slightly better than it is done presently is an imitative strategy.

FALSE

The SCAMPER tool is effective for solving problems only in traditional ways.

FALSE

Attempting to make oneself seem more accomplished than reality is referred to as: A. aggrandizing. B. poisoning the well. C. moonlighting. D. cannibalizing.

A. aggrandizing.

In stand retail, the key success factor for a stand is: A. having a location where there is enough foot or vehicle traffic. B. having a variable income. C. having nonperishable sale items. D. sharing with other businesses to minimize the high rent.

A. having a location where there is enough foot or vehicle traffic

_____ refers to the sum total of forces outside of an entrepreneur and a firm. A. Environment B. Organizational climate C. Corporate governance D. Social capital

A. Environment

_____ refers to the value of a business that exceeds the sum of the value of all individual assets but that cannot be sold separately from the business. A. Goodwill B. Collateral C. Inventory D. Debt

A. Goodwill

The two fastest growing minority groups that represent the largest segments of minority business owners are: A. Hispanics and African Americans. B. Hispanics and Pacific Islanders. C. Asians and African Americans. D. Asians and Pacific Islanders.

A. Hispanics and African Americans.

Which of the following stages of the business life cycle do most small business never go through? A. The takeoff stage. B. The emergence stage. C. The existence stage. D. The entrepreneur stage.

A. The takeoff stage.

A business run by the individual who owns it is referred to as a(n) _____. A. franchise B. owner-managed firm C. professionally-owned business D. novelty firm

B. owner-managed firm

It can take 3000 ideas to yield one commercially viable product. To increase the odds of finding a good idea, the screening process takes all the thoughts from the ______ step of the entrepreneurial process, and puts them through a ______. A. "Check"; "Plan" B. "Plan"; "Check" C. "Feel"; "Check" D. "Check"; "Feel"

C. "Feel"; "Check"

Which of the following is essential to the success of all start-ups? A. Starting a business with low margins B. Not going into competition with one's employer C. Building trust in one's "story"

C. Building trust in one's "story"

_____ refers to a situation when what is best for one's part-time business is different from what is best for his or her full-time employer. A. Cannibalizing B. Aggrandizing C. Conflict of interest D. Poisoning the well

C. Conflict of interest

Which of the following is an example of part-time business? A. Tabatha, who works from home for a fashion website for a minimum of 40 hours a week B. Raul, who works as an intern in a law firm for more than 35 hours a week C. Dorothy, who works in her small bakery for less than 30 hours a week D. Joshua, who teaches piano to children for 40 hours a week

C. Dorothy, who works in her small bakery for less than 30 hours a week

_____ refers to searching and capturing new ideas that lead to business opportunities. A. Opportunity charging B. Entrepreneurial alertness C. Opportunity recognition D. Opportunity encryption

C. Opportunity recognition

The amount for which an asset would sell, less the costs of selling the asset is called: A. book value. B. replacement value. C. net realizable value. D. earnings multiple.

C. net realizable value.

Contracting with people or companies outside one's business to get work done for the business is known as: A. aggrandizing. B. hybrid entrepreneurship. C. outsourcing. D. licensing.

C. outsourcing.

According to the U.S. Small Business Administration, small businesses generate _____ times the number of patents per employee than do big businesses. A. 35 B. 2 C. 16 D. 50

C. 16

_____ measure a management's effectiveness in using the invested capital of the business to provide profits. A. Profitability ratios B. Gross margin ratios C. Return on investments D. Return on equity

C. Return on investments

_____ is a special set of observational and thinking skills that help entrepreneurs identify good opportunities. A. Screening ability B. Incremental skill C. Radical ability D. Entrepreneurial alertness

D. Entrepreneurial alertness

Delegation makes sense in two situations. The first is when others can do things better than you. Which of the following is the second situation in which delegation makes sense? A. When the task is complex and time consuming. B. When there is not enough time to discuss the work, only the outcomes. C. When there is only one location in which work is performed. D. When you want your business to operate when you are not present.

D. When you want your business to operate when you are not present.

In door-to-door selling, _____ refers to getting the customer to agree to buy. A. opening B. promoting C. auctioning D. closing

D. Closing

"S" in the creativity tool SCAMPER stands for summarize.

FALSE

As the owner of a business, quickly admitting that the firm is in trouble indicates a lack of accountability.

FALSE

In deciding whether to make the move from part-time to full time entrepreneurship, the key question is usually government regulations.

FALSE

In entrepreneurship, every good idea is a viable business opportunity.

FALSE

In order to make profits from a small business, the company needs to make an actual product.

FALSE

In the U.S., government programs are the number one source for financing small businesses.

FALSE

During the start-up phase of a small business the emphasis is on conserving what little cash the new business has.

TRUE

The firm that obtains the rights to use a particular piece of intellectual property is referred to as the: A. franchisee. B. licensee. C. obligor. D. assignor.

B. licensee.

Following the BRIE model in starting a business, an entrepreneur creates a boundary within the environment, setting his firm apart from the rest of the environment. In doing this, the entrepreneur gives the firm an _____. A. organizational citizenship B. organizational identity C. organizational diversity D. organizational collusion

B. organizational identity

The weighted average cost (WAC) refers to: A. a legal reduction in taxes by the government. B. the average equity capital costs incurred by a firm per year. C. the percentage cost of obtaining future funds. D. the expected average future cost of funds.

D. the expected average future cost of funds.

_____ are considered as a part of the internal environment of a firm. A. Employees B. Suppliers C. Competitors D. Unions

A. Employees

_____ refers to information provided to the government concerning the existence of, name of, nature of, and contact information for one's business. A. Zoning B. Franchising C. Registration D. Permanence

C. Registration

According to the BRIE model, _____ sets up a business as a firm. A. intention B. exchange C. franchise D. boundary

D. boundary

The business model canvas and the classic feasibility study produce very different results.

TRUE

After being in business for 24 months, Paul's auto spare parts company Chromson Inc. grows to a relatively stable size. Which of the following would be Paul's primary financial management need at this stage? A. Building owner's wealth B. Clearing all debts C. Implementing bootstrapping techniques D. Establishing internal control over assets

A. Building owner's wealth

Which of the following is one of the prime challenges faced by most second career entrepreneurs? A. Keeping personal finances out of the business B. Avoiding overconfidence C. Lacking resources D. Deciding whether to return to work

A. Keeping personal finances out of the business

Which of the following statements about entrepreneurial teams is true? A. Most entrepreneurial teams are family related. B. The majority of new businesses have an entrepreneurial team of a minimum five co-owners. C. The trend is toward even more businesses being developed by a solo entrepreneur. D. Only 10 percent of teams are spouses or life partners working together.

A. Most entrepreneurial teams are family related.

The _____ is a U.S. government agency that helps people start a business and also provides them support and advocacy. A. Small Business Administration B. U.S. Department of Business Development C. U.S. Department of Commerce D. U.S. Entrepreneurial Administration

A. Small Business Administration

The general description for the processes and skills used in the management of a firm's interactions with people, organizations, and institutions outside of its boundary is called _____. A. external relations B. organizational structure C. horizontal integration D. social audit

A. external relations

Which of the following challenges is typical to family businesses? A. Motivation and nepotism B. Role conflict and succession C. Succession and finances D. Leadership and finances

B. Role conflict and succession

Which of the following is true of a small business? A. Its preferred funding source is other people's money. B. It sells more when it is facing bankruptcy. C. It considers sales as more important than marketing. D. It focuses more on effectiveness than on efficiency.

C. It considers sales as more important than marketing.

_____ refers to a set of shared beliefs, basic assumptions, or common, accepted ways of dealing with problems and challenges within a company that demonstrate how things get done. A. Organizational portfolio B. Organizational ergonomic C. Organizational culture D. Organizational layout

C. Organizational culture

This stage of the business life cycle is characterized by a stable level of sales and profits over several years. The functional areas, the market, and the products or services are all being dealt with consistently and efficiently. A. The success stage. B. The existence stage. C. The resource maturity stage. D. The takeoff stage.

C. The resource maturity stage.

There are two key groups outside one's business with which one must deal—customers and investors.

FALSE

With over 8.3 million businesses owned by women, they account for a quarter of small business revenue nationally.

FALSE

Uncertainty of returns in a business is referred to as _____. A. financial risk B. accelerated cash-out C. overpayment D. collateral

A. financial risk

The RBI screen consists of asking yourself five questions to help you screen entrepreneurial ideas. Which of the following is NOT one of those five questions? A. Who are you? B. Who are your competitors? C. What are you offering? D. Why do they care?

B. Who are your competitors?

Which of the following is true of a high-growth venture? A. It considers sales as more important than marketing. B. Its metastrategy is novelty. C. It focuses more on efficiency than on effectiveness. D. It does not allow for easy delegation of work or responsibilities.

B. Its metastrategy is novelty.

Orion Inc. was started as a small organization with five employees. After the first year's profits were made, the owners decided to invest the profits in expanding the business. This is an example of financing the business using _____. A. benchmarking B. bootstrapping C. piggybacking D. outside equity

B. bootstrapping

Joe is planning a new mobile restaurant business. He wants to convert an antique bus into a sit-down restaurant with a service window allowing him to serve people within the bus and walk-ups who want to get their food and take it home. Joe is performing some research into his project and is looking at the overall business idea, the product/service, the industry and market, financial projections (profitability), and the plan for the future action. Joe is performing a(n) ___________. A. business model canvas B. pilot test C. feasibility study D. RBI screen

C. feasibility study

Thomas has started a new business venture for which he has been using highly economical resources, such as the market research data available in public libraries, low-interest funds borrowed from national banks, and equipments hired on lease. This technique used by Thomas to overcome resource constraints in his start-up firm is best known as _____. A. caveat emptor B. moonlighting C. bootstrapping D. collective bargaining

C. bootstrapping

Josh, an electronics retailer, noticed that the e-commerce business was booming. He started an online shopping website to take advantage of this surge in business. As a result, his business attracted more customers from all across the country. This reflects Josh's: A. creativity. B. radical ability. C. incremental skill. D. entrepreneurial alertness.

D. entrepreneurial alertness.

The competency suggested by _____ relates to the organizational and business processes of a firm. A. intention B. resource C. exchange D. boundary

D. boundary

Intellectual property refers to original works like inventions, visual and performing art works, books, and computer programs

TRUE

Most entrepreneurs start out working part time on their new business.

TRUE

Most small businesses—even part-time ones—need to have a website regardless of whether or not they use it for actual sales

TRUE

Tammy has just opened a donut shop called The Rabbit Hole. Given that The Rabbit Hole is in its start-up phase, which of these would be Tammy's immediate financial management need? A. Building owner's wealth B. Conserving what little money the business has C. Obtaining increasing amounts of cash inflows D. Minimizing debt and increasing asset value

B. Conserving what little money the business has

_____ are the smallest full-time business. A. High-performing small businesses B. Traditional small businesses C. High-growth ventures D. Lifestyle businesses

B. Traditional small businesses

A person's belief in his or her ability to achieve a goal is called: A. growth rewards. B. bootstrapping. C. novelty. D. self-efficacy.

D. self-efficacy.

Small businesses are usually: A. imitative in nature. B. characterized by the novelty of their products. C. the same as high-growth ventures. D. not affected by market fluctuations.

A. imitative in nature.

One of the seven key strategies of the entrepreneurial way involves effectuation or an approach used to create alternatives in uncertain environments.

TRUE

One of the ways to determine the financial situation of a business is by crafting a business plan.

TRUE

One of the ways to practice the business of innovation is to invite someone who was never included before in a meeting for solving a problem.

TRUE

Which of the following is most likely to be an advantage of a start-up? A. It begins with a clean slate. B. It has initial name recognition. C. It is easy to establish and it immediately provides positive cash flow. D. It has easy access to revolving credit.

A. It begins with a clean slate.

The value of a franchise is determined by: A. the rights granted. B. the conditions and standards set. C. the operating permissions granted. D. the value of assets acquired.

A. the rights granted.

Jacob has started a graphic design company called Interon Graphics. As Interon Graphics moves into the growth phase, which of the following would be Jacob's dominant financial management need? A. Obtaining increasing amounts of cash inflows B. Establishing internal control over assets C. Conserving the money that the business has D. Clearing all debts

A. Obtaining increasing amounts of cash inflows

Which of the following terms is not one of the four steps in the successful entrepreneurial process? A. Seek. B. Do. C. Plan. D. Check.

A. Seek.

Which of the following is true with regard to minimalized business professionalization? A. The entrepreneur does nearly everything in the simplest way possible. B. The entrepreneur is passionate about one or two of the key business functions. C. The entrepreneur meets or exceeds the industry's standards. D. The entrepreneur brings the highest levels of trust among customers.

A. The entrepreneur does nearly everything in the simplest way possible.

Factors such as the ages, races, and gender of customers would be an element of the firm's _____ environment. A. general B. internal C. task D. ownership

A. general

There are two general sources of gift financing: A. institutional and personal. B. friends and family. C. consumer and commercial banks. D. angel and venture investors.

A. institutional and personal.

Which of the following is a disadvantage of buying a franchise? A. It is more expensive than starting a new business. B. You give up creative control and have greater reliance on your parent company's financial status. C. You compete with the franchise company itself. D. You receive no training and management support.

B. You give up creative control and have greater reliance on your parent company's financial status.

What would happen when a small business that is growing becomes too great to be handled alone by an individual owner? A. There are fewer risks for a decline. B. The business will in most cases be cannibalized. C. Professional managers are hired to share the management load. D. The manager of the company will never join a competing business.

C. Professional managers are hired to share the management load.

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

C. start-up.

The _____ of an organization will be a part of its task environment. A. owners B. board of directors C. competitors D. employees

C. competitors

A start-up cannot: A. provide the owner with the opportunity to use the most up-to-date technologies. B. provide new, unique products or services. C. begin with a "clean slate." D. provide positive cash flows immediately.

D. provide positive cash flows immediately.

Which of the following is a difference between a small business and a high-growth venture? A. For a small business, the preferred funding source is other people's money, whereas for a high-growth venture, it is the owner's own money. B. For a small business, the personal control preference is to involve others, whereas a high-growth venture prefers to retain autonomy. C. A small business focuses on effectiveness, whereas a high-growth venture focuses on efficiency. D. A small business grows when necessary, whereas a high-growth venture grows when possible.

D. A small business grows when necessary, whereas a high-growth venture grows when po

Lisa runs a dog grooming business and is always looking for new trends, reading articles, keeping notes, and talking to customers and suppliers about what is needed in the industry. What important function is Lisa performing? A. Lisa is building social capitalism. B. Lisa is recruiting for new employees. C. Lisa is building an organizational culture. D. Lisa is scanning the environment.

D. Lisa is scanning the environment.

_____ is money from selling part of a business to people who are not and will not be involved in the management of the business. A. Dividend B. Bond C. Equity capital D. Outside equity

D. Outside equity

A buyout refers to starting a business from scratch.

FALSE

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

FALSE

Being a small business makes managing organizational culture harder than in larger businesses.

FALSE

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

FALSE

In family-owned businesses, the board of directors can only be comprised of family members.

FALSE

Most businesses run by teams are not family related.

FALSE

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

FALSE

Research suggests that the first good idea entrepreneurs come up with is always the best.

FALSE

The goal of any small business owner is to manage external relations in order to minimize social capital.

FALSE

The majority of new firms go through similar startup processes with those most likely to be successful following a four-step process: Finance, Construct, Promote, Demonstrate.

FALSE

The text outlines five major pitfalls that business owners can become victim to when trying to become more innovative, but obeying nonexistent rules is not one of those pitfalls.

FALSE

There are only a few good business models available for the new entrepreneur.

FALSE

When a business enters a phase of rapid growth, one of the challenges it faces is that very few sources of money are available to support its growth.

FALSE

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

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

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

TRUE

Entrepreneurs get used to a do-it-yourself approach, which can be especially trying for second career entrepreneurs.

TRUE

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

TRUE

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

TRUE

In crafting a feasibility study, the goal is to assess if the idea can be profitably brought to market.

TRUE

In making moral decisions, it is possible to find oneself in the legal "right" but still unable to make a viable business decision by pursuing legal recourse.

TRUE

People who buy ownership rights but are not part of the management of the business are known as outside equity investors.

TRUE

Small businesses are often the first to try something innovative.

TRUE

The majority of part-time businesses are based in the home

TRUE

The majority of small business start-ups are funded by bootstrapping.

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

The more time and energy one spends preparing for a part-time business, the longer it takes to make a profit

TRUE

The most frequently occurring element of the BRIE model is intention.

TRUE

Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's opportunity competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin setting up the business's office in his garage D. Martin deciding to set up his own business after quitting his previous job

B. Martin contracting with the mayor to help paint during reconstruction

Which of the following is true with regard to minorities in small businesses? A. Minority-owned firms have not grown much in recent years and are a slow growing sector. B. The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs. C. There is a phenomenal decline in the number of minority entrepreneurs despite the growth of racial and ethnic groups within the U.S. population. D. Minority entrepreneurs do not face the challenge of access anymore.

B. The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs.

Which of the following statements is true about the general environment? A. This part of the external environment is smaller than the task environment. B. The task and internal environments of a firm are independent of its general environment. C. It excludes the broad trends of the environment affecting law, government, and politics. D. It always needs to be considered in terms of its social supports and institutional supports.

D. It always needs to be considered in terms of its social supports and institutional supports.

The text defines an entrepreneur as: A. a person who purchases an existing business. B. working for yourself. C. characterized by being different or new. D. a person who owns or starts an organization, such as a business.

D. a person who owns or starts an organization, such as a business.

The challenge of _____ refers to when woman or minority-owned businesses are simply excluded from the opportunities offered to firms owned by white males. A. consistency B. access C. flexibility D. mutuality

B. access

Money contributed to businesses in return for part ownership of the business is called a(n) _____. A. debt B. equity capital C. gift D. loan

B. equity capital

Social networking helps build long-lasting relationships into a person's day-to-day business operations.

TRUE

Succession plans deal with the people who will take over, what roles they will fill, and what supports they will receive.

TRUE

Using low-cost or free techniques to minimize cost of doing business is referred to as bootstrapping.

TRUE

Which of the following best describes conflict of interest? A. Sarah works a full-time day job as a waitress and then runs a part-time baby-sitting service at night. B. Cathy, who does computer repairs, lies to customers about having an office downtown when she actually works part-time from her home. C. Jenson misses his deadlines at his full-time day job because he works late nights as a part-time music producer. D. Ken uses the money he gets from his full-time job as a chef to run his part-time business of graphic designing.

C. Jenson misses his deadlines at his full-time day job because he works late nights as a part-time music producer.

Which of the following statements about certification with regard to women- or minority-owned small business is true? A. Most corporate certification programs require a business to be in operation at least five years. B. Certification is for every women or minority-owned small business. C. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies. D. For corporations, certification is handled by organizations that are affiliated with the government or big business.

C. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies.