Entrepreneurship Test 2

Because the advantages of going public outweigh the disadvantages, it is in a corporation's best interest to go public.

False

Creativity cannot be developed or improved.

False

Design-centered entrepreneurship is when the entrepreneur applies design methods in six action stages of developing an opportunity.

False

Entrepreneurs are rarely able to set up a business without investment funds or bank loans.

False

Franchisees have the option of using the logo and symbols of the franchisor.

False

Innovation is planned and predictable.

False

It is not uncommon for a buyer to be faced with a franchise fee of $250,000 to $1,000,000.

False

It is really genius and not hard work that creates success for the entrepreneur.

False

Large ventures often use private placements as a method of raising capital.

False

Mistakes and failures along the way are to be seen as poor planning and actually hinders the design methodology.

False

Most entrepreneurs are objective when they evaluate their new idea.

False

Most entrepreneurs hire lawyers to brief them on the legal issues surrounding a new venture.

False

Much franchise litigation has arisen over termination of owners.

False

Public offering is a term used to refer to corporations taking public donations to raise capital.

False

Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals.

False

Sales records are of very little value to a buyer in evaluating a company's worth.

False

Surprisingly, growth of sales is generally not considered a critical factor in assessing new ventures.

False

The 'learn' stage of the Build-Measure-Learn feedback loop is a process in which one learns by trying out an initial idea and then measuring it to validate the effect.​

False

The Federal Trade Commission does not provide information on franchise success.

False

The creative climate rejects the ambiguity common in work and life.

False

The decision of an entrepreneur to ignore the market is a safe one if he or she is sure that the idea will be a success.

False

The idea experience phase of the creative process is often the least interesting part of the process.

False

The innovation process involves only the development of a good idea.

False

The principles of innovation are largely focused on profit maximization.

False

The sources of new business ideas among men and women are identical in type and proportion.

False

The term risk versus loss refers to the amount of return for funds invested.

False

The venture capital pool is rapidly declining due to overfunding.

False

There are five specific phases that a new venture goes through.

False

There are three types of design-centered entrepreneurship.

False

There is only a small number of informal risk capitalists in the market today.

False

Timing has little to do with the success or failure of a new venture.

False

Truly creative people are always geniuses.

False

Venture capitalists are quick to invest.

False

Venture capitalists, surprisingly, require little information before they make an investment.

False

​Common stock is the least basic form of ownership.

False

​Researchers uniformly agree that the easiest step in the creative endeavor is the evaluation and implementation phase.

False

"Intensity of competition" changes the dominance of problem areas.

True

A product does not have to be patented in order to be introduced into the marketplace.

True

Creativity, in the entrepreneurial context, is the generation of ideas that result in the improved efficiency or effectiveness of a system.

True

Design is now a hot topic in the business world.

True

Entrepreneurs are always looking for unique opportunities to fill needs or wants.

True

Frugality is deemed a bootstrapping technique.

True

Generally, the larger and more successful the franchisor, the greater the franchise fee that is charged.

True

In a lifestyle venture, independence, autonomy, and control are the primary driving forces.

True

In negotiating a deal to purchase an existing business, it is possible to request that the seller retain a minority interest in the firm.

True

In purchasing an existing business the first question should be: "Why are you selling?"

True

Incubation in the creative process often occurs when the individual is doing something completely unrelated to the subject.

True

Informal risk capitalists are often referred to as "business angels."

True

Innovation is the process by which entrepreneurs convert opportunities into marketable ideas.

True

Innovation should follow a milestone schedule.

True

Innovative activity should be rewarded.

True

It is always important that you weigh advantages against disadvantages in purchasing a franchise.

True

It is reported that more than 400,000 new firms have emerged in the United States every year since 2010.

True

Many entrepreneurs do not understand the marketing life cycle of a new product.

True

Many inventions and innovations are a result of inventors seeing new and different relationships among objects, processes, materials, technologies, and people.

True

Most innovations result from a conscious and purposeful search for new opportunities.

True

Only a small percentage of new ventures succeed.

True

Only new patterns of thinking lead to new ideas and innovation.

True

P2P lenders charge fees for brokering and servicing loans and collect penalties for late payments.

True

Perhaps the greatest advantage of buying a franchise, as compared to starting a new business or buying an existing one, is that the franchisor will usually provide both training and guidance to the franchisee.

True

Peter Drucker has stated that successful innovators must look, ask, and listen.

True

Pricing becomes less of a concern when customers become aware of a product's unique characteristics that are superior to the competition.

True

Private placement is a method of raising capital through the private placement of securities.

True

Social lending sites are different from so-called microlending sites.

True

Solid analysis and evaluation of the feasibility of the product/service idea are critical tasks in starting a new business.

True

Sources of debt financing include trade credit, accounts receivables, factoring, and finance companies.

True

Structured and focused chaos is necessary for creativity to occur.

True

The Build-Measure-Learn feedback loop begins with identifying which hypotheses to test and ends with requiring the entrepreneur to take a look at the results and determine whether a pivot is required.​

True

The Franchise Disclosure Document (FDD) is a legally required disclosure document that must be presented to potential franchisees during presale discussions.

True

The Lean Start-Up methodology is hypothesis-driven.​

True

The actual cost of "opening the doors" of a franchise establishment can be more than $200,000.

True

The business plan is a critical element in a new-venture proposal.

True

The cognitive ability of entrepreneurs to acquire and transform information has yet to be studied.

True

The comprehensive feasibility analysis approach is closely related to the preparation of a thorough business plan.

True

The elimination of time and effort associated with starting a company is an advantage of acquiring an ongoing venture.

True

The four basic types of innovation are invention, extension, duplication, and synthesis.

True

The four phases of the creative process are knowledge accumulation, incubation, ideas, and evaluation and implementation.

True

The growth pattern of sales is critical for an entrepreneur to make correct forecasts.

True

The innovation process allows creative people to subconsciously mull over the information they have gathered.

True

The left hemisphere of the brain is responsible for logical and analytical skills.

True

The maverick entrepreneur who avoids reaching out and finding help is a myth of the past.

True

The most common sources of debt financing are commercial banks.

True

The most important area to examine prior to purchasing a business is company profitability.

True

The prospective investor should get as much information as possible on the franchisor.

True

The terms upside gain and downside loss refer to the profits the business can make and the losses it can suffer.

True

Two important factors classified as managerial that could be a cause for failure include human resource problems and the concept of the team approach.

True

Uniqueness in a product or service can be demonstrated through a new-new approach or a new-old approach.

True

Use of debt to finance a new venture involves a payback of the funds plus an interest fee (interest) for the use of the money.

True

When purchasing an existing business, the prospective owner should conduct an assessment of the business's current group of employees.

True

When using P2P lending, one potential danger may be an uncertain regulatory environment.

True

​A good idea is important, but a good management team is even more important.

True

​Business brokers specialize in business opportunities and can provide leads and assistance in finding a venture for sale.

True

​In 2014, there were over 450 crowdfunding platforms.

True

​Innovation has become more global and is no longer the exclusive domain of Silicon Valley and Route 128 in Boston.

True

​The average size of social loans is around $17,000.

True

​The way to approach a new business venture is to design a good or service that is unique.

True

​Trade credit is given by suppliers who sell goods on account.

True