FOUNDATIONS OF BUSINESS: CHAPTER 5 EXAM

Venture capital

Money that is invested in small and sometimes struggling firms that have the potential to become very successful is called

​Tech

​Teenage entrepreneurship is growing especially in the _____ industry.

Which form of franchising is the most common today?

A franchisor supplies brand names, techniques, or other services instead of a complete product.

Small business

Billy Tucker operates Tucker Farms in northern Illinois. Last year, his annual receipts were just under $750,000. According to the Small Business Administration, Tucker Farms is a

Cash-flow problem

Amy starts a small quilting and embroidery business. She purchases a technologically advanced quilting machine and an embroidery machine for a combined $25,000. Her monthly payments on the equipment are $500, but she has only one client at this time. Amy is facing a potential

Business plan

Before seeking financial backing for his new business, Charlie puts together a concise document explaining the nature, mission, and goals of his new business and its expected costs and potential. Charlie has constructed a(n)

SCORE personnel provide services to small businesses through the SBA

Devon has owned his own business for five years but is having trouble accounting for the business assets. He has read about the SBA SCORE Association and would like to have a SCORE volunteer mentor him. Which of the following most accurately explains the services and purpose of SCORE?

A small-business investment company (SBIC) is a government agency that provides venture capital to small enterprises.

False

About half of small businesses are in the production industries.

False

An investor who is considering investing in Diane's Burger Bar would not likely want to see her business plan.

False

Franchising experienced tremendous growth during the early 1930s.

False

Small businesses operate only in the service industry, not in manufacturing.

False

Some franchisors claim that contracts are unfairly tilted toward the franchisees.

False

The average length of an SBA loan is about twenty-five years.

False

Limited potential for him to advance

Jack works for a small pest-control company that has a total of five employees. From his point of view, the primary disadvantage of a small business is the

Fostering competition

Many small firms seek to establish a particular niche in the market, realizing that they cannot afford to operate on a larger scale without exposing themselves to considerable risk of retaliation from larger companies. When a number of small businesses are operating in this manner, they are forcing the larger businesses to recognize and account for their influence on the market. In this way, small businesses are primarily

Her entrepreneurial spirit

Norma always knew she wanted to start her own business. She was very passionate and wanted to create something new. Norma's primary motivation for starting her own business is

Retailing

Of the small businesses in the distribution industry, nearly three-quarters of them are involved in

In her small retail shop, Stacey knows most of her best customers by name and knows their preferences in clothing and shoes. This demonstrates which advantage of a small business?

Personal relationships with customers

Small-business development center.

Robert is the director of a university-based group that provides individual counseling, specialized training, and research data to owners of small businesses. Robert's group is called a

Distribution

The industry concerned with the movement of goods from producer to consumer is

What is a common mistake that small-business owners make when their businesses begin growing?

They over expand without proper planning.

According to a government source, more than half of this century's technological innovations came from small companies.

True

Because of small-business competition, large companies must become more efficient and responsive to consumers' needs.

True

Entrepreneurial spirit is the desire to create a new business.

True

For those who like dealing with people, small business is the place to be.

True

International trade will become more important to small-business owners in the new century.

True

Large companies often find it less expensive to purchase parts from small companies than to manufacture their own.

True

Money invested in small firms with the potential to become very successful is known as venture capital.

True

SCORE is a group of retired businesspeople who volunteer their services to small businesses through the SBA.

True

Small businesses are prone to failure.

True

Some advantages of the sole proprietorship also apply to the small business.

True

The SBA has defined a small business as one independently owned, operated for profit, and not dominant in its field.

True

The business plan should deceive neither investors nor loan officers and should convey accurate and realistic expectations of business potential.

True

The main reasons small businesses fail are poor management skills on the part of owners, inadequate capital, and poor planning.

True

"This business will create a caring, learning environment for elementary school children after regular school hours to meet the needs of working parents." This statement answers which of the following issues that should be addressed in a business plan?

What is the nature and mission of the business?

It may take several years for a new business to begin showing a profit.

Which of the following statements is true regarding the profitability of new businesses?

36 percent

Women were 51 percent of the U.S. population, and, according to the SBA, they owned at least ___ percent of all small businesses in 2017.

Franchisor; franchisee

You have decided to open a pet store and have engaged in a contract with Dog N' Cat Centers, Inc. You and the company have drawn up an agreement that allows you to use the company's name and its proven method of doing business, to receive training, and to use its advertising materials. In this agreement, Dog N' Cat is the ____ and you are the ____.

The SBA makes a special effort to

assist minorities wanting to start small businesses or expand existing ones