small business chapter 1 - 23

A sales forecast can best be described as:

A fact-based prediction of the best, worst, and most-likely sales levels of a business.

Integrity is best defined as:

A general sense of honesty and reliability that is expressed in a strong commitment to doing the right thing, regardless of the circumstances.

According to the video, producers of cocoa have a hard time negotiating with chocolate manufacturers because:

The barriers to entry are high in chocolate manufacturing—there are only about 12 producers—making it difficult for farmers to negotiate on price.

Which of the following is the most accurate statement about doing business online?

E-commerce models may have advantages over physical stores and should be considered when launching a business.

Liquidity can also be described as:

The availability of cash to meet maturing debt obligations

_________________________ bring together buyers and sellers of businesses.

business brokers

A facility that rents space specifically to new businesses or to people wishing to start a business is called a:

business incubator

__________________________ is a document that outlines the basic concept of a business and a course of action that will make that business a reality.

business plan

Choosing a focus strategy has its advantages, but it can also lead to:

competition from other companies that decide to imitate the same strategy

Which of the following marketing philosophies is likely to lead to success in many areas, not just marketing?

consumer-oriented

_______________________ identifies the characteristics necessary to locate and describe potential customers.

customer profile

Small companies are particularly adept at competing with larger companies when they focus on:

customer service

Which of the following is NOT one of the elements of the "triple bottom line?"

production --- triple bottom line: planet, profits, people

a __________________________ corporation is set up in order to accommodate individuals whose profession requires licensure.

professional

The fair trade practices used by Theo Chocolate help raise the price paid to farmers by:

providing transparent negotiating system that enables farmers to increase the quality of their product

The culturally supported sense of obligation to repay in kind what another has done for us is called:

reciprocation

_________________________ identifies the nature and types of income expected to come into the firm from the sale of products and services.

revenue model

___________________ is advantage created by an individual's connections with a network of social relationships.

social capital

the _____________________ commitment of family members refers to ties that extend beyond the financial rewards of being in the business. They include things like solidarity, identification with the family, and a sense of history.

socioemotional

The simplest and cheapest legal form of organization is a:

sole proprietor

_______________________ equipment has a limited use and is only justified at high volumes of output.

special purpose

Ralph took his first tangible step to becoming an entrepreneur rather than a small business owner when he:

started considering expansion strategies to teach other people how to fit 3D modeled shoes

Which of the following is most likely to result in increased self-confidence in grown children who are thinking about entering the family business?

succeeding in another firm on one's own

The fundamental benefit a customer gains from a product or service is called:

the core product/service

Which of the following statements most accurately describes the relationship between planning and doing in a business?

they are both important and must be balanced intelligently

Spotting trends can come from all of the following EXCEPT:

tinkering with products features alone what they CAN come from: - listening to customers - joining social media groups -using focus groups

The most effective strategy for a newcomer to use when entering a market is:

to offer benefits that allow you to charge a premium

The lesson that Goldman learned through his experience with the bottling plant was:

to stick with what it did best -- making tea and promoting the brand

Current assets are also known as:

working capital

The best guide to use when deciding how long and detailed a plan should be is:

write a plan in accordance with what the particular audience will find helpful

________________ restrict and/or limit the operations of home-based businesses.

zoning ordinances

The demise of Blockbuster Video stemmed from which of the following vulnerabilities?

- new entrants changed the industry's way of doing things - they stuck to an old, established way of doing business instead of innovating - management failed to take into account the increasing feasibility of delivering video online (all of the above)

Problems with nepotism include:

-Difficulty in disciplining wayward employee/family members. -The perception by non-family members that family members are treated differently.

According to Heidi, franchise culture is:

-The branded materials of your company, its logos, and its presence on the Internet. -The way your company is perceived by the outside world. -Its relationship with franchisees.

Entrepreneurs who start and lead small businesses contribute to the economy in which of the following ways?

-they make up the overwhelming majority of all businesses -they hire nearly half of all high tech employees -they are increasingly going global, representing 97 percent of all exporters

The startup cost for a McDonald's franchise is:

1-2 million

In this context, a "clean" deal means:

All equity investors are accredited and the legal form of organization makes it easy to bring in investors.

Which of the following is NOT an advantage of opening a home-based business?

Customers feel more comfortable in your home

A strategy of ___________________ involves bypassing retailers and going to the customer directly through online operations.

Disintermediation

The best definition of cost of goods sold is:

Expenses associated directly with the production of products and/or services

In order to meet company goals, especially with friends and family who are involved with the company, Heidi has to:

Focus on managing by the numbers and be firm when people don't meet goals, no matter who they are.

Which of the following statements best describes the relationship between Camp BowWow corporate and the franchisees?

Franchise guidelines are followed strictly, but individual owners are encouraged to be innovative as well.

Paulette's decision not to open a retail store was driven by which of the following considerations?

Her margins were too thin if she had the dolls manufactured in the U.S.

The best description of business model risk is:

How changing circumstances may affect the business and how the business model can be adjusted to cope with them.

Heidi, the found of Camp Bow Wow, started a franchise instead of only having one location in part because:

It allowed her to work at realizing her vision and building the brand rather than the day-to-day operations of the business.

Which of the following statements most accurately describes the financial liability of a corporate stockholder?

It is limited to the amount of money invested in the business unless the owner has signed personally for a corporate loan.

A corporation has a distinct advantage when raising new equity capital due to:

Its ease of transferring ownership and distributing shares

The best way to summarize what Paulette learned about location as she started her own business is:

Location is not just about geography—a business can be "located" online.

Entrepreneurs generally think differently about resources than do employee-managers in which of the following ways?

Managers want larger budgets; entrepreneurs work to do more with less.

Which of the following statements best describes the proper way to purchase equipment and furnishings for a new business?

Save money when possible, but make sure the company looks stable and professional.

Heidi's dream for Camp BowWow is being realized mostly because:

She brings fresh energy to the brand constantly by adding things for customers like Home Buddies and Behavior Buddies.

Which of the following is NOT one of the three main financial statements?

Statement of Changes in Owners' Equity

The predator/parasite conflict can best be described as:

The perception by family members who work in the firm that family members who do not work in the firm are benefitting unfairly and the perception by family members who work outside the firm that inside members are benefiting unfairly.

Profits are not the same as cash flows because:

They are calculated on an accrual rather than a cash basis.

Family businesses are best described as:

Those in which the strategic direction of the firm is influenced significantly by family members.

Recent research findings suggest that companies that are successful in making the transition from one generation to the next are:

Those whose new leaders act on their own, take risks, and support innovation.

The chief benefit of a marketing plan is:

To reduce the number of costly errors you make in your marketing.

Which of the following is the most frequent source of new ideas for a business?

prior work experience

based on what you have seen in this video, which of the following is the most accurate statements about growing a large entrepreneurial business

a basic system that must be designed, refined, and replicated over and over

Which of the following statements is the most accurate concerning personal factors in a business?

a business should align with its owner's personal goals

Which of the following statements is NOT one of the desirable traits of entrepreneurs listed by Spinelli and Adams?

a domineering attitude

working on the business and not just in the business is best described as

a mindset that focuses on building a scalable business with high growth potential as opposed to performing the actual work that the business does each day

Which of the following is NOT a cost normally associated with franchise ownership?

a personal vehicle ARE: initial franchise fee investment costs

Sally has opened five successful candy shops and wishes to capitalize on the scalability of her business by franchising. Which of the following should she consider before going that route?

all of the above: -She should determine whether her business systems are well-defined and replicable. -She should see if she can get sufficient financing to deploy the franchise. -She should research government regulations regarding her obligations to disclose certain information to potential franchisees.

Which of the following are advantages of buying a franchise as opposed to starting one's own business from scratch?

all of the above: -brand recognition -use of a recognized trademark -the operations manual

Which of the following is MOST descriptive of entrepreneurial passion?

an entrepreneur must have passion, but unchecked passion can be destructive

According to Heidi, the best way to keep franchisees aligned with the plan while still capitalizing on their innovative ideas is:

an open door policy

Social entrepreneurship is best defined as:

applying already established principles of good business to social problems

The consumer-to-consumer model that allows individuals and companies to list products for sale to potential bidders is called a/an:

auction site

Which of the following is foundational to a company's ability to satisfy its stakeholders?

being profitable

Tom took great care in investigating his purchase of an existing business. He was engaging in:

due diligence

_______________________ is the process of investigating an investment thoroughly and may include background checks, credit checks, employment history, and financial history.

due diligence

Uncle Jake was a/n ______________ investor, meaning that he put money into the business in exchange for part ownership.

equity

The most accurate statement concerning socially responsible actions and firm profitability is:

evidence concerning the link between social responsibility and profit is mixed

a ____________ is a meeting of family members held (usually off-premises) to discuss family business matters.

family retreat

A __________________________ is a preliminary look at how well a business might do if it were opened.

feasibility analysis

A _________________ is a business model that involves a business owner who license trademarks and methods to an independent entrepreneur.

franchise

_______________________ are entrepreneurs who make contractual arrangements with established business chains rather than doing everything themselves.

franchisers

Which of the following is NOT one of the "Big Three" stakeholders?

government regulators

The strategy that the founders of Honest Tea used to get started is best described as:

identifying and attacking a niche

Which of the following e-commerce business models do not actually sell anything online?

information based and content based

______________ is acting in ways that are congruent with the values you espouse

integrity

Which of the following best describes the difference between integrity and ethics?

integrity is based on internal principles that guide behavior; ethics is based on external guides too behavior

_________________________ is the term used to describe specific knowledge and/or abilities that enable a firm to uniquely and exclusively offer a particular benefit to a customer.

intellectual property

According to Frank Moyes, a successful entrepreneur and former teacher at the University of Colorado, the most important reason for business planning is that:

it requires the entrepreneur to get the answers to some difficult questions

The aspect of partnerships that involves each partner's being held accountable for the decisions of the others even if they were not consulted is called:

joint and several liability

___________________ specify the hard assets and working capital a firm will need to achieve its mission.

key resource requirements

______________ lies are those that are specifically designed to make a new business look bigger and busier than its really is

legitimacy

Businesses that do not attract investors, but allow their owners to live the way they want to live are called ________________ businesses.

lifestyle

a ____________________ involves at least one general partner and one or more limited partners.

limited partnership

_____________________ involves taking the steps necessary to locate and describe potential customers.

market analysis

The number that results when taxes are subtracted from profits (before taxes) is called ____________________ and represents money that can be reinvested in the firm or paid out to owners (assuming enough cash is on hand).

net profits

Ideas based on selling existing products or services in a new context are called:

new market ideas

Which of the following is NOT an element of SWOT analysis?

obligations ARE: -threats -strengths -weaknesses

The culture at Honest Tea favors which kind of employee?

one who can thrive in an open, entrepreneurial environment

The main difference between lifestyle business owners and entrepreneurs is the way they perceive

opportunity

The definition of a family used in the context of this chapter is:

people bound by a shared history who are committed to a future together

Michael opened a franchise restaurant within an existing business. He did what is known as:

piggyback franchising

New businesses often find it necessary to __________________ when the original idea is found to have flaws.

pivot

The right to buy new shares of stock in a company in proportion to the number of shares already owned before the stock is offered for public sale is called:

preemptive right