Smartbook 6 Scenarios/Examples

What is a good tactic for entrepreneurs to implement in order to keep a new company growing?

delegate authority to employees

A good business plan is between 25 and 50 pages long and takes many months to write. A comprehensive business plan will include which of the following?

- Cover letter - company background - Executive summary

Chris spent his own money on marketing research, and consulted his sister Kara, who is an accountant. They spent the next few months writing a business plan. Which of the following are some business functions Chris would have addressed?

- Marketing - Planning - Financing

Which of the following are good ways to learn how to run your own business?

- Talk to other business owners - Run a small business during your off hours - Work for a successful entrepreneur

Which of the following is true regarding businesses with low failure rates, such as veterinary services, dental practices, and medical practices?

- They often require advanced training to start. - They do not tend to produce much growth.

Examples of businesses that require high rates of advanced training are

- electricians - veterinary services - dental practices

It is extremely important to develop a(n) _____ _____ , Correct Unavailable before going to a bank for a loan, because it shows that you are aware of who the target market is, who the competition is, how much money you need, and exactly how you intend to turn a profit.

1. Business 2. Plan

Jason has prepared a comprehensive _____ _____ which includes a cover letter, executive summary, company background, management team, financial plan, capital required, marketing plan, location analysis, manufacturing plan, and an appendix.

1. Business 2. Plan

Venture capitalists may ask for a large stake in your small business - as much as ______ percent which could cause you to lose control of the business.

60 percent

True or false: The most important thing investors want to know about in the Marketing Plan portion of the business plan, is what makes the product (or service) more competitive than what already exists.

True Reason: Having a competitive advantage is critical for a small business today.

True or false: The owner of McDonald's, Ray Kroc, turned to his business associates - his suppliers - for funds to keep the business going.

True Reason: Suppliers are some of the most important business associates a small business can have.

Venture capitalists try to safeguard their investment by taking some control over the business. What could happen if a venture capitalist takes too large a stake in your company?

You could lose control of the business.

Understanding where to locate your business, who your target market is, and how to reach them, can be accomplished through

an inexpensive market research study

Local community college classes are a good place to start to learn about starting your own

business or company

Some causes of small-business ______ include underpricing or overpricing goods or services, starting with too little capital, going into business without first learning something about the industry or market, and underestimating how much time it will take to build a market.

failure

According to a recent study, offering low-cost offices with basic services to new businesses in the early stages of development results in an 87% success rate of _________ graduates.

incubator

A necessary and invaluable aid to entrepreneurs is a competent, experienced _____ who knows and understands small business. This person can help with leases, contracts, partnership agreements, and protection against liabilities.

lawyer or attorney

Started by the Small Business Administration in 1991, the ______ program provides very small loans (up to $50,000) and technical assistance to small-business owners.

microloan

Entrepreneurs often come up with an idea for a new business and need financing. At this stage, it is important to develop a business _____, which forces potential small-business owners to be quite specific about the products or services they intend to offer.

plan or strategy

A good lawyer for a small business does not have to be expensive. Several prepaid legal _____ offer documents and other services for a small annual fee.

plans

Daniel wanted to start his own small business. After spending his own money on marketing research, Daniel asked his friend Chase to be his accountant. They spent a few months writing a business plan, which then they presented to a bank. Daniel:

understands the steps needed to start a small business

When starting a small business, government agencies such as the Small Business Administration (SBA), the Farmers Home Administration, the Economic Development Authority, and the Minority Business Development Agency are possible sources of:

- capital - information

Community Development Financial Institutions (CDFI) have been successful because they:

- maintained financial discipline other lenders lack - provide counseling on improving cash flow - offer counseling on marketing strategies

Managing a small business became relatively easy with the advent of inexpensive personal computers. Inexpensive computer systems and off-the-shelf or even free, open-source software make it easy for the small business manager to:

- manage customer records - follow the daily sales and expenses

Learning from others is a useful way to avoid pitfalls when starting a small business. Some things you may be told would include:

- starting with enough money - to hire a good lawyer and accountant - that finding and retaining good workers is hard

In 2019, online retail sales reached over $365 _________, or approximately ________ percent of all retail sales.

1. $365 Billion 2. 12 percent

Adam hopes to show the bank lending manager he is meeting with that he is aware of who the target market is, who the competition is, how much money he needs, and exactly how he intends to turn a profit by supplying him with a(n) _____ _____.

1. Business 2. Plan

The part of a business plan that includes an organization chart, job descriptions of listed positions, and detailed resumes of the current and proposed executives is called the _____ _____ section.

1. management or managerial 2. team

True or false: Addressing the cover letter on your business plan "To whom it may concern" is considered preferable.

False Reason: The cover letter should always be addressed to a specific person.

The most important things investors want to know are what makes the product more desirable than what's already available and whether or not the product can be patented. In which section of the business plan should investors look to find this information?

Marketing plan

What happens if a borrower takes out a loan from a community development financial institution (CDFI) and fails to repay the loan?

The CDFI takes the hit and is stuck with the defaulted loan.

Becoming a(n) _______ is one of the best ways to learn about how to run a business.

apprentice or intern

David opened his own bicycle shop 30 years ago, and although he enjoyed his work, he needed more free time. When Josie requested to work as an apprentice, David was very willing. Before long Josie was able to run the store without any help. This is an example of how:

apprenticeships can benefit both the business owner and the apprentice

A good business plan takes a lot of time to write, but you have only a few minutes to convince readers not to throw it away. This is why your _____ summary is very important.

executive

Gaining financing, knowing how to get started in exporting, and navigating bureaucratic paperwork are major hurdles to consider when getting started in _____ business.

global or international

The expansion and development of the Internet has sprouted a world of small web-based businesses. This, among other reasons, may explain why online sales are rapidly:

increasing

Because investors want to be protected against any possible mishaps, it is also a good idea to include a description of ______ coverage in the Company Background portion of the business plan.

insurance

Factors like the customer needing a lot of personal attention, the product not being easily made, and sales not being large enough to appeal to a larger firm all create opportunities for ________ business success.

small

After working for a large auto manufacturing company for over 20 years, Silvia decided to start her own auto accessory store. While facing new challenges every day, Silvia enjoys being free to manage her company as she desires. This example illustrates:

why people take the risks of entrepreneurship

One of the most difficult tasks is raising money for a start-up. To raise money, entrepreneurs talk with bankers and other potential investors, and try to sell their ideas. In order to have a chance, most of the time, entrepreneurs have to present a(n) _____ _____.

1. Business 2. Plan

Since entrepreneurs can't compete with larger firms' pay and benefits, what are three ways they can motivate employees?

- provide more challenging opportunities to learn - maintain good employee relations - be respectful of employees' opinions

There are a few hurdles that prevent many small businesses from engaging in the global market. Which of the following are examples of such problems?

- Would-be exporters do not know how to get started. - Financing is often difficult to find.

When writing a business plan, it is important to:

- analyze the competition - calculate how much money you need to start

Among the hurdles small businesses must overcome in starting to operate globally are:

- bureaucratic paperwork - understanding cultural differences - difficulty finding financing

Mark recently started a small consulting firm. He is drafting a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and qualifications of the owner(s). Mark is writing a(n) ______ ______.

1. Business 2. Plan

Totals that are shown in the Capital Required portion of a business plan should be the same as the ones shown in the _____ _____ statement.

1. Cash 2. Flow

Phil invests in new businesses in exchange for partial ownership in those businesses. Phil is a(n) _____ _____ .

1. Venture 2. Capitalist