Chapter 2 Small Business Entrepreneurs: Characteristics and Competencies

One of the major issues identified for second career entrepreneurs is keeping personal finances out of the business. True or False

True

One way to maximize communication in the succession process is to create a family council. True or False

True

About a third of the second career types who return to work decide to become self-employed. True or False

True

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

True

Which of the following deals with the actual process of exploiting an opportunity for profit? A. Resource B. Exchange C. Intention D. Boundary

B. Exchange

The successful entrepreneurial personality exhibits certain types of business-related expertise which the text condenses into five competencies. Which of the following statements is NOT true about these competencies? A. Research shows these competencies can be learned through training. B. The amount of expertise is what distinguishes the more successful from the less successful firms. C. Determination competencies are activities, knowledge, and skills specific to businesses in a particular industry. D. Opportunity competencies are the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business.

C. Determination competencies are activities, knowledge, and skills specific to businesses in a particular industry.

Which among the following is a critical-point planner? A. Amanda does not have a very long-term approach to planning and she plans only for those business aspects that are of paramount importance. B. Andrew looks at all aspects of the business, from launch to the complete working of it. C. Cathy looks for a good chance to achieve her goal and acts according to a routine. D. Joshua acts on what he has been doing and does not believe in planning.

A. Amanda does not have a very long-term approach to planning and she plans only for those business aspects that are of paramount importance.

This stage of the business life cycle occurs once the firm is established in its market. A. The success stage. B. The emergence stage. C. The existence stage. D. The resource maturity stage. The success stage occurs once the firm is established in its market.

A. The success stage.

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.

When starting a business using entrepreneurial teams, which number of team members is the most common? A. Two team members B. Three team members C. Four team members D. Five or more team members

A. Two team members

hich of the following is a major economic force, employing 58 percent of America's total workforce? A. Public companies B. Government enterprises C. Family businesses D. International assignments

C. Family businesses

Which of the following statements concerning family businesses is correct? A. Family members often work in the business but may not sit on the council. B. Family businesses employ about 20 percent of America's total workforce. C. Most top managers at family firms tend to stay in their positions much longer than those at nonfamily firms. D. Family businesses plan for succession using a critical-point plan.

C. Most top managers at family firms tend to stay in their positions much longer than those at nonfamily firms

Which of the following refers the three levels of professionalization? A. Low, medium, and high B. Company, industry, and global C. Personal, team, and organizational D. Expert, specialized, and minimalized

D. Expert, specialized, and minimalized

Opportunistic planners always plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. True or False

False; Opportunistic planners generally start with a goal and look for opportunities to achieve it. Once they find a good opportunity, even if it isn't the one related to their original goal, they act on it, so it is very short term in orientation.

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

True

Which of the following planners do best in terms of getting a start-up launched, keeping it going, and making a living from it? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Reactive planners

A. Comprehensive planners

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

Getting the business organized and registered is an example of _____ competency. A. opportunity B. resource C. industry-specific D. boundary

D. boundary

Only _____ of family-owned businesses survive beyond the first generation. A. three-quarters B. one-half C. one-fourth D. one-third

D. one-third

Which of the following statements is true about a family council? A. It helps to maximize communication in the succession process of family businesses. B. Its main function is complete the key business activities of a family business. C. It includes family members with immediate interests in the business and a significant number of non-family members. D. It is not a good forum for grappling with issues like role expectations, commitment, and personal responsibility.

A. It helps to maximize communication in the succession process of family businesses.

____ refers to the process of intergenerational transfer of business. A. Role conflict B. Succession C. Certification D. Access

B. Succession

The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as _____. A. basic business competencies B. resource competencies C. opportunity competencies D. determination competencies

B. resource competencies

Which of the following was not listed as a time management technique in the textbook? A. 123 Prioritize B. Delegate C. Perseverance D. Strategize

C. Perseverance

Which of the following approaches yields better results in an established industry or a poor one? A. External focus B. Effectuation focus C. Prevention focus D. Promotion focus

C. Prevention focus

Christopher is a hard-working entrepreneur who looked into all the details of his small gaming software business. He focused on all aspects of the business from the initial launch, promotion, and marketing aspects to the final set up. He finds planning convenient and works according to a plan. Christopher is a(n) _____. A. opportunistic planner B. habit-driven planner C. reactive planner D. comprehensive planner

D. comprehensive planner

Entrepreneurs who start with a goal instead of a plan and look for a chance to achieve it are known as _____. A. reactive planner B. critical-point planner C. comprehensive planner D. opportunistic planner

D. opportunistic planner

Regulatory focus is a mix of two internal focuses, _____ focus and _____ focus. A. effectuation; comprehension B. comprehension; prevention C. effectuation; promotion D. promotion; prevention

D. promotion; prevention

When starting a business, more women choose ________ industries that tend to have lower average sales levels. A. construction B. financial C. technology D. service

D. service

Which of the following problems is closely related to role conflict? A. Resource shortage B. Lack of skills C. Shortage of time D. Perseverance

C. Shortage of time

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

A situation that occurs when businesses have founders or owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources is known as _____. A. expert business professionalization B. specialized business professionalization C. minimized business professionalization D. maximized business professionalization

B. specialized business professionalization

Expert business professionalization is a situation that occurs: A. when only the most critical aspect of business is met. B. when most aspects of the business meet or exceed the industry's standards. C. when one or two aspects of the business are met. D. when none of the business can achieve the industry standard.

B. when most aspects of the business meet or exceed the industry's standards.

Which of the following approaches yields better results in richer, dynamic, uncertain environments or industries? A. Promotion focus B. External focus C. Effectuation focus D. Prevention focus

A. Promotion focus

Which of the following best describes the problem that arises when people have multiple responsibilities and each makes different demands on them? A. Role conflict B. Succession issues C. Strategizing challenges D. Leadership constraints

A. Role conflict

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.

The problem behavior of trying the same action repeatedly without learning is called _____. A. perseveration B. prevention focus C. effectuation D. critical observation

A. perseveration

Qualification for _____ requires certification as a business owned and operated by a woman or a minority. A. set-asides B. codicils C. product liability insurance D. professional liability insurance

A. set-asides

Which of the following is an example of a second career entrepreneur? A. Cynthia, a 24-year-old, starting a consultancy business after graduating from college. B. Mark, a 30-year-old, starting a new business venture in stock trading after the failure of his previous business in real estate. C. Ursula, a 60-year-old, starting a business in shrimp trading after being retired for 5 years. D. Timothy, a 62-year-old, joining a real estate agency as a sales representative, after being retied for 4 years.

C. Ursula, a 60-year-old, starting a business in shrimp trading after being retired for 5 years. Second career entrepreneurs are people who begin their businesses after having retired or resigned from work.

Which of the following is true as an advantage of businesses run by a group of tight-knit family members? A. Succession issues don't crop up in family-owned businesses. B. Role conflicts never happen in family owned businesses. C. Board of members are not used in family-owned businesses. D. Communication-based integration is most effective in family-owned business.

D. Communication-based integration is most effective in family-owned business.

Government contracting funds which are earmarked for particular kinds of firms, such as small businesses, minority-owned firms, women-owned firms, and the like, are known as _____. A. collective investment scheme B. cooperative fund C. certified items D. set-asides

D. set-asides

Which of the following would have a very short-term approach to planning? A. Individuals who look for opportunities to achieve their goal, even if the opportunity isn't the one related to their original goal. B. Individuals who develop long-range plans for all aspects of the business and act based on the plans they've developed. C. Individuals who plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. D. Individuals who are comfortable with planning and act based on the plans they have developed.

A. Individuals who look for opportunities to achieve their goal, even if the opportunity isn't the one related to their original goal.

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 resource 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 having prior knowledge of the house-painting business

A. Martin hiring more house painters to meet demand

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.

The key difference between a family council and a board of directors is that: A. the council is comprised of unrelated members while the board is comprised of family members. B. the board of directors maximizes communication while the council works on unique company problems. C. the council is to keep the family involved while the board is focused on running the business. D. the board can seek legal advice while the council gathers legal advice from the board.

C. the council is to keep the family involved while the board is focused on running the business.

Which of the following is one of the most common behaviors found in successful entrepreneurs? A. Preemption B. Frigidness C. Personalization D. Passion

D. Passion There are five aspects of behavior that most successful entrepreneurs display. These are not the only possible behaviors that you could consider, but they are behaviors that have been shown in the research to relate to success among entrepreneurs. The five behaviors include passion, perseverance, promotion/prevention focus, planning style, and professionalization.

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 provides industry-specific knowledge to martin? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having worked in a house-painting company before starting his own business

D. Martin having worked in a house-painting company before starting his own business

Which of the following is the most effective approach for avoiding role conflict? A. Keep family issues out of the family business B. Keep separate rules for family members and employees C. Have constant role reversals D. Have decisions narrowed down for family members based on family necessities

A. Keep family issues out of the family 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.

Which of the following is not listed as a challenge for the late career entrepreneur? A. access to financial backing B. adjusting to the entrepreneurial life C. keeping personal finances out of the business D. reestablishing self-confidence

A. access to financial backing

Access problems for women- and minority-owned small businesses crop up most often as: A. differences in labeling. B. discrimination in financing. C. problems involved in business contacts. D. the presence and absence of certain skills.

B. discrimination in financing.

About 400,000 new firms a year are started by teams, with about 320,000 started by: A. solo entrepreneurs. B. family teams. C. unrelated business associates. D. five or more team members.

B. family teams

Like every person, every small business is unique. There is no way to predict how the company will progress in the growth process. True or False

False; Like every person, every small business is unique. But just as we all go through childhood and adolescence on the way to adulthood, so do entrepreneurs' small businesses. There is a lot of predictability in this growth process, and knowing the developmental stages of the business life cycle can help you better understand your business.

The competency suggested by exchange relates to the organizational and business processes of a firm called basic business competency. True or False

False; The competency suggested by boundary in BRIE theory relates to the organizational and business processes of a firm called basic business competency.

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

False; The key difference between a family council and a board of directors is that the function of the family council is to keep the family involved while the board is focused on running the business. The board includes significant nonfamily membership.

The majority of new businesses are run by a solo entrepreneur. True or False

False; The majority of new businesses are run by a solo entrepreneur.

The slowest growing sector of all U.S. businesses is women-owned businesses. True or False

False; Women-owned businesses are one of the fastest growing sectors of all U.S. businesses. Between 1997 and 2012, the number of private businesses with at least 51 percent female ownership increased by 54 percent, while the rate for firms overall was 37 percent.

Access problems for women- and minority-owned small businesses crop up most often as discrimination in marketing True or False

False; Access problems for women- and minority-owned small businesses crop up most often as discrimination in financing. This means that they may not be given the same access to funds or contracting opportunities that white male-owned firms are given.

For corporations, certification for businesses owned by women or minority is handled by organizations that are not affiliated with the government or big business. True or False

True

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.

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

An examination based acknowledgement that the firm is owned and operated as specified is known as _____. A. performance analysis B. certification C. multi source assessment D. homologation

B. certification

The extent to which a firm meets or exceeds the standard business practices for its industry is known as _____. A. bootstrapping B. professionalization C. effectuation D. Perceived Organizational Support (POS)

B. professionalization

Which of the following comprises a family business? A. A firm in which two or more families own a stake in a company but with no authority for daily management B. A firm in which no family members are involved in the management of the business C. A firm in which two or more families are involved in the occasional management of the business D. A firm in which one family owns a majority stake

D. A firm in which one family owns a majority stake

Which of the following relates to the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business? A. Determination competencies B. Basic business competencies C. Resource competencies D. Opportunity competencies

D. Opportunity competencies

Most businesses run by teams are not family related. True or False

False; In fact 53 percent of teams are spouses or life partners working together with another 18 percent having different arrangements of family members working together. Only 15 percent of teams are composed of unrelated business associates.

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

False; Although in 2012, there were 8.3 million businesses owned by women, women-owned firms accounted for only 4 percent of small business revenue nationally.

Workers are opting for early retirement as corporations merge, downsize, and reorganize. True or False

True; Firms are offering attractive retirement packages to encourage employees to voluntarily leave the organization. Workers are opting to accept generous offers to retire early.

One way entrepreneurs display passion is by being persistently focused on the business. True or False

True; Passion is displayed in three ways: (1) by looking at the challenges of the business in a creative way, (2) by being persistently focused on the business, and (3) by being absorbed by the tasks and concerns of the business.

Entrepreneurs who develop plans focused on the most important aspect of the business first are known as _____. A. critical-point planners B. opportunistic planners C. comprehensive planners D. reactive planners

A. critical-point planners

Competencies are defined as: A. forms of business-related expertise. B. forms of personal development model. C. different forms of self-assessment. D. different forms of personality theories.

A. forms of business-related expertise.

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

Identify the simplest form of discrimination with regard to women and minority entrepreneurs within the U.S. population. A. Certification B. Role conflict C. Access D. Collusion

C. Access

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 basic business competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having prior knowledge of the house-painting business

C. Martin getting his company registered

Which of the following is best thought of as a type of learned optimism in successful entrepreneurs? A. Apathy B. Professionalization C. Perseverance D. Cognition

C. Perseverance Perseverance is best thought of as a type of learned optimism, the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not immediately known.

_____ entrepreneurs are people who begin their business after having retired or resigned from work in corporations at or after the age of 50. A. Occasional B. Helical C. Second career D. Veteran

C. Second career

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.

Which of the following is true with regard to women in small businesses? A. Women-owned businesses are the slowest growing sector of all U.S. businesses. B. Women-owned firms accounted for 25 percent of small business revenue nationally. C. Women prefer less-risky firms, which also tend to be firms with lower returns. D. Women prefer more high-tech firms, as well as firms where technology is central to the business than men.

C. Women prefer less-risky firms, which also tend to be firms with lower returns.

Certain businesses demand higher safety related rules. For example, window cleaners that specialize in high-rise buildings have certain rules and safety protocols. These specific rules would comprise the _____. A. specialized business professionalization B. infant-industry argument C. industry-specific knowledge D. key business functions

C. industry-specific knowledge

A business action that has been widely adopted within an industry or occupation is known as _____. A. best business practice B. specialized business professionalization C. standard business practice D. expert professionalization

C. standard business practice

Which of the following organizations tracks experts in family business? A. Association for Family Business Foundations B. Association for Small Business Entrepreneurs C. Family Business Management Institute D. Family Firm Institute

D. Family Firm Institute

_____ are completely passive, waiting for cues from the environment to determine what actions to take. A. Opportunistic planners B. Critical-point planners C. Comprehensive planners D. Reactive planners

D. Reactive planners

Which of the following characterizes a habit-based planner? A. They take a long-term view, develop long-range plans for all aspects of the business, are comfortable with planning, and act based on the plans they've developed. B. They plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. C. They are completely passive and generally wait for cues from the environment to determine what actions to take. D. They don't plan, and they don't tend to react to changes in their environments.

D. They don't plan, and they don't tend to react to changes in their environments.

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

D. boundary

The organizing process to help make the most efficient use of the day is known as _____. A. promotion focus B. competence C. certification D. time management

D. time management

The majority of businesses run by teams are comprised of: A. five or more members. B. one member. C. three members. D. two members.

D. two members.

Habit-based planners don't plan, and they don't even tend to react to changes in their environments. True or False

True

Several models exist for the life cycle of the small business firm. Each divides the stages a bit differently. True or False

True

Skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business are called opportunity competencies. True or False

True

Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources are known as _____. A. key business functions B. competencies C. business accreditations D. business-related expertise

A. key business functions

Which of the following kinds of planners generally tend do very poorly in business, even if they do manage to get their firms started? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Critical-point planners

B. Habit-based planners

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.