ENT 8-15

Earnings before interest, taxes, depreciation, and amortization is the same as ______

EBITDA

According to the text, why do many see failure as the path by which individuals travel to develop into entrepreneurs?

Failure can intensify the cognitive processes involved in learning, resulting in improvements in future performance

which of the following is an advantage of bootstrapping?

Outside investors are more likely to fund you if you have bootstrapped

Which of the following conditions is applicable to all not-for-profit organizations?

Profit must be reinvested and used for the organization's exempt purpose

What is a major risk in following legal advice found on the Internet?

The advice may not be strictly accurate or relevant to your type of business

which of the following is true of pitch decks?

They have no strict rules for length or style

What is the ultimate question a feasibility study is trying to answer?

Will my venture work?

Arabella went to her accountant and learned about DOI, defined as ______.

a measure of the average number of days it takes to sell the entire inventory of a company

Janis went to her accountant and learned about DSO, defined as ______.

a measure of the number of days it takes to collect on accounts receivable

In reference to crowdfunding, a backer is best described as ______

a person who contributes support in a crowdfunding adventure

Typically, LLPs are only popular among what type of business?

a professional practice, such as a legal or accounting group

A/an ______ is a type of investor who uses his or her own money to provide funds to young startup private businesses run by entrepreneurs who are neither friends nor family.

angel investor

The general rule of thumb for new startups is to ______.

avoid seeking investment for along as possible

Arya wants to produce a financial report that shows the amounts the company owes, what it owns, including the shareholders' stake at a particular date in time. She wants to produce a/an ______.

balance sheet

How should you discuss your business's weaknesses when writing your plan?

be honest, but don't dwell on it

It is important for entrepreneurs to manage the negative emotions associated with failure so they can ______.

begin the process of learning from failure

Crowdfunding and crowdsourcing would both be considered which of the following strategies?

bootstrapping

What is the name given to the process of building a business with very little, or no, funding?

bootstrapping

A 2- to 3-page document outlining the company overview, value proposition, customers, and milestones is referred to as a ______.

business brief

"Launch plan" is another term to describe a ______.

business model canvas

Justin opened a physical therapy business in a new location and hired two well-known therapists. Once the business was up and running, Justin began work on launching a restaurant in a neighboring town. With Justin at the restaurant most days, the physical therapy business began to flounder. Which startup failure is represented in this scenario?

inattention

Vivienne wants to produce a report that measures her financial performance on a monthly basis. She wants to see sales- and expense-related activities that result in profit or loss over a period of time. She is interested in producing which of the following statements?

income statement

What two characteristics should a lawyer have when working with a startup?

industry knowledge and a familiarity and comfort working with startups

Once you establish the extent of your fear of failure, which of the following would be a good step toward coping with it?

deliberately allow yourself to feel the fear

A business model ______.

describes how a venture will create, deliver, and capture value

What behavior is at the top of the failure spectrum?

deviance

A popular restaurant offers a free meal. At the restaurant, it turns out that drinks are not included. The drinks sell for above market rates. This is an example of which of the following?

direct cross subsides

Instead of "failure," a process of prototyping, testing, analyzing, and refinement is best thought of as ______.

intentional iteration

The razor-and-razor-blade revenue model ______.

involves offering an item at no or low-cost to encourage the sale of expensive complementary or disposable products later

A C corporation has transferable ownership, which refers to the fact that

it can issue stock in exchange for capital and can be passed on to new owners

______ consist(s) of larger amounts of funds provided for companies that have a team in place and a product or service tested or piloted, but as yet show little or no revenue.

early stage financing

If an entrepreneur receives $275,000 from venture capitalists in exchange for stock, what do the investors receive in return?

equity in the business

Which of the following is true about a revenue model?

its a key component of the business model

In the context of grit, committing to activities that enhance skills, as well as prioritizing improvement over perfection, is called ______.

excellence

Amy C. Edmondson, professor of leadership and management at Harvard Business School, describes a spectrum for failure that runs from blameworthy to praiseworthy. According to Edmondson, a praiseworthy reason for failure is ______.

exploratory experimentation—conducting market tests to get early feedback

what are the "3 F's" for financial assistance?

family, friends, and fools

What planning tool helps entrepreneurs test the possibilities of an initial idea to see if it is worth pursuing?

feasibility study

In which revenue model does an existing business allow another party to trade under the name of that business?

franchising revenue model

What revenue model mixes free basic services with premium or upgraded services?

freemium revenue model

Brynlee paid $500,000 for a company, $100,000 in excess of the book value. Brynlee has ______.

goodwill of 100,000

When a company has long-term investments, it means it ______.

has cash, stocks, bonds, and/or real estate that has been on its books longer than one year

How do the authors suggest the Internet's legal resources be used?

identify the type of legal counsel you will need

The term vesting can best be described as which of the following?

imposing equity forfeitures on cofounders over a certain period of time on a piecemeal basis should they not stay with the company

Nan presents her plan for a slip-on shoe that is water repellent, inexpensive, and highly fashionable. She believes that the market for the product is "everyone in the city of Seattle." Because of this, she forecasts that she will capture 40 percent of the market. What is the business plan error that Nan is incurring?

the exaggerated hockey stick

Revenue can be described as which of the following?

the income gained from the sale of goods or services

An employee has been developing a company product for the last 3 years when he decides to leave the company. That product is a glue that remains tacky for hours, enabling certain types of artwork to be performed. After he leaves the company, the employee joins another company and finalizes the glue development for his new company. Who is likely to own the rights of the intellectual property involved in the formulation of the glue?

the original company who paid for the product to be developed

Equity financing is defined as ______.

the sale of shares of stock in exchange for cash

What can be said of small failures in the entrepreneurial journey?

they are the low point but are manageable and help the entrepreneur learn

Tony owns a bicycle shop where he sells bicycles, repairs them, and sells accessories. How many revenue streams does Tony's business have?

three

Even though your business may not currently be profitable, investors will want to know how many customers you have, primarily because it will show the potential

to scale the business

Rory and Katie manufactured a smartphone-related product marketed for personal safety. Unsure about the best market segment to target, they developed a product for older adults and the general public but they decided to also market it for children. Which of the following is the most likely cause for failure here?

uncertainty

Which revenue model measures the amount of revenue generated by the number of items sold by the company?

unit sales

Users of the popular GPS app Waze periodically report driving conditions while on the road, allowing all users to benefit from live traffic updates. Waze is an example of crowdsourcing because ______.

users freely contribute traffic information for use by the app

Which of the following is a professional investor who generally invests in early-stage and emerging companies because of perceived long-term growth potential?

venture capitalist How is a seed-stage company valued?

The planning exercise that involves getting out of your usual working environment and imagining what the business could look like in three years is called

vivid vision

Founding CEO Alison led a team of talented programmers. The company quickly grew. Alison eventually stepped down as CEO because while she had strong technical skills, she realized she did not have the vision and skillset a CEO needed to lead a large corporation. Which of the following is likely the reason Alison stepped down?

lack of ability

The revenue model associated with giving permission to other parties to use protected intellectual property in exchange for fees is called the ______.

licensing revenue model

Mehmet's café sells coffee for only $.50, which is less than it costs, but Mehmet hopes customers will come for the coffee and end up buying sandwiches and pastries. What sort of pricing strategy is Mehmet pursuing?

loss leader

What qualifies someone as an accredited investor?

net worth over 1 million or income over 200,000

The feasibility study should be shared with ______.

no one, it's for the entrepreneurs eyes only

How is a seed-stage company valued?

on the anticipation of future growth

Operating expenses include which of the following?

sales, general, and administrative expenses

______ consist(s) of small amounts of capital given to help prove a concept

seed stage financing

According to the text, small companies and individuals may choose to manufacture prototypes in China because Chinese factories can manufacture in ______ batches at ______ costs.

small; low

What business entity term refers to a business owner who has not formed a separate entity to run the business?

sole proprietorship

Jose is opening a small restaurant. On weekends, he works with his cousin to construct the tables, chairs, and counters that will go into the restaurant. What is the name given to the result of these efforts?

sweat equity

Which of the following helps an entrepreneur make decisions during the initial conceptualization of the venture?

the Business Model Canvas

Which of the following can be affected by the type of legal structure your company has?

the authorities you need to notify, taxes, record-keeping, and decision processes

Key partners is an aspect of what type of plan?

the business model canvas

In a C corporation, who is legally liable for its actions?

the corporation

In an S corporation, what is the maximum number of shareholders allowed?

100

Which of the following would most likely be considered fair use of copyrighted material?

A high school teacher copies a portion of a song sheet to explain the use of timing and syncopation

how much money can be raised through crowdfunding?

From small amounts to amounts in the millions of dollars

What question are you answering in your plan when you describe the needs your product or service fulfills for your customer, the problems you are solving for them, and any evidence you have to show that your potential customers will want to buy your offering?

How will you enter the market?

In an LLC, how are profits and losses reported?

Individual tax returns

How does equity crowdfunding differ from other types of crowdfunding?

Investors are given the opportunity to become company shareholders

What is characteristic of the patronage model of crowdfunders?

Investors provide financial support with no expectation of direct return

When someone states, "I don't have money to start a business," what fact might you tell them to consider?

Most businesses start without any formal investment.

Google's "cost-per-click" model is a type of ______ revenue model.

advertising

Jimi is very interested in managing his cash. You mentioned this course to him and told him about ______, which is the number of days a company's cash is tied up in the production and sales process.

cash conversion cycle

Karter is very busy and wants to produce a financial report that details the inflows and outflows of cash for his company over the last month. He is interested in producing a/an ______.

cash flow statement

The pro forma financial statement should include at least three scenarios of your financial forecast, each containing an income statement, balance sheet, and ______

cash flow statement

Airbnb is considered an intermediation revenue model because it ______.

charges a commission for connecting home renters with home owners

The easiest way for startups to determine their company's potential is to ______

check out how similar companies in the same industry are being valued

When preparing financial projections for a business plan, be ______ in your estimates.

conservative

______ is a short-term loan that can be turned into equity when future financing is issued

convertible debt

The process of raising capital for a new venture from a large audience, usually through the Internet, is called ______.

crowdfunding

Using the Internet to attract, aggregate, and manage ostensibly inexpensive or even free labor from enthusiastic customers and like-minded people is called ______.

crowdsourcing

______ are assets that can be converted into cash within a year

current assets

The four key revenue drivers are ______.

customers, frequency, selling process, price

what is the backlog?

orders that have been received but not delivered to the customer

Which of the following are intangible assets?

patents, software programs, copyrights, trademarks, and/or brand names

Using whatever resources you have to save money while you are getting your business started is referred to as what type of strategy?

penny pinching

A change in direction in response to a small failure is called a ______.

pivot

The process of envisioning the future for a business, including what one plans to do and how one plans to do it, is called ______.

planning

______ is the company's value after it receives a round of financing

post money valuation

______ is the company's value before it receives outside investment

pre money valuation

What support service for entrepreneurs is offered by the U.S. Patent and Trademark Office?

pro bono legal program

Nour operated a successful massage and health spa in a lucrative resort location. She handled all reservations herself and if a customer called to make an appointment when she wasn't in the spa, she asked her employees to leave her a note. The notes sometimes went missing, resulting in angry customers. Which startup failure type is most likely represented in this scenario?

process inadequacy

Essential to the idea of intelligent failure is that this sort of failure ______.

provides valuable new knowledge

Brent has designed a barbeque smoker that will sell for $29.99 and appeal to campers. The product uses a disposable unit that will protect the food during smoking and make cleanup easier, which customers can replace after 8-10 uses. What revenue model is Brent planning on?

razor-and-razor-blade

When writing a business plan, you should be ______ about the chance for success.

realistic

Once you establish the extent of your fear of failure, which of the following would be a good step toward coping with it?

reframe goals so that they are more achievable

One of the main advantages of convertible debt is that it ______.

remove the need for valuation

Shareholder equity includes what two main components?

retained earnings and capital stock