Entrepreneurship

A business owner sells ownership to a retirement fund for the employees

Employee Stock Ownership Plan (ESOP)

What are three characteristics of entrepreneurs?

Responsible Disciplined Honest

Courage

Takes risks in spite of possible losses

Which are three reasons to buy a franchise instead of starting a business from scratch?

Proven System Easier Financing Exclusive Geographic Area

Owned by no one; pays no U.S federal tax

Nonprofit Corporation

A SCUBA instructor is interested in opening a dive tour business. She is preparing a presentation to a group of potential investors that will include a value proposition. Of the options below, which three should be included in the value proposition?

Overview of the business what services will be offered how the business differs from the competitors

The owner of a pet daycare is presenting a plan to investors to expand the facility and promises the center will meet the needs of customers with a variety of schedules. What is a legitimate value proposition for potential customers?

Providing extended hours to pickup and drop off pets before and after work

What is a legal reason to practice ethics in your business?

to avoid lawsuits

The owner of a popular seafood restaurant needs to hire a new chef

1. Identify the skills required of the new chef 2. Write the job description, including minimum and desired requirements 3. Post an ad in places most likely to be viewed by qualified candidates 4. Accept and review applications to assess the most qualified candidate

Double-taxed, but best for international businesses

C Corporation

What is a primary benefit of starting a new business without purchasing a franchise or buying an existing business?

Developing your own rules

Terminates upon death of a partner

General or Limited Partnership

The owner of a housekeeping business wants to target customers for its services.

Psycho-graphic- Home owners with busy lifestyles that don't have time to clean themselves Behavioral- Home owners who are looking for promotions and discounts on cleaning services Demographic- Home owners with higher incomes Geographic- Home owners who live in neighborhoods near the business

Easy to setup, but has unlimited liability.

Sole Proprietorship

Which are two benefits of using angel investors to help start a business?

Angels often accept a lower return on investment compared to other sources of equity capital. Angel investors typically do not expect to be paid until the business begins making money

The owner of a tire shop in a large city wants to reach the largest number of people with promotional efforts. Which method should be used?

TV advertising

What is the primary advantage of the General Partnership versus a Sole Proprietorship?

More than one person is responsible for financial backing

The owner of a landscaping business is developing a cash flow budget for the coming month. If the beginning cash balance is $1,500, what will be the ending cash balance?

$3,350

A beekeeper is analyzing the cash flow for his business for the prior year. What was the ending inventory value?

$6,500

The owner of Quality Electrical is analyzing financial parts of the Income statement including Net Sales, Total Cost of Goods Sold, Gross Profit, Total expenses, Pre-Tax Profit and Net Profit. Match each figure to the correct calculation in the income statement worksheet

A. -$85,030 B. -$18,545 C. -$42,485 D. - $27,615

The owner of a gourmet chocolate shop creates treats that have unique flavors derived from cocoa grown only in specific regions of the world. On which segment of the supply chain should the owner focus?

Between the gourmet chocolate shop and the base chocolate suppliers

Which characteristic would be beneficial to an entrepreneur?

Doesn't give up easily

The owner of a gas station on one side of town wants to retire and offers to sell the station to a competitor located on the other side of town. The competitor agrees to cash out the seller, merge the two businesses, and continue operating both locations. This is an example of which exit strategy?

Harvesting

An experienced residential painter wants to move his family to a new town. Before he moves, he needs to determine if there is sufficient demand for his painting business in the new community. Which two questions should the painter research?

How many competitors are in the area? What are the spending patterns of potential customers in the area?

A fitness trainer provides her services to clients as a sole proprietorship. What are the tax implications for this structure?

Income earned by a sole proprietorship passes to one owner to be taxed

A law is passed increasing the minimum wage from $10 to $15 per hour. A gourmet pizza restaurant is popular for obtaining its ingredients locally. Which two factors are most responsible for the price increase?

Increased raw material costs Increased labor costs

An entrepreneur wants to become the sole proprietor of a sandwich shop. Based on the estimates provided by the entrepreneur, will the bank approve her loan?

No, because her debt ratio is too high

Match each cost or expense with the proper category of an income statement.

Operating expense- advertising Operating expense- insurance cost of goods sold- labor cost of goods sold-materials operating expense- rent revenue- sales

What is the primary drawback of a Sole Proprietorship?

Unlimited Liability

A carpenter builds and remodels residential decks. Classify the carpenter's cost according to how each cost acts in connection with the number of decks built and remodeled.

Variable cost- Building permits paid by the carpenter for new and remodeled decks Fixed cost- Professional license fee to sit for the state builders' exam Variable Cost- Travel to the residences of customers to build and remodel decks Variable Cost- Woods for building and remodeling decks

A travel agent wants to own her own business. She is researching the business opportunities that exist if she specializes in booking cruise ship vacations. Which cruise add-on should be promoted from revenue perspective?

Shore excursions

The owner of a computer training center wants to know the book value of all the equipment in the center at the end of the year. Which financial statement provides this information?

Balance sheet

A real estate broker employs 10 real estate agents. The broker provides offices, administrative support, and marketing for her agents. Which of the following should outsourced?

Internet services

Kim went to school and studied to be a chef, he loves cooking and worked hard to master his craft so he could open his own restaurant after graduation, but Kim's family pressured him to take over the family horticulture business instead. Which characteristic might cause Kim's business to fail?

Kim lacks enthusiasm for the business

An entrepreneur moves into a small town and notices several stores selling guns and ammunition. The entrepreneur loves to compete in competitive shooting events. Based on the scenario provided, what should be emphasized in marketing to attract customers?

Location

Empathy

Sensitive to thoughts and feelings of others

Successful entrepreneurs typically posses which three characteristics?

Tenacious, Adaptable, Responsible

Which is one of the greatest benefits of entrepreneurship?

Being your own boss

After a self-assessment, potential entrepreneur has learned that he knows nothing about accounting and keeping records for a business. Based upon his finding, what should this entrepreneur do?

Enroll in a beginning level business accounting course at a local community college

A software trainer needs more corporate customers. She begins the sales process.

1st- Obtain List of potential customers 2nd- Use market research to select demographics and psychographic prospects 3rd- contact people on the list 4th- close the sale 5th-complete transaction

An electrician has fixed costs of $1,500 per month. The only variable costs are needed for labor and supplies. How many repairs are needed to break-even for the year?

450 repairs

The owner of a software training company with 40 employees has decided to outsource the payroll and payroll-related functions of the business. Which responsibility would be included in this outsourcing?

Benefits administration

A member of a band writes a new song. He wants to protect his song from being recorded or sold by other bands. Which type of intellectual property protection will safeguard a song?

Copyright

A DJ notices the number of customers attending her Saturday night dances is decreasing. What should the DJ do to create more loyal repeat customers?

Create a Facebook page about the dances and make changes based on customer comments/ suggestions

What are three characteristics of entrepreneurs?

Creativity, Determination, Enthusiasm

Which are three rewards of entrepreneurship?

Helping the community Doing work your way Potential for greater wealth

An entrepreneur wants to purchase a fleet of food trucks to start a mobile restaurant business. The entrepreneur is writing business plans for the new business. Match each primary target audience with its type of business plan

Investors: Executive summary Investors: oral presentation Investors: Investor's business plan Business owner: operational business plan

How would a perspective entrepreneur benefit from a personality self- assessment?

It can identify strengths and weaknesses in the entrepreneur's leadership style

A chef is interested in opening a restaurant in a nearby town. He wants to learn more about possible competitors. Where should the chef go to obtain a list of restaurants in the nearby town?

Local Chamber of Commerce

Match each type of networking with its opportunity for information sharing.

Local community- attendance at a Chamber of Commerce event Your industry- participation in a specialized trade show Online communities- posting on twitter or Linkedin Face to Face acquaintances- having conversations including one- sentence elevator speech

The owner of a pet supply store wants to expand her business and by boarding animals. She has designed plans to add a 30' x 60' kennel onto the back of her retail building.

Permit

An individual is starting a janitorial services business and is trying to secure new clients. The individual has been contacting potential customers for a month but has only one customer so far. Which step in the sales process is the individual failing to execute?

Qualifying Sales Leads

Similar to a C Corporation, but taxed at a lower rate

S Corporation

A carpenter wants to start his own business building custom cabinets. Unfortunately, he has no business training and needs assistance writing a business plan, finding funding, and obtaining general advice. Which agency should the carpenter utilize?

SBA

The owner of a rapidly growing landscaping business is finding the workload increasingly difficult to manage projects, acquire clients, supervise employees, keep records and pay bills. What business is being implemented in this example?

Separation of Duties

An interior designer has learned the she must pay-self employment tax on her individual earnings. Which type of legal structure must pay self-employment tax?

Sole proprietorship

A business is legally structured as C corporation. What are the tax implications for this structure?

The corporation pays taxes and each of the share holders pays taxes

An entrepreneur wants to own a bakery. She opens a bakery that specializes in wedding cakes. After 6 months the business fails and the bakery must close. Which choice should the entrepreneur make based on this failure?

The entrepreneur should evaluate why the business failed and identify the strengths and weaknesses of the business. Then she should apply what she learned to any future startup, so it will have a greater chance of success

Which two are advantages of buying a franchise?

Branding Marketing assistance

A HVAC repairman has been operating his own business for three years. Demand for his services is growing and he is finding it difficult to keep up with customer visits. Which factor will help the HVAC repairman choose the best candidate that meets this human capital need?

Whether the performance of the candidate can be assessed

Flexibility

Ability to adapt, willingness to change

A welding shop owner rents space in a building and needs a $5,000 in supplies to complete a large project for a new customer. The bank has turned down a personal loan request. What is the most practical source of funding for the materials needed to complete this customer job?

Asking for an advance payment from the customer whose large order is the reason the materials are needed

The owner of a house cleaning business is seeking new customers for his low-priced services. Which method of segmentation is the owner using?

Behavioral

A chef is considering opening a restaurant and wants to identify the benefits and drawbacks of various business opportunities.

Buy a franchise: Benefit: branding success Drawback: pays a royalty Start a new business: Benefit: build your own way Drawback: riskiness Buy an existing business Benefit: has customers Drawback: expensive

Dividing ownership of a privately held company into shares sold to the public

Initial Public Offering (IPO)

An automotive has noticed that a local major competitor has several vehicles parked outside his garage waiting for service. The mechanic learns that many people complain about the long wait. Which variable should be used by the automotive mechanic to attract these customers?

Speed of service

An entrepreneur notices new demand for products featuring characters from a recent movie. The entrepreneur finds a manufacturer of kitchen products featuring these character. Based on the scenario provided, what should be a primary concern of this entrepreneur?

Reliability of supply

Which are three risks of entrepreneurship?

Long hours, potential business failure, financial insecurity

A software development consultant works with several clients. Some of the clients are competitors. What is a consequence if the consultant violates confidentiality by discussing a client's project with another client?

Loss of clients and possible lawsuit

A consultant wants to use a form of personal communication to market his services to businesses during a conference. Which form of communication should be used?

Networking

An individual starts a babysitting business with a loan of $1000. The loan is for 2 years at a 5% COMPOUND interest rate. How much will the individual owe by the end of the loan assuming nothing is paid until the end of the 2 years term.

$1,102.50

The owner of a used car sales business is analyzing the cash flow for his business for the prior year. In January, the opening inventory balance of automobiles was $208,000. What is the ending inventory value?

$100,000

A welder has arranged for a loan from a family member in the amount of $10,000 with an annual simple interest rate of 6%. The loan is due in 12 months. What is the amount of simple interest due at the end of the 12 month loan period?

$600

A massage therapist wants to open her own spa. She researches the prices charged at the three local competitor spas and estimates she can average $80 per customer visit. Match the correct figure to the appropriate location in the break-even formula.

A. Fixed Costs = $245,400 B. Average Price = $80 C. Variable Cost = $3.00 D. Break Even Point in units = 3,187

A pizza maker has come up with a new takeout restaurant concept that sells only large gourmet pizzas. Match the correct figure to the appropriate location in the break-even formula.

A. Fixed Costs = $380,000 B. Average Price = $20 C. Variable Cost = $7 D. Break Even Point in units = 29,231

Patience

Accepts that goals are not reached overnight

An entrepreneur who has a hobby in leathercraft wants to turn it into a business. She wants to sell purses, belts, and other leathercrafts from her home. Which opportunity for starting a leathercraft business would have the highest probability of success?

Build an online storefront

Which three C's must be addressed in all types of business plans?

Concept Customers Capital

An entrepreneur was building a website for a new dog grooming business. Through internet searches, the entrepreneur found many pictures to use on the new business's website. Which type of intellectual property protection is at issue in this example?

Copyright

The owner of an online retail business dropships merchandise from her wholesale suppliers directly to her retail customers. Which expense of her business is variable?

Cost of Shipping

The owner of a beauty salon has had a successful business for ten years. She now feels she needs to focus attention on business sustainability because of the number of sales have dropped rapidly over the last year. Which action should be taken to enhance the sustainability of her business?

Determine the factors driving sales

Which is one of the greatest risks of entrepreneurship?

Loss of money

A photographer enjoys traveling and having freedom over her own schedule. She would like to turn her photography hobby into a business. Which are the two greatest benefits she might experience by turning her hobby into a successful business?

Making her own rules Satisfaction

Transferring ownership to people who already operate the business

Management Buyout

An entrepreneur would like to open a pizza restaurant. A survey of customers in the area reveals several complaints about existing pizza restaurants. The entrepreneur notices that most complaints are about deliver orders being delayed and pizza arriving cold. Which two competitive factors are being addressed by this business opportunity?

Quality Service

A mechanic just graduated from motorcycle repair school and wants to start a business because there is a lack of motorcycle repair shops in the local town. Given the facts provided, which opportunity would be the best choice for the motorcycle mechanic to open a business?

Start a new business and invest $50,000 in modern diagnostic tools.

Which of the following should be addressed in the description section of a business plan?

Target Markets

The owner of a new automobile sales lot is applying for two loans at the bank. Why would the bank be more inclined to approve the first loan but not the second?

The inventory loan would have the automobiles as collateral, but the operating loan has no collateral

A new dog grooming business is setting milestones that will determine if it is successful or not. The owner has decided the business will be considered successful when it starts to make a profit. Which milestone will measure profitability?

When revenue exceeds the break-even point

A non-profit organization wants to hire a Director. The organization has been operating for only a year and is growing fast. The newly created Director position will responsible for all aspects of operating the entire organization, so the founders want to hire a candidate with at least 10 years experience. Which factor could prevent the hire?

Whether the non-profit organization can afford the salary to attract a qualified candidate

The partners of an awning repair shop are assessing the amount of money needed to start a business at a new location. The partners have calculating that the business will generate more than enough revenue to cover monthly expenses after its second month in operation. What is the amount of start-up capital the partners will need to open the new awning repair business?

$84,920

A fitness trainer wants to create a legal structure that will help protect her from lawsuits. She will have no partners or employees.

Limited Liability Company

A farmer providing custom farming and tractor services averages averages $1,000 per day in revenue with a gross profit margin of $40. How many prospects should the farmer have in their active clients listing at all times at a minimum?

20

The owner of a real estate office prepared a cash flow budget for the coming month. The beginning cash balance was $1,500 Match the dollar amount to the correct line item on a cash flow budget:

Available cash: $6,500 Cash outflow:$4,600 Cash inflow:$5,000 Ending cash balance:$1,900

A family owns a tractor sales and supply store. Over the past decade sales of large tractors and implements have decreased as many of the old farms in the community have sold and been subdivided into smaller residential hobby farms. Given the facts provided, which action would be most likely to increase the sustainability of the business?

Add a line of small lawn and garden tractors

An auto mechanic opens a business in a community that has a history of auto repair shops delivering poor quality workmanship. How can the new auto mechanic regain the trust of local customers?

Advertise a free 90-day warranty on all repairs

A property care business provides landscaping maintenance, debris cleanup, and snow removal. The owner is reviewing several requests for its services. Which potential new customer will generate the highest gross revenue over the next year?

Apartment complex paying $175 weekly

An entrepreneur invents a new kind of ice cream scoop that is heated in a microwave oven to make scooping ice cream easier. What should the entrepreneur do to protect the invention?

Apply for a patent on the ice cream scoop

Gabe has worked as a journeyman electrician for an employer for the past 16 years. He is paid a good salary. His only dissatisfaction is the hours are long and often when he requests time off he is denied because of customer workload. Which benefit of entrepreneurship will Gabe most enjoy?

Autonomy

Based upon the education and skills gained from the years of vocational training as an auto mechanic, as well as having grown up in a family of entrepreneurs, a young adult decides to open an auto mechanic shop. Which customer group will this new auto mechanic business support?

Businesses

After a self-assessment, a potential entrepreneur has learned that she has a very low risk tolerance. Based upon this finding, which approach might be less stressful for the entrepreneur to have her own business?

Buy an existing business that is already successful.

The owner of a mobile food truck plans to sell tacos, hamburgers, and other foods to employees in a large office complex. Before opening his business, the owner will most likely need to obtain which of the following documents from each employee to verify they have completed a course in food handling safety?

Certificate

The owner of a car detailing business wants to develop a reputation for customer service. The owner is developing policies and procedures to guide the staff in this effort. Which documented procedure covers the area of customer service?

Customer Complaints

A successful software trainer has decided to open a corporate training business. The software trainer is putting together an organizational chair and assessing what job roles will be needed. What are some of the expected roles of those employees on the highest level of the organizational chart?

Developing succession plans and building a board of advisors

A mobile lunch truck is introducing a new seasonal salad. Which group of people would be the most likely to purchase this new salad?

Employees who work at nearby businesses

The owner of a pizza delivery business is seeking new customers. The owner has identified a group of potential customers that have moved into some new housing within reaches of his drivers. Which method of segmentation is the owner using?

Geographic

A home remodeling business wants to identify customer segments to target its services. Match each method of segmentation to its potential customers.

Geographic- Setup a studio with a gallery of sample photography Behavioral- Homeowners who respond to promotional discounts Demographic- Homeowners with higher incomes Psychographic- Homeowners who like modern decor and conveniences

Best for a single member seeking low risk

Limited Liability Company

An entrepreneur has been working for a flooring business in a neighboring town. He feels he is ready to open his own flooring business in his local community. Which should be emphasized in marketing to attract customers to his new business?

Lower Prices

A photographer wants to turn her hobby into a business. She is researching the business options available. When 100 potential customers were surveyed, they provided the following responses: Which opportunity for starting a photography business would have the highest probability?

Setup a studio with a gallery of sample photography

A business owner is applying for a loan with a bank. The bank uses a standard credit application form that asks the business owner about her personal income, bank accounts, credit cards, current balances outstanding, whether she rents or owns her house and other personal information. Which three are factors that affect credit scores?

Payment history on existing loans Amounts owed on existing loans Types of credit already in use by the applicant

The owner of a new landscaping company has set a number of milestones for the first year of his business. Achieving which of the following goals will show that the business has broken even or better?

Profitable operations

A fitness trainer in a neighborhood is trying to add new consumers who have recently moved into the neighborhood. What is effective for attracting new customers?

Promotional Discount

A local bakery wants to develop close relationships with its customers to encourage return business. What is the best option for the bakery to accomplish this goal?

Provide a free baked good each quarter to customers who signup to receive a monthly newsletter

An independent gas station sits besides a busy highway. Half of its customers are travelers passing through the area. Why would the gas station charge more for purchases made with a credit card?

To offset processing fees charged by the credit card companies

Which two groups benefit most from a well-written business plan?

Business owner Investors

An entrepreneur wants to own a flower shop and researching the business options available. When 100 potential customers were surveyed, they provided the following responses: Which opportunity for starting a florist business would have the highest probability of success?

Buy an existing florist business and enhance it so customers have the option to also place orders online

The owner of a small successful hardware store has died and left the business to his children. None of his children want to operate the business. They decide to sell. The business has a book value of $876,400 and annual earnings of $1,050,600. Four companies have made offers to buy the hardware store. Which is the better offer?

Company C has offered to pay three times the book value

A horse owner loves training animals. She would like to turn her hobby of training horses into a business. Which two are the greatest entrepreneurial risks being taken to start this business?

Loss of free time Financial uncertainty

An entrepreneur invents a new kind of ice cream scoop that is heated in a microwave oven to make scooping ice cream easier. The entrepreneur discuss his idea with a manufacturing company who agrees to produce the ince cream scoop so the entrepreneur can sell it. Which part of the supply chain needs to be addressed?

Negotiated costs

A photographer wants to protect work she is about to create. Match each type of intellectual property protection with the products the photographer might create.

Patent- Unique type of portable tripod Copyright- website gallery of stock photos available for purchase Copyright- photographs of a wedding Trademark- a logo representing the photographer's company brand

An auto mechanic specializes in transmission repairs, which often cost between $1,000 to $5,000. Which operating policy should the owner establish to possibly keep these customers and acquire their business?

Payment terms on approved credit

Businesses accept many forms of payment in exchange for goods and services.

Cash- government back currency Check- payable note used by account owner to pay debt Debit card- electronic deduction from existing account Line of Credit- a loan to purchase now and pay later

What is a primary drawback of starting a new business without purchasing a franchise or buying an existing business?

Greater chance the business will fail

Exchanging ownership for cash, either by acquisition or merger

Harvesting

A beekeeper wants to start a seasonal business renting hives to farmers to pollinate their orchards and crops. The beekeeper believes the business will cover its own costs after three months, and that start-up expenses for hives, trucking, and other costs through that same time will be $18,000. What is Total Financing Required by the beekeeper?

$29,700

The owner of Reliable Appliance Repairs is analyzing financial parts of the income statement including Net Sales, Total Cost of Goods Sold, Gross Profit, Total Expenses, Pre-Tax Profit and Net Profit. Match each figure to correct location in the Income Statement worksheet.

A.$45,144 B.$18,500 C.$26,644 D.$9,325

A child daycare center needs to identify a value of proposition that will help parents feel secure about using their services. Which two initiatives meets this objective?

Providing live web cams parents can access from the Internet by using a secure logon. Offering a list of references from other parents

An entrepreneur discovers that residents in a small rural area travel an average of 10 miles to shop at the nearest grocery store. The entrepreneur finds an old two story ranch house for sale located on a busy road in the center of the rural area. What will the entrepreneur need to obtain before proceeding?

Zoning variance