MGMT 159: Ch. 6 Entrepreneurship & Starting a Small Business

Economics

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals is

Microeconomics

The study of individual economic behavior for particular products or services

What two tasks are important to complete when writing a business plan?

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

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

- Cover letter - Executive summary - Company background

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?

- Financing - Planning - Marketing

What two advantages do small businesses have over larger companies?

- More personal customer service - Able to respond quickly to opportunities

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

An inexpensive marketing research study may help you determine which of the following?

- What is an effective strategy for reaching your target market - Where to locate - Whom to select as your target market

An inexpensive marketing research study may help you determine which of the following?

- Whom to select as your target market - Where to locate - What is an effective strategy for reaching your target market

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

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

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

- bureaucratic paperwork - understanding cultural differences - difficulty finding financing

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

- follow the daily sales and expenses - manage customer records

What is the "Executive Summary" component of a business plan?

A short description of the business along with major goals and objectives

Entrepreneurship

Accepting the risk of starting and running a business.

What type of business relationship benefits both a trainee and a business owner and occurs when a trainee is hired to learn small-business management while assisting the owner in getting daily work done?

Apprenticeship

Thomas Malthus.

Carlyle called economics the "dismal science" after reading the early work of

Which part of the business plan summarizes the most attractive points of your project in as few words as possible?

Cover letter

Micropreneurs

Entrepreneurs who are not interested in starting a mammoth corporation, but rather are interested in a balance between lifestyle and work are called

business 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.

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

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

What term is given to individuals or companies that invest in new businesses in exchange for partial ownership in those businesses?

Venture capitalists

Action-oriented, highly energetic, and tolerant of uncertainty

What are three attributes of successful entrepreneurs?

- You can sell the product at a price customers will pay and still make a profit. - It fills customers' needs.

What are two indications a business idea is a good opportunity?

What advice is helpful for someone wanting to learn small-business management?

You should become an apprentice or work for a successful entrepreneur.

business plan

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).

To keep track of daily sales, expenses, profits, inventory control, customer records, and payroll a small business needs a good

accounting system

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

The executive summary is the part of the ______ plan that consists of a two- or three-page management summary of the proposed venture, including a short description of the business, and discusses major goals and objectives.

business

If you want bankers or other investors to provide capital for your business venture, it is essential that you have a(n) ______ before you talk with them

business plan

It is extremely important to develop a(n) ______ 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.

business plan

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)

business plan

A market consists of consumers with unsatisfied wants and needs who have both resources and the willingness to:

buy

business incubators

centers that offer businesses in the critical stage of early development low-cost offices and access to basic services such as accounting, legal advice, and secretarial help.

Intrepreneurs

creative people who work as entrepreneurs within corporations.

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.

exceutive

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 most common source of funding for small businesses after friends and family is ____ savings.

personal

Kayla wanted to open her own dress design business. She spent a few hours putting together a marketing plan, then selected an award-winning dress she designed and wore it to the meeting with the bank. The most likely reason she did not receive a loan was

she did not develop a thorough business plan

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

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

venture capitalist

What four items are addressed in a business plan?

- the nature of the business - qualifications of owners - any competitive advantages the business has - the target market

What two items are described in a business plan?

- the resources and qualifications of its owner(s) - the target market

Why people take the risks of entrepreneurship

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:

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

False

innovation leading to more resources

Fish farms create wealth by providing food and creating jobs. This is an example of:

A tendency toward self-discipline

Identify the principle characteristic of an entrepreneur.

False

T or F: A good business idea may work for a while, but it is not necessary to have it be sustainable in the long run.

Macroeconomics

If you are studying the operation of a nation's economy as a whole, you are learning about

- independence - profit - opportunity

Select reasons why people become entrepreneurs.

Some common causes of small business failure include:

- no experience in that business or industry - underpricing or overpricing goods or services - starting with too little capital

A small business is defined as:

- one that is not dominant in its field - one that is independently owned and operated - one that meets certain standards of size in terms of employees or receipts

Select the characteristics of an intrapreneur.

- someone who uses company's resources to launch new products - a creative person who works within a corporation - he or she generates profits by leveraging a firm's human financial and physical resources.

increasing

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:

- he or she generates profits by leveraging a firm's human financial and physical resources. - a creative person who works within a corporation - someone who uses company's resources to launch new products

Select the characteristics of an intrapreneur.