Quiz Ch 5 BA_1301

Businesses close down for many reasons. Which of the following is NOT a typical reason for a business failure?

Expenses were lower than the owner expected.

Mark Ghermizian had quit his job and was looking to start a small business so he could be his own boss. When he read that people spend up to fifteen minutes every day staring at a bathroom stall door, he decided he would find advertisers who wanted to pay to have their advertising messages on bathroom stall doors. Since he has his idea, Ghermizian's next step is to:

choose a form of business organization

In buying an existing business, the prospective buyer should ask questions about the operation of the business. Which of the following would be an appropriate question to ask?

-Is the business operating at a profit? -Why are you selling? -Are there any problems with the business? -Will the customers stay with the business?

A business plan:

-describes in detail the idea for the new business and how it will be carried out -is used to persuade lenders and investors to finance the venture -may take many months to write -serves as the first operating plan for a new business

_____ financing is a form of business financing consisting of borrowed funds that must be repaid with interest over a stated time period.

debit

Jeff Arnold and Reggie Bradford created WebMD, an Internet provider of health care information. During the development of this high-growth company, Arnold and Bradford attracted a group of investors who purchased stock in their company and provided them with ______ financing.

equity

Established small businesses are defined as companies that have been in business at least fifteen years and employ between 50 to 500 employees.

false

The first step in starting your own business is the creation of a unique marketable idea.

false

One of the advantages of owning a small business is:

flexibility

Which of the following is NOT a reason why small business thrives in the United States?

guaranteed profits

An advantage of a small manufacturer over a large manufacturer is the speed with which new products can be introduced to the marketplace.

true

One of the reasons why there has been a dramatic increase in the number of small business startups is rapidly changing technology.

true

The Small Business Administration (SBA) assists small businesses by providing advice in management and financial matters.

true

The two forms of business financing are _____ (borrowed funds) and _____ (ownership funds).

debt; equity

Jon P. Farmer is the founder of Kolopua Hawaii LLC, a company that markets Pure Hawaiian Air. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. Retailing for about $5 apiece, the bottles are sold at gift shops in Hawaii, as well as to travel agents nationwide who give them to clients. As a(n) _____, Farmer's annual income exceeds $100,000 annually.

entrepreneur