BUSN 12

Small businesses have contributed to the U.S. economy by: a. fueling innovation. b. embracing existing markets. c. specializing in mass production. d. increasing its customer base.

a. fueling innovation.

Which of the following is a threat to small businesses? a. A bigger regulatory burden compared to large businesses b. Limited scope for providing effective customer service c. The unavailability of technology d. Higher overhead costs compared to large businesses

a. A bigger regulatory burden compared to large businesses

Which of the following nations is most likely to have the lowest percentage of entrepreneurs? a. A nation that places complex regulations on businesses b. A nation that provides a low level of employment protection c. A nation with a business-supportive socio-political culture d. A nation with a low per capita income

a. A nation that places complex regulations on businesses

Which of the following is a similarity between buying an established business and buying a franchise? a. Both find getting financing less challenging. b. Both have challenging logistics. c. Both have high first-year failure rates. d. Both need a lot of time to establish a customer base.

a. Both find getting financing less challenging.

When starting a business from scratch, _____. a. the logistics can be challenging b. it is easy to get credit from both lenders and suppliers c. it is easy and quick to build a customer base d. the chances of first-year failure are minimal

a. the logistics can be challenging

Which of the following is a similarity between angel investors and venture capital firms? a. Both are components of crowdfunding. b. Both put in money in exchange for a share of ownership. c. Both restrict themselves to funding only large corporations. d. Both are used to fund nonprofits that run independent of government aids.

b. Both put in money in exchange for a share of ownership.

Which of the following is a characteristic of successful entrepreneurs? a. Apathy b. Confidence c. Intolerance of uncertainty d. Intolerance of failure

b. Confidence

Eugene Playem, a small firm that develops games, wants to raise capital to develop a new expensive video game. The firm's finance team plans to find several video game enthusiasts online, who can afford to invest money for the video game's development. In this scenario, which of the following funding options has Eugene Playem planned? a. Personal resources b. Crowdfunding c. Bootstrap d. Micro-laundering

b. Crowdfunding

_____ is a characteristic that most successful entrepreneurs possess. a. External locus of control b. Energy c. Intolerance of failure d. Apathy

b. Energy

Sheila wants to start her own business that would specialize in fashion accessories. However, she decides to continue with her current job at Potters Fashion Inc. as a fashion consultant for another three years to get to know the industry better. Which of the following entrepreneurial strategies is Sheila executing? a. Avoiding uncertainty b. Gaining experience c. Implementing a visionary plan d. Developing an external locus of control

b. Gaining experience

In the context of various launching options when starting a new business, which of the following statements is a drawback associated with buying a franchise? a. Its logistics can be challenging. b. It has less opportunity for creativity. c. It involves a lot of pressure. d. It lacks management expertise and consulting.

b. It has less opportunity for creativity.

Which of the following is an advantage of starting one's own business? a. Steady and fixed income b. Minimal workload c. Independence d. Minimal risk

c. Independence

Which of the following is a drawback of buying an established business? a. It lacks a developed organizational structure. b. It takes time and money to build a new customer base. c. It may entail inheriting the previous owner's mistakes. d. It is more challenging to get financing and credit.

c. It may entail inheriting the previous owner's mistakes.

_____ are small segments of a market with fewer competitors than the market as a whole. a. Target markets b. Market collectives c. Market niches d. Exhaustive markets

c. Market niches

People who risk their time, money, and other resources to start and manage a business are known as _____. a. executives b. employees c. entrepreneurs d. regulators

c. entrepreneurs

Entrepreneurs with an internal locus of control tend to: a. have trouble learning from past mistakes and end up repeating those mistakes. b. deny the acceptance of personal responsibility for actions that cause failure. c. feel that their success or failure is largely the result of their own actions. d. put too much faith in the ability of others to act and decide about their own fate.

c. feel that their success or failure is largely the result of their own actions.

In the context of small businesses and the economy of a country, which of the following factors can bring down entrepreneurship rates? a. A lack of unemployment security b. Limited employment opportunities c. Minimal business regulation d. A high level of employment protection

d. A high level of employment protection

_____ are individuals who finance start-up companies with high growth potential in exchange for a share of ownership. a. Peer-to-peer lenders b. Crowdfunders c. Philanthropists d. Angel investors

d. Angel investors

In the context of various strategies that can help you become a successful entrepreneur, which of the following is a difference between Small Business Development Centers (SBDCs) and the Service Corps of Retired Executives (SCORE)? a. SBDCs have a common online platform for small businesses, whereas SCORE does not have a website for itself. b. SBDCs have volunteers who work for them, whereas SCORE has only permanent salaried employees. c. SBDCs assist only small businesses, whereas SCORE assists only large corporations. d. SBDCs provide a range of free services for small businesses, whereas SCORE provides free counseling for small businesses

d. SBDCs provide a range of free services for small businesses, whereas SCORE provides free counseling for small businesses

Tyron needs financing for his new business venture. He feels that the best way to obtain the funds would be to tap his personal financial resources. In the context of this scenario, the most appropriate source of personal finance for Tyron would be: a. Bob, Tyron's rich uncle with whom he has a close relationship. b. Chris Poulson, a businessman who charges high-interest rates on loans. c. First Reserve, Tyron's local bank, where he has banked for years. d. Albert Anthony, a well-known venture capitalist who Tyron has met once.

a. Bob, Tyron's rich uncle with whom he has a close relationship.

Which of the following is one of the largest crowdfunding sites in terms of traffic? a. Kickstarter.com b. Businessinsider.com c. Cesim.com d. Futurelearn.com

a. Kickstarter.com

Audrey launched a start-up called Baintley Inc. Steven, her wealthy friend, believes that her company has high growth potential. He invests in Baintley Inc. in exchange for a share of ownership. In this scenario, Steven is a(n) _____. a. angel investor b. corporate philanthropist c. alternative lender d. venture capitalist

a. angel investor

Which of the following is an appealing benefit that entrepreneurs enjoy? a. Minimal workload b. Flexible schedule c. Fixed income d. Minimal risk

b. Flexible schedule

In the context of various strategies to become a successful small business owner, which of the following statements is true of an effective business plan? a. It is less than five pages. b. It takes about six months to write. c. It should not compute the initial capital required. d. It should not consider the competitive market involved.

b. It takes about six months to write.

In the context of funding options for small businesses, which of the following statements is true of crowdfunding? a. Its sites provide guarantors in case a venture fails. b. Its sites are used to funds nonprofits. c. It is more preferred by large corporations than small businesses. d. It consists of money attained through personal resources.

b. Its sites are used to funds nonprofits.

Which of the following is an advantage of starting a business from scratch? a. The entrepreneur faces less pressure in terms of securing permits and hiring employees. b. The entrepreneur gets to build his or her own business concept and structure. c. The entrepreneur can secure funding easily. d. The entrepreneur has access to an established customer base.

b. The entrepreneur gets to build his or her own business concept and structure.

Which of the following statements is true of people with an external locus of control? a. They are extremely self-reliant. b. They believe that the actions of others can control their fate. c. They feel that they have complete control over their lives. d. They validate their own efforts.

b. They believe that the actions of others can control their fate.

In the context of small business opportunities, which of the following statements is true of market niches? a. They are uniquely positioned to exploit large corporations. b. They offer more than enough potential for small, specialized companies. c. They are ideal for firms that incur high overhead costs. d. They encourage high levels of competition.

b. They offer more than enough potential for small, specialized companies.

Greg started a business of tire shops and one by one opened several shops in various parts of his hometown. However, he had to shut down all the shops because they failed to make profits. At 65 years of age, he raised capital and started Gregton Inc., which is now a well-known two-wheeler manufacturing firm in his country. Which of the following entrepreneurial traits most likely contributed to Greg's success? a. Tolerance of uncertainty b. Tolerance of failure c. Visionary knowledge d. An external locus of control

b. Tolerance of failure

_____ are companies that invest in start-up businesses with high growth potential in exchange for a share of ownership. a. Nonprofit organizations b. Venture capital firms c. Alternative lenders d. Peer-to-peer lenders

b. Venture capital firms

Entrepreneurs who mortgage their homes for the business and stake their reputation on the success of an unproven product demonstrate: a. an external locus of control. b. a high tolerance of uncertainty. c. a low tolerance of failure. d. low self-reliance.

b. a high tolerance of uncertainty.

Lindsay is planning to start a new seafood restaurant. She has considered the opinions of many consultants, friends, and family members about her business idea. Despite overwhelming negativity, Lindsay has faith in her abilities as she possesses five years of experience in this field. In this scenario, Lindsay displays the entrepreneurial characteristic of _____. a. failure tolerance b. confidence c. risk aversion d. uncertainty avoidance

b. confidence

Adrian recently lost his job and has been unsuccessful in finding a new one. To sustain himself and his family, he decides to open a small café. He believes that the café is his only economic option. Adrian is now trying to acquire funds from family and friends to open his café. In this scenario, Adrian is a(n) _____. a. venture capitalist b. preferred stockholder c. necessity entrepreneur d. angel investor

c. necessity entrepreneur

Two companies offer Gayle a job. The first is a successful, venture capital-backed, competently led start-up that has been operating for over a year. The second is a well-established corporation that has been running operations for 50 years. Gayle, after considering factors such as his family, decides to join the well-established corporation. This is most likely because: a. corporations tend to have more scope for personalized customer service. b. start-ups have high overhead costs. c. start-ups find it difficult to provide health insurance coverage to their employees. d. start-ups operate in generic markets with many competitors.

c. start-ups find it difficult to provide health insurance coverage to their employees.

In the context of how small businesses have contributed to the U.S. economy, in which of the following ways do small firms allow new thinking to take hold? a. By reapplying an existing idea to a business plan b. By refraining from producing patents c. By specializing in mass production d. By displaying a refreshing lack of bureaucracy

d. By displaying a refreshing lack of bureaucracy

In the context of funding options for small businesses, which of the following statements is true of the U.S. Small Business Administration (SBA)? a. It rents out resources and utilities to start-up businesses. b. It grants interest-free loans to entrepreneurs. c. It seeks ownership in business firms in return for financing. d. It lends microloans through community nonprofit organizations.

d. It lends microloans through community nonprofit organizations.

Which of the following scenarios illustrates entrepreneurship? a. Harry lives on the beach and whenever he needs money, he simply opens his guitar case and starts playing beside a boardwalk. b. Diane is a banker who has had a very fulfilling 30 years at the same branch of First Lenders Bank and is nearing her much-awaited retirement. c. Tommy works for the Bureau of Land Management but also paints house exteriors on weekends for a little extra income. d. Jill who has a degree in landscaping has started her own landscaping service business and has hired several employees under her supervision.

d. Jill who has a degree in landscaping has started her own landscaping service business and has hired several employees under her supervision.

Which of the following is an advantage for small businesses? a. Lower health insurance costs b. Smaller regulatory burdens c. Easily available loans d. Lower overhead costs

d. Lower overhead costs

Derek, after retiring as the CEO of Solitaire Graces Inc., decides to donate his time and expertise to assist newly established small businesses. He learns about an organization called the Service Corps of Retired Executives (SCORE), which is supported by the Small Business Administration (SBA), and joins as a volunteer. As a SCORE volunteer, in which of the following activities is Derek expected to be involved? a. Investing in small businesses with high growth potential b. Offering loans with low interest rates to small businesses c. Assisting small businesses in clearing their debts with commercial banks d. Providing free business counseling and mentoring for small business owners

d. Providing free business counseling and mentoring for small business owners

Which of the following statements is true of small businesses? a. They have lower health insurance costs than large businesses. b. They tend to have higher overhead costs than large businesses. c. They tend to avoid market niches because of the presence of more competitors. d. They have more scope to provide personal customer service than large businesses.

d. They have more scope to provide personal customer service than large businesses.

Which of the following is a reason why many members of the European Union have low entrepreneurship rates? a. They do not have well-developed property rights, making it much riskier to form new businesses. b. They do not provide employment protection to their citizens. c. They are yet to develop niche markets because their markets are far from the maturity phase. d. They provide strong unemployment insurance to their citizens.

d. They provide strong unemployment insurance to their citizens.

In the context of the U.S. economy, small businesses: a. generate about 10% of total employment in American inner cities. b. provide more health insurance coverage benefits to employees than large businesses. c. display more bureaucracy than large businesses. d. comprise more than 99% of inner-city business establishments.

d. comprise more than 99% of inner-city business establishments.

Colleen lost an important business project. According to her, she would not have lost the project if she had been organized in her work approach. This scenario indicates that Colleen most likely has a(n) _____. a. external locus of control b. high tolerance of risk c. low tolerance of risk d. internal locus of control

d. internal locus of control

Entrepreneurs must understand that no conventional lending source, whether private or government, will: a. associate with start-ups that do not have a recognized brand name. b. charge interest for start-ups that show high profit gains in its first quarter. c. lend any money to start-ups. d. lend all of a start-up's funding.

d. lend all of a start-up's funding.

According to the U.S. Small Business Administration (SBA), to officially count as a small business the: a. average revenue of the business should be more than $30 million. b. workforce should be more than 75% of the nation's employment. c. average revenue of the business should be less than $0.75 million. d. number of employees should range from fewer than 100 to 1,500.

d. number of employees should range from fewer than 100 to 1,500.