Chapter 5

Small Business Administration (SBA)

- An independent agency of federal government - Offers management and financial assistance to small business

What is a small businesss?

- Any independently owned and operated business that is not dominant in its competitive area - Does not employ more than 500 people

Small firms represent ______ of the U.S. exporters of goods.

98 percent

Which three are considered equity financing?

A personal laptop The accumulated value in a life-insurance policy The savings account of the owner

Which agency is comprised of active executives willing to provide advice and knowledge to owners of small firms?

ACE

Line of credit

Banks and other financial institutions cant grant a small business a line of credit - an agreement by which a financial institution promises to lend a business a predetermined sum on demand.

______ use a company's existing resources to launch new products and generate new profits. They are the creative people who work as entrepreneurs within corporations.

Intrapreneurs

Entrepreneurship

Process of creating and managing business to achieve desired objectives

True or false: In order to save the expense of maintaining various departments, small business owners may hire other firms to supply services on an as-needed basis.

True

Which of the following are common, primary reasons that small businesses fail?

Undercapitalization Inability to cope with growth Managerial inexperience

Collateral

a financial interest of the property and interest of company.

Business Plan

acts as a guide and reference document: +Explanation of the business: analysis of competition + Income/expense estimates" - guide and reference document - should include an explanation of the business, and analysis of the competition, estimates of income and expenses, and other information

Half of all new companies fail within the first _____.

five years

With regards to franchising, who acquires the rights to the name, logo, methods of operation, national advertising, and products?

franchisee

A small business owner must deal with ongoing worries about competition, employee problems, rent increases or changing market demand. All of these are contributing factors to which disadvantage of small business ownership?

high stress level

Venture capitalists

persons or organizations that agree to provide some funds for a new business in exchange for an ownership interest or stocks.

The founder and owner of Tom Shoes is an example of which type of entrepreneur?

social entrepreneur

Equity financing

use of personal assets rather than borrowing funds

micro-entrepreneurs

Entrepreneurs with five or fewer employees

Disadvantage of small-business ownership

High stress level High Failure rate + Undercapitalization "the lack of funds to operate a business normally" + Managerial inexperience or incompetence + Inability to cope with growth

Advantages of Small-Business Ownership

Independence Costs Flexibility Focus Reputation

Which industry is characterized by the acquiring of goods from producers or wholesalers and then selling them to consumers?

Retailing

Which agency is comprised of retired executives willing to provide advice and knowledge to owners of small firms?

SCORE

Which two of the following are volunteer agencies funded by the SBA to provide advice for owners of small firms.

SCORE ACE

Which of the following is TRUE regarding flexibility and small business ownership?

Small business owners can make and execute decision quickly.

Business Plan

Statement of the rationale for the business Step-by-step explanation of how to achieve goals

Being able to be your own boss is one of the leading reasons that entrepreneurs choose to go into business for themselves. This advantage of small-business ownership is referred to as _______.

independence

social entrepreneurs

individuals who use entrepreneurship to address social problems

All of the following are characteristic of a small business EXCEPT ______.

it carries only one product line

The SBA is the government agency that advises and assists small businesses by providing which three of the following?

management assistance training employees and owners consulting on improving operations

Jim is working on starting his own small business catering to the nutritional needs of large, mature dogs that live in tiny, inner-city spaces without opportunity for exercise. His small, specific group of customers is his ______.

market niche