Chapter 6 Business Test

The most important step in starting a business is preparation.

true

The most popular use of business plans is to persuade lenders and investors to finance the venture.

true

U.S. businesses with just a single owner and no staff acount for over $600 billion in annual sales.

true

In the United States, women own this percentage of small business. 25% 35% 50% 75%

25%

Over a ten-year period, about how many new businessed will be discontinued? Give at least five reasons why businesses started by entrepreneurs commonly close.

50% 1. lack of capital 2. low sales 3. higher than expected ecpenses 4. competitive pressure 5. owner is unprepared to manage growing business

According to the Small Business Administration, a small business is an independent business with few than ____ employees. 10 50 100 500

500

Which element of a business plan discusses the entrepreneur's short and long term goals for the business? financial plans description of the competition description of the business customer analysis

description of the business

Successful entrepreneurs tend to have all of the following characteristics EXCEPT energetic goal-oriented creative hesitant

hesitant

The source of owner-supplies money depends on the business's ownership structure. In a ______, one person will supply the money.

proprietorship

Which of the following would NOT be discussed in the operations plan section of a business plan? organization of the company sales forecast human resource plans analysis of resources needed

sales forecast

Most of the money needed to start a new business comes from the sale of stock credit given by businesses that sell products and services to the new business bank loans the entrepreneur and his/her family and friends

the entrepreneur and his/her family and friends

Small businesses have an advantage over big businesses when customers are willing to buy standard products want more individual attention prefer low cost and efficient delivery all of the above

want more individual attention

Short-term financing is obtained for a period of less than 3 months 6 months 1 year 2 years

1 year

Name at least three sources of funding for new businesses. Which the most important?

1. outside sources 2. owner's savings, bank loans, and credit card debt 3. venture capital Venture capital is the most importatnt because it is money provided by large investors to finance new products and new businesses that have a good chance to be very profitable.

Why should all small business owners develop business plans even if they are not required to obtain financing?

All small business owners should develop business plans even if they are not required to obtain financing because the owner is forced to think about important activites, the amount of time they will take, and their cost. Also the plan serves as a guide to keep the business on track.

Of all new businesses

about one-third are profitable, one-third do not make a profit but continue to operate, and one-third lose money

The most successful small business owners

establish good working relationships with professionals such as bankers, lawyers, and accountants

The first step in developing a business plan is to identify alternative plans for production and marketing write the introductory section develop the "game plan" gather and review information

gather and review information

Almost all people starting small businesses have graduated from _______.

high school

Which of the following does NOT describe a typical small business? the owner is usually the manager it is dominant in its field it serves a small market it operated in one or very few locations

it is dominant in its field

Which of the following is probably the LEAST important factor in becoming an entrepreneur? living in a major U.S. city having special skills and abilities having a real desire to be your own boss developing a good initial business plan

living in a major U.S. city

About how many new business are created in the United States every year? 62.5 thousand 625 thousand 6.25 million 62.5 million

625 thousand

What percentage of new jobs in the United States are created by small businesses? Name at least four common categories of small businesses.

60-80% 1.educational services 2. information 3. waste management 4. retail trade

Small businesses account for ___ of the U.S. gross domestic product each year. about 10 percent almost a quarter more than half about 75 percent

more than half

Small business owners

usually get direct information from their customers about what they like and dislike

If you start a new business, you need information about competitors government regulations customers all of the above

all of the above

Location is important to small retail businesses because most retailers need good customer traffic to survive many potential customers will stay away if the business is not easy to find customers generally do not want to travel long distances to find what they need all of the above

all of the above

Entrepreneurs must have a very low tolerance for ambiguity almost never own their first business while in their teens come from all age categories and educational backgrounds must have a business degree to be successful

come from all age categories and educational backgrounds

All entrepreneurship opportunities emerge from inventions and innovations.

false

Everyone who owns a business is an entrepreneur.

false

Once a business plan is written, it should never be revised and should never be updated.

false

The process of starting, organizing, managing, and assuming the responsibility for a business is called capitalism.

false

Scrubbles laundry detergent has been on the market for years. The manufacturer of Scrubbles recently added a new ingredient to give the detergent extra cleaning power. This is an example of an improvement invention innovation opportunity cost

improvement

In the United States, nearly as many small businesses close as begin each year.

true

It is easier for a small business to meet the precise needs of customers than a large business.

true

Many small businesses faily simply because they are not located in the right spot.

true