BUSI 1301 Ch. 7

In the context of various funding options for small businesses, which of the following statements is a difference between angel investors and venture capital firms?

Angel investors are wealthy individuals, whereas venture capital firms are companies.

Lowell runs a unisex salon and has six 10-hour workdays. If a customer requests him to stay open on the seventh day, he always obliges. He also provides home services if requested. Which entrepreneurial characteristic is most likely highlighted in the given scenario?

Energy

Richard is a wealthy and successful businessman who is well known for financing many successful start-ups. He has earned a sizable amount of profit by providing capital to start-ups in return for a share of their profits. In the given scenario, which of the following statements is true of Richard?

He is an angel investor.

Howard is a young entrepreneur who is invested in creating a new form of social media. He is sure of his idea and believes that it will be successful in the long run. However, he is careful not to be overoptimistic about it and works on other ideas as well. In the given scenario, which of the following statements is true of Howard?

He is confident but not overconfident regarding his abilities.

Brian had started a new business venture using majority of his savings. However, his divorce affected him monetarily because of which he had to shut down his business. Which of the following threats is highlighted in the given scenario?

High risk of failure

Which of the following is a drawback of buying a franchise?

If the national brand suffers, so does the business.

Richard, an employee in an investment firm, was dissatisfied with the way his superiors handled business dealings. For that reason, he quit his job and started his own business so that he is able to make all management decisions without interference from anyone. Which advantage of entrepreneurship is highlighted in the given scenario?

Independence

Gemini Inc., a large conglomerate, offered Timothy's new logistics company the much required financial support in exchange for a 40% ownership in the company. It also provided Timothy with an experienced group of people to help him make crucial decisions for the company. In the given scenario, which of the following statements is true of Gemini Inc.?

It is a venture capital firm.

Runion Bank is well-known for providing funds to start-ups. The bank lends money to an entrepreneur at an interest rate of 5%, which is to be repaid only after the business earns a sizable profit. If the business fails, then only the primary amount needs to be returned. In the given scenario, which of the following statements is true of Runion Bank?

It provides loans to entrepreneurs.

Mabel has a business idea of starting a store that would only sell hair products. Although she needs to raise capital to start her business, she does not want to share the ownership of her firm with anyone else. With a good appetite for risk, which of the following financing resources would be most ideal for her to start her business?

Personal credit cards

Charles owns a restaurant that is thematically modeled into representing the pop culture of the 1980s. While setting up the restaurant, Charles took care of everything himself, from interior decoration to menu and music. He even got the permit for the restaurant himself. Which entrepreneurial characteristic is highlighted in the given scenario?

Self-reliance

In the context of funding options for small businesses, the__________assists entrepreneurs by partially guaranteeing loans from local commercial lenders.

U.S. Small Business Administration

Which of the following is a powerful contribution made by small businesses to the U.S. economy?

Vitalizing inner cities

Lois wants to start an art gallery. However, because of lack of adequate funds, she decides to borrow money from a bank. The bank is hesitant to give money to Lois because it cannot verify whether her business would be able to earn enough profit to repay the borrowed amount within the stipulated period. However, after a thorough research, the bank grants her the money. In the given scenario, Lois uses _____ to fund her business.

a loan

In the context of opportunities and threats, overhead costs for small businesses:

are often lower than big companies.

In the context of the U.S. economy, small businesses:

are often the first to contract when times are tough.

A__________is a formal document that describes a business concept, outlines core business objectives, and details strategies and timelines for achieving those objectives.

business plan

Small business start-ups are likely to find that getting commercial loans are:

difficult because lenders are reluctant to give loans to firms that do not have a track record.

Robert wants to start an independent recording studio. In order to finance his start-up, Robert seeks help from Esther, a successful business magnate. Esther agrees to fund Robert's venture as long as she receives a 20% share of the profits made by Robert. In the given scenario, Robert receives the financial resources to start his business:

from an angel investor.

Technological tools such as the Internet and email have:

made it easy for small business owners to manage their firms on the go.

In low-income countries, a high percentage of entrepreneurs are considered__________.

necessity entrepreneurs

Ruben owns an astronomy-themed restaurant. The entire restaurant resembles a planetarium. He has also installed a projector that transforms the ceiling into a night sky. Ruben used most of his savings to fund this venture and also borrowed funds from his friends and family. In the given scenario, Ruben used _____ to fund his business.

personal resources

Rudy, a food truck owner, has sizable followers on his website where he personally interacts with them and thanks them for their support. He also lets his followers know his location and the menu for a day in advance. The opportunity of _____ is highlighted in the given scenario.

providing personal customer service

Buying an established business is a better plan than starting your business from scratch because:

the organizational structure is in place.

Nestor wants to open a new event management company. Deveon, a multinational company, agrees to fund his business on the condition that Deveon be given 50% ownership in the company. In the given scenario, Deveon is most likely a(n) _____.

venture capital firm