Business Dynamics Chapter 6

True or false: Addressing the cover letter on your business plan "To whom it may concern" is considered preferable.

false

What type of business relationship benefits both a trainee and a business owner and occurs when a trainee is hired to learn small-business management while assisting the owner in getting daily work done?

apprenticeship

After working for a large auto manufacturing company for over 20 years, Silvia decided to start her own auto accessory store. While facing new challenges every day, Silvia enjoys being free to manage her company as she desires. This example illustrates:

why people take the risks of entrepreneurship

What is the "Executive Summary" component of a business plan?

A short description of the business along with major goals and objectives

What is the best definition of entrepreneurship?

Accepting the risk of starting and running a business

A good business plan is between 25 and 50 pages long and takes many months to write. A comprehensive business plan will include which of the following?

Executive summary Cover letter company background

Which of the following are good ways to learn how to run your own business?

Run a small business during your off hours Talk to other business owners Work for a successful entrepreneur

What happens if a borrower takes out a loan from a community development financial institution (CDFI) and fails to repay the loan?

The CDFI takes the hit and is stuck with the defaulted loan.

An inexpensive marketing research study may help you determine which of the following?

Where to locate Whom to select as your target market What is an effective strategy for reaching your target market

Select the characteristics of an intrapreneur.

a creative person who works within a corporation someone who uses company's resources to launch new products he or she generates profits by leveraging a firm's human financial and physical resources.

All consumers with unsatisfied wants and needs who have both resources and the willingness to buy are:

a market

To keep track of daily sales, expenses, profits, inventory control, customer records, and payroll a small business needs a good

accounting system

Which of the following characteristics are needed to become a successful entrepreneur?

action oriented, tolerant of uncertainty, initiative

What three items are included in the "Management Team" section of a business plan?

an organizational chart resumes of current and proposed executives job descriptions of listed positions

When writing a business plan, it is important to:

analyze the competition calculate how much money you need to start

In 2019, online retail sales reached over $365 ______, or approximately ______ percent of all retail sales.

billion, 12

Local community college classes are a good place to start to learn about starting your own

business

centers that offer businesses in the critical stage of early development low-cost offices and access to basic services such as accounting, legal advice, and secretarial help.

business incubators

If you want bankers or other investors to provide capital for your business venture, it is essential that you have a ________ before you talk with them

business plan

a detailed written statement that describes the nature of the business, the target market, the advantages the business will have over competition, and the resources and qualifications of the owner(s).

business plan

A market consists of consumers with unsatisfied wants and needs who have both resources and the willingness to:

buy

section of a business plan describes company operations to date (if any), potential legal considerations, and areas of risk and opportunity. This portion also summarizes the firm's financial condition, and includes past and current balance sheets, income and cash flow statements

company background

Which part of the business plan summarizes the most attractive points of your project in as few words as possible?

cover letter

more personal ________ service and the ability to respond quickly is an advantage for small businesses.

customer

What is a good tactic for entrepreneurs to implement in order to keep a new company growing?

delegate authority to employees

Being self-directed, self-nurturing, action-oriented, and tolerant of uncertainty are all considered characteristics of a(n):

entrepreneur

An _________ team is a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product.

entrepreneurial

Individuals who possess such attributes as being self-directed, action-oriented, and tolerant of uncertainty can make excellent

entrepreneurs

Many ________ use their time, money, and energy to turn their passions into sustainable businesses. They are comfortable being their own bosses and are not afraid of failure.

entrepreneurs

A good business plan takes a lot of time to write, but you have only a few minutes to convince readers not to throw it away. This is why your _______ summary is very important

executive

A comprehensive business plan will include cover letter, ____________, company background, management team, financial plan, capital required, marketing plan, location analysis, manufacturing plan, and an appendix

executive summary

What section of a business plan is intended to catch the readers interest quickly and convince them to read it further and not throw it away?

executive summary

a two- or three-page management summary of the proposed venture, including a short description of the business, and discusses major goals and objectives.

executive summary

In addition to good ideas, entrepreneurs must

have a burning desire to realize and actualize their dream want to see their dream become reality be action oriented

Some causes of small-business ______ include underpricing or overpricing goods or services, starting with too little capital, going into business without first learning something about the industry or market, and underestimating how much time it will take to build a market.

failure

Included in the comprehensive business plan, the ______ plan provides five-year projections for income, expenses, and funding sources.

financial

Gaining financing, knowing how to get started in exporting, and navigating bureaucratic paperwork are major hurdles to consider when getting started in ______ business

global

The Financial Plan part of a business plan should show how you plan to fund the business at various stages of the company's

growth

The expansion and development of the Internet has sprouted a world of small web-based businesses. This, among other reasons, may explain why online sales are rapidly:

increasing

According to a recent study, offering low-cost offices with basic services to new businesses in the early stages of development results in an 87% success rate of _________ graduates

incubator

All organizations require the following:

information management, capital, planning

Because investors want to be protected against any possible mishaps, it is also a good idea to include a description of ________ coverage in the Company Background portion of the business plan.

insurance

becoming an ________ is one of the best ways to learn about how to run a business.

intern (apprentice)

Since entrepreneurs can't compete with larger firms' pay and benefits, what are three ways they can motivate employees?

maintain good employee relations provide more challenging opportunities to learn be respectful of employees' opinions

Community Development Financial Institutions (CDFI) have been successful because they:

maintained financial discipline other lenders lack offer counseling on marketing strategies provide counseling on improving cash flow

Managing a small business became relatively easy with the advent of inexpensive personal computers. Inexpensive computer systems and off-the-shelf or even free, open-source software make it easy for the small business manager to:

manage customer records, follow the daily sales and expenses

The part of a business plan that includes an organization chart, job descriptions of listed positions, and detailed resumes of the current and proposed executives is called the

management team

The part of a business plan that includes an organization chart, job descriptions of listed positions, and detailed resumes of the current and proposed executives is called the __________ section

management team

The most important things investors want to know are what makes the product more desirable than what's already available and whether or not the product can be patented. In which section of the business plan should investors look to find this information?

marketing plan

___________ want to maintain a balanced life style while doing the kind of work they want to do.

micropreneurs

Some common causes of small business failure include:

no experience in that business or industry underpricing or overpricing goods or services starting with too little capital

Two advantages small firms have over large firms include more personal customer service and the ability to respond quickly to:

opportunities

Select reasons why people become entrepreneurs.

opportunity, profit, independence

The most common source of funding for small businesses after friends and family is _________ savings

personal

Entrepreneurs often come up with an idea for a new business and need financing. At this stage, it is important to develop a business _______ which forces potential small-business owners to be quite specific about the products or services they intend to offer

plan

Although there are many functions that are important in both the start-up and management phases of the business, what two functions are considered to be primary concerns?

planning and financing

The Small Business Administration (SBA) is the U.S. government agency that advises and assists small businesses by:

providing management training providing financial advice providing loans

Kayla wanted to open her own dress design business. She spent a few hours putting together a marketing plan, then selected an award-winning dress she designed and wore it to the meeting with the bank. The most likely reason she did not receive a loan was:

she did not develop a thorough business plan

________ businesses are businesses that are independently owned and operated, are not dominant in their field of operation, and meet certain standards of size in terms of employees or annual receipts.

small

Wayne is starting a small business, but needs help with management training, financial advice, and loans. He should contact the

small business administration

A business plan is a detailed written statement that describes:

t

What four items are addressed in a business plan?

the nature of the business any competitive advantages the business has qualifications of owners the target market

Learning from others is a useful way to avoid pitfalls when starting a small business. Some things you may be told would include:

to hire a good lawyer and accountant starting with enough money that finding and retaining good workers is hard

True or false: Most entrepreneurs do not get their ideas from a flash of inspiration; they come more from their passions or looking at problems.

true

True or false: Personal savings, venture capitalists, and government agencies such as the Small Business Administration (SBA) are possible sources of capital or information when starting a small business.

true

True or false: The owner of McDonald's, Ray Kroc, turned to his business associates - his suppliers - for funds to keep the business going.

true

True or false: The principles of management are similar for a small neighborhood business and a giant global firm.

true

Daniel wanted to start his own small business. After spending his own money on marketing research, Daniel asked his friend Chase to be his accountant. They spent a few months writing a business plan, which then they presented to a bank. Daniel:

understands the steps needed to start a small business

______ are individuals or companies that invest in new businesses in exchange for partial ownership in those businesses.

venture capitalists

Select the characteristics of an entrepreneurial team that will be developing and marketing a new product.

Members have complementary skills and are creative A group of experienced people Each from different areas of business

David opened his own bicycle shop 30 years ago, and although he enjoyed his work, he needed more free time. When Josie requested to work as an apprentice, David was very willing. Before long Josie was able to run the store without any help. This is an example of how:

apprenticeships can benefit both the business owner and the apprentice

potential sources of __________ for an entrepreneur are personal savings and government agencies such as the Small Business Administration (SBA), the Farmers Home Administration, the Economic Development Authority, and the Minority Business Development Agency.

capital (funding)