Chapter 5

A(n) _______ is someone accepting the risk of starting and running a business.

Entrepreneur

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

False, address the person directly if possible

Planning, ______, keeping good business records, knowing your customers, and managing employees are what it takes to start and run a small business.

Financing

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

Business ______ are 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.

Incubators

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

Micropreneurs

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

True

A banker or investor in a small business is very interested in making sure you are a person of good ______ as a small business owner.

character

The executive summary is the part of the ______ plan that consists of a two- or three-page management summary of the proposed venture, including a short description of the business, and discusses major goals and objectives.

Business

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

accounting system

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, money, funding, or financing

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

Cover Letter

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

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 is free to manage her company as she desires. This example illustrates:

Why people take the risks of entrepreneurship

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

(Name 3) Executive summary company background Cover letter Management Team Financial Plan Capital Required Marketing Plan Location Analysis Manufacturing Plan Appendix

Adam hopes to show the bank lending manager he is meeting with that he is aware of who the target market is, who the competition is, how much money he needs, and exactly how he intends to turn a profit by supplying him with a(n) ______ ______.

Business Plan

All organizations require the following:

Capital, and Information Management

A(n) ______ desires to grow a business and generate wealth, a(n) ______ desires to remain small and balance lifestyle with work

Entrepreneur, Micropreneur

A(n) ______ 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 _______ like Bill Gates and Steve Jobs.

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

Local community college classes are a good place to start to learn about business and ______

Entrepreneurship

______ refers to accepting the risk of starting and running a business.

Entrepreneurship

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

Becoming an apprentice, talking to other business owners, and working for a successful entrepreneur are all examples of effective ways to obtain ______ for running your own business.

Experience, Information, Knowledge, or Skills

______ are creative people who work as entrepreneurs within corporations.

Intrapreneurs

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

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

Venture Capitalists

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

a market

Entrepreneurs must recognize that they need competent and motivated employees. Since they can't compete with larger firms' pay and benefits, they need to:

be respectful of employees' opinions provide more challenging opportunities to learn delegate more often

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

As a small business grows, it is ______ to oversee every detail; entrepreneurs must train and motivate employees.

impossible

A necessary and invaluable aid to entrepreneurs is a competent, experienced ______ who knows and understands small business. This person can help with leases, contracts, partnership agreements, and protection against liabilities.

lawyer or attorney

A small business is defined as:

one that is independently owned and operated, one that meets certain size standards in terms of employees or receipts, one that is not dominant in its field

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

opportunities

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 (answer is one word).

plan/strategy

A good lawyer for a small business does not have to be expensive. Several prepaid legal ______ offer documents and other services for a small annual fee.

plans

Among the hurdles small businesses must overcome in starting to operate globally are:

understanding cultural differences difficulty finding financing bureaucratic paperwork

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

A(n) ______ is hired to assist the owner of a small business while gaining experience.

Apprentice/Trainee

One of the most difficult tasks is raising money for a start-up. To raise money, entrepreneurs talk with bankers and other potential investors, and try to sell their ideas. In order to have a chance, most of the time, entrepreneurs have to present a(n) ______ ______.

Business Plan

The ______ 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

More personal ______ service and the ability to respond quickly is an advantage for small businesses.

Customer

Opportunity, profit, independence, and challenge are some reasons people are willing to take the risks of being a(n) _______

Entrepreneur

What are some good ways to learn how to run your own business?

Work for a successful entrepreneur, Run a small business during your off hours, and talk to other business owners

There are a few hurdles that prevent many small businesses from engaging in the global market. Which of the following are examples of such problems?

Would-be exporters do not know how to get started. Financing is often difficult to find.

When writing a business plan, it is important to:

analyze the competition, and calculate how much money you need to start

A(n) ______ can benefit both the trainee and the business owner by hiring the trainee to learn small-business management while assisting the owner in getting daily work done.

apprenticeship

A(n) ______ is 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

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

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

international

The best way to define a(n) ______ is all consumers with unsatisfied wants and needs who have both resources and the willingness to buy.

market

Since the Executive Summary is the summary of the proposed business venture, it could include parts of the entire business ______

plan

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

providing loans providing management training providing financial advice

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, most business plans take up to 6 months to hash out completely

Entrepreneurial attributes include:

Self-Directed Self-Nurturing Action-Oriented Highly Energetic Tolerant of Uncertainty

A business that is independently owned and operated, is not dominant in its field of operation, and meets certain standards of size in terms of employees or annual receipts is a(n):

Small Business

The U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans is called the:

Small Business Administration

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:

follow the daily sales and expenses manage customer records

What is a type center that offers new businesses in the critical stage of early development low-cost offices with basic services such as accounting, legal advice, and secretarial help?

A business incubator

Bankers receive many business plans every day, so the ______ of your business plan must be written to catch their interest quickly

Summary or Executive Summary

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

Team, Managerial

Some common causes of small business failure include:

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

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

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

While a business plan is a detailed document with many sections, its overall purpose is to describe the nature of the business, the ______ market, and the ______ over the competition.

target, advantages

Chris spent his own money on marketing research, and consulted his sister Kara, who is an accountant. They spent the next few months writing a business plan. What are some business functions Chris has addressed?

Knowing your customers Planning

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