Chapter 5

A carefully constructed guide for the person starting a business is a(n) _______.

business plan

Approximately how many businesses are there in the United States?

31.7 million

Which industry category accounts for the fewest number of small businesses?

Production

Which of the following is the most likely example of a production industry?

Assembly plant

Which of the following is a form of debt financing?

Bank loan

Suleiman owns a Holiday Inn franchise, which he mostly enjoys. However, he dislikes one disadvantage of franchising. What is it?

Being required to buy the franchisor's high-priced name-brand supplies instead of cheaper ones at Costco

Which of the following is not a reason for starting a small business?

Desire for a guaranteed financial return

Which of the following would least likely be started as a small business?

Electricity provider

Which of the following is an advantage to the franchisor in a franchise agreement?

Fast and well-controlled distribution of products

Which of the following would most likely be classified as being part of a distribution industry?

Grocery store

Which of the following is not considered a category in the distribution industries?

Manufacturing

What is the significant advantage of small business that helps retain effective employees who could earn more at a larger firm?

Personal relationships with employees

What is the primary reason for small business failures?

Poor management

Who (or what) actually lends the money for Small Business Administration loans?

Private lenders

Which of the following is not one of the significant contributions of small business to the economy?

Providing dividends to stockholders

Your friend wants to open a new restaurant and is looking for management resources. She recently learned about an organization of more than 10,000 retired and active businesspeople, including veterans, women, and people of color, who volunteer their services to small-business owners through the SBA. What organization is she looking for?

Service Corps of Retired Executives

Which of the following statements is not true about small businesses?

Small businesses create cyclical unemployment.

Which group may face challenges founding and/or funding a business due to minimum age requirements?

Teenagers

Who typically manages a small business?

The founders/owners

Which of the following is a form of equity financing?

Venture capital

The following statement answers which major question that a business plan should address? "This business will serve more than 200 customers by the end of the year and employ seven full-time employees."

What are the goals for the business?

You have decided to open a pet store and have signed a contract with Pets 'R' Us, Inc. You and the company have drawn up an agreement that allows you to use the company's name and its methods of doing business, to receive training, and to use its advertising materials. In exchange, you will pay a one-time fee and recurring fees. In this agreement, Pets 'R' Us is the _______ and you are the _______.

franchisor; franchisee

All of the following are reasons people go into business except the _______.

guaranteed path on the corporate ladder

Beto's business sells snacks, souvenirs, and craft items to tourists in Galveston, Texas. This is an example of a _______ business

distribution

Innovative ways to do a job with less effort and at lower cost is at the root of the _______.

increases in productivity for the past two hundred years

Henry decides to start his own business designing websites for other businesses. Henry's business would be classified as a _______.

service business