Entrepreneurs

_____strengthen the local economy by helping create jobs through the establishment of successful small businesses.

Business incubators

The minimum possible expenditure of capital and other resources in order to bring an entrepreneurial idea to market is known as:

Affordable loss

Which of the following terms best represents something a business owns that has economic value or is expected to have economic value in the future?

Asset

The purchase of substantially less than 100 percent of a business is called a(n):

Buy in

Which of the following provides a buffer for the mistakes made by a start-up business?

High margins

Which of the following is a disadvantage of purchasing an existing business?

Existing managers and employees resisting change.

The specific concept that leads to a start-up business usually comes from the _____ of the person starting the business.

Experience

Which of the following is accomplished by a small business when it secures outside investment?

It indicates a level of belief in the business and the owner.

The ratio of the value of a firm to its annual earnings is called:

the earnings multiple.

The price at which a buyer is indifferent about buying or not buying the business is called:

The point of indifference

A business that is created by separating parts of an operating business into a separate entity is called a:

Spin off

new business that has begun from scratch is called a:

Start up

A combination in which the whole is greater than the sum of its component parts refers to:

Synergy

In a _____, the buyer seizes control of the business without the permission of all owners.

Takeover

Seizing of control of a business by purchasing its stock to be able to select the board of directors refers to a(n):

Takeover

A _____ is an organization that provides financial, technical, and managerial help to start-up businesses.

business incubator

The practice of and ability to seize upon novel opportunities that become apparent during the conduct of business is known as:

leveraging contingencies.

Which of the following is one important advantage of key resource allocation?

As only assets are acquired, a subsequent business, regardless of its legal form, is not responsible for any of the acts or transactions made prior to purchasing the business.

analysis is based on the concept that the longer you have to wait to receive money, the less valuable it is right now.

Discount cash flow

are the cash flows that have been reduced in value because they are to be received in the future.

Discounted cash flow

The amount by which sales prices exceed product costs refers to:

High margins

Patents and trade secrets are examples of:

Intangible

In _____ executive volunteers contribute their time and energy in assisting start-up and struggling small businesses as a public service.

Mentoring programs

The amount for which an asset would sell, less the costs of selling the asset is called:

Net realizable value

_____ is an estimate of what an identical asset would cost to be acquired and readied for service.

Replacement value

A(n) _____ credit is a credit agreement that allows the borrower to pay all or part of the balance at any time; as the loan balance is paid off, it becomes available to be borrowed again.

Revolving

Which of the following is a disadvantage of a start-up?

Cannot easily gain revolving credit

Which of the following is most likely to increase the odds of successes for a start-up?

Choosing a business that produces high margins

Which of the following is commonly used to estimate the value of a business?

Comparable sales of other firms

Which of the following is the first step for performing due diligence?

Conduct extensive interviews with the sellers of the business

Which of the following refers to income capitalization?

Dividing projected net income excluding depreciation, interest, and owner draws, by the best return that you could expect to obtain in other investments.

The difference between original acquisition cost and the amount of accumulated depreciation is called the:

Book value

Which of the following is essential to the success of all start-ups?

Building trust in one's "story"

strengthen the local economy by helping create jobs through the establishment of successful small businesses.

Business incubators

Which of the following is the last step for performing due diligence?

Obtain sufficient capital to purchase and operate the business.

A start-up cannot

provide positive cash flows immediately.

A legal agreement that allows a business to be operated using the name and business procedures of another firm is referred to as a:

Franchise

Which of the following is one of the ways to get into small business management?

Franchising

If Sarah were to buy an existing business, which of the following disadvantages would you point out?

Difficulty in determining the worth of the business.

The process of investigating a business to determine its value is called:

Due diligence

Purchases of existing businesses may occur through _____ in which the business is bought over a period of time with money obtained from the business.

Earn outs

Which of the following is the primary goal for performing due diligence?

Finding any inefficiencies, unnoticed opportunities, waste, and mismanagement

are rules of thumb that are commonly used to estimate firm value in relation to some easily observable characteristic of the business.

Heuristics

The single greatest hurdle to a successful start-up is obtaining and maintaining sufficient cash to support both operations and growth. Which of the following is needed by a successful start-up to overcome this hurdle?

High margins

Which of the following is most likely to be achieved as the result of starting a business with established customers?

Immediate cash flows

are the only way a sole proprietorship may be purchased.

Key resource acquisition

Sam used his management skills to start a loans advising website. He started seeing clients at his home before it grew into a well-established company in the next ten years. Which of the following entrepreneurial methods did he use in the beginning, to reduce the financial risk of his start-up?

Lean method

Which of the following is most likely to be the best indicator of successful start-ups?

Level of experience of the founders

Which of the following is an excellent way to find businesses for sale?

Networking

Which of the following ensures that a new business will be critically examined by outsiders who have no vested interest in the owners' idea, product, or service?

Securing outside investment