Practice & Mindset of Entrepreneurship

True or false. An angel investor is frequently a family member or close friend.

False

True or false. Crowdsourcing would be the fastest way of raising financial capital for your business.

False

True or false. Deliberate practice is the process of learning from good failures that provide valuable new knowledge that can help a startup innovate and stride ahead of its competition.

False

True or false. Entrepreneurs should not conduct due diligence on potential venture capital investors.

False

True or false. If an entrepreneur issues convertible debt, he or she will lose control of the company.

False

True or false. In early-stage financing, small amounts are given so that entrepreneurs can prove a business concept

False

True or false. Some people expand the 4 Ps to include people and owner personality.

False

True or false. Studies have shown that people with a high IQ will be more likely to achieve success.

False

True or false. You would like to raise funds for a foodbank in your local community. Kickstarter would be an excellent source for the initial funds.

False

True or false. According to the text, bankruptcy or forced sale is probably the biggest failure for a startup.

True

True or false. Cultural differences may influence the way we approach failure

True

True or false. Experimentation is a form of planned failure that is necessary for achieving goals.

True

True or false. In a pitch, it is a good idea to use the 4 Ps framework. Using the framework will organize your review of the product and make sure your pitch is complete.

True

True or false. In the investor model, crowdfunding backers will expect an equity stake in your business.

True

True or false. In the patronage model, investors will contribute to your project with no expectation of direct return.

True

True or false. Modern sales is genuine and creative, adds value, and builds relationships.

True

True or false. Researchers have suggested that the origins of fear of failure may lie in parent-child relations.

True

True or false. Seed-stage financing consists of small amounts of capital to help entrepreneurs prove a concept.

True

True or false. The experience of the cofounders and previous successes will influence an investor's willingness to invest in your company

True

True or false. When borrowing from friends and family, it is better to treat the arrangement as a formal loan.

True

What percentage of startup businesses start without any formal investment? a. 98% b. 75% c. 50% d. 24%

a. 98%

What is social capital? a. Having a network of people who willingly cooperate, exchange information, and build trusting relationships b. People with whom you connect on social networks c. All of your friends and family members d. Business contacts and vendors

a. Having a network of people who willingly cooperate, exchange information, and build trusting relationships

Which of these questions will not provide information for the revenue model? a. How will my service add value to my customer? b. How much will my customers be willing to pay? c. How many customers do I need? d. How much cash can be generated from sales?

a. How will my service add value to my customer?

When someone states, "I don't have money to start a business," what fact might one consider? a. Most businesses start without any formal investment. b. This is a valid reason for not starting a business. c. Formal investment will be needed to make a successful company. d. People who have no money cannot start a business.

a. Most businesses start without any formal investment.

What action will most likely be required of someone who starts his/her company as a sole proprietorship? a. Obtain a license or business permit in your jurisdiction b. File for status as a C corporation c. File for status as an S corporation d. File as an LLC

a. Obtain a license or business permit in your jurisdiction

In an LLC, how are profits and losses reported? a. On individual tax returns b. On the corporation's tax return c. On both the corporate and individual tax return d. On either the corporate or individual tax return

a. On individual tax returns

Which of the following can be affected by the type of legal structure your company has? a. The authorities you need to notify, taxes, record-keeping, and decision process b. Taxes and ability to sue the company c. Taxes and marketability of your company d. Taxes only

a. The authorities you need to notify, taxes, record-keeping, and decision process

What is the advantage of angel investor funding? a. You may gain advice and guidance. b. You will not have to pay for the investment. c. You will not be expected to use your own money toward your business. d. The funding is easy to attain.

a. You may gain advice and guidance.

What two sources of investors are available for a private company? a. accredited investors and family/friends b. family/friends and shareholders c. investors and family/friends d. investors and banks

a. accredited investors and family/friends

The general rule for a new startup is to a. avoid seeking investment for as long as possible b. try to get as much funding as possible as soon as possible c. to immediately line up one committed investor with deep pockets d. seek many small investments from a wide range of people right away

a. avoid seeking investment for as long as possible

What are the two types of costs that should be taken into consideration when understanding cost drivers? a. cost of goods sold and operating expenses b. cost of startup and cost of operations c. cost of pre-startup and cost of operations d. employee costs and infrastructure costs

a. cost of goods sold and operating expenses

The process of raising capital for a new venture from a large audience, usually through the Internet, is called ____________. a. crowdfunding b. penny pinching c. crowdsourcing d. bootstrapping

a. crowdfunding

Pricing is based on the amount the customer is expected to pay for the product, its perceived value, and the degree to which the price can be raised or lowered depending on: a. market demand and competitor pricing. b. manufacturing costs and location. c. marketing campaigns and customer freedback. d. wholesaler disounts and retail markup.

a. market demand and competitor pricing.

Another term for an income statement is: a. profit and loss statement b. income tax statement c. balance sheet d. credit report

a. profit and loss statement

The financial report that measures the financial performance of your business on a monthly or an annual basis is: a. profit and loss statement b. income tax statement c. balance sheet d. credit report

a. profit and loss statement

What is the simplest and most inexpensive form of legal structure for startups? a. sole proprietorship b. general partnership c. C corporation d. S corporation

a. sole proprietorship

What should a startup focus on when thinking about funding? a. Focus on following your balance sheet. b. Focus on the money on hand. c. Remember how much money you will make when the business is successful. d. Build a strong financial forecast.

b. Focus on the money on hand.

This action allows the stock to be purchased on the open market and gives investors a chance to get a return of cash. a. liquidation b. IPO c. exit plans and clauses d. company registration

b. IPO

______ consist(s) of small amounts of capital given to help prove a concept. a. Startup loans b. Seed-stage financing c. Startup financing d. Early-stage financing

b. Seed-stage financing

What is a major risk in following legal advice found on the Internet? a. The advice may be given by a lawyer who does not have an official office. b. The advice may not be strictly accurate or relevant to your type of business. c. The service is free and there is no paperwork to document the advice. d. Sample documents and forms will not be available.

b. The advice may not be strictly accurate or relevant to your type of business.

Of the following, what best describes the value of crowdfunding? a. Projects are easy to conduct. b. There are various options to funds other than giving a part of the company away. c. It is relatively risk free. d. It is the easiest way to get worldwide recognition.

b. There are various options to funds other than giving a part of the company away.

How does the author suggest that the Internet's legal resources be used? a. To access low-cost legal forms and advice b. To identify the type of legal counsel you will need c. To seek advice from free legal services d. To find sample documents that match your industry, products, and services

b. To identify the type of legal counsel you will need

The act of clearly presenting and describing a product or service to others is called ___________. a. the marketing mix b. a pitch c. a business plan d. an opportunity

b. a pitch

Crowdfunding and crowdsourcing would both be considered which of the following strategies? a. formal fundraising b. bootstrapping c. angel funding d. none of these

b. bootstrapping

What is the name given to the process of building a business with very little funding? a. seed startup b. bootstrapping c. zero funding d. skeleton funding

b. bootstrapping

A business model: a. means the same thing as a revenue model b. focuses on how the product or service will serve a market need c. determines how profits will be made d. determines how revenue will be earned

b. focuses on how the product of service will serve a market need

When valuing a seed-stage, startup, or early-stage company, which of the following is most likely to be considered? a. the company's history of sales b. how much time it will take for the business to become profitable c. the length of time invested in developing the product or service d. the amount of capital already raised by the founders

b. how much time it will take for the business to become profitable

The cost of running the business, including rent, utilities, administration, salaries, marketing, etc., is referred to as which of the following? a. cost of goods sold b. operating expenses c. infrastructure costs d. nonsales costs

b. operating expenses

What feature of registering a company allows you to set aside a portion of your stock for future employees? a. reserve funds b. option pools c. stock reserves d. employee stock option plans

b. option pools

A change in direction in response to a small failure is called a ________ a. failure b. pivot c. termination d. retrenchment

b. pivot

What support service is offered by the U.S. Patent and Trademark Office? a. general advice to startup companies b. pro bono legal program c. small business grants d. tax preparation services

b. pro bono legal program

This dimension describes the type of social ties you have or don't have. a. relational b. structural c. dimensional d. cognitive

b. structural

Revenue can be described as which of the following? a. all the money that company has to work with b. the money from loans, sales, and contributions c. money gained from the sale of goods or services d. money gained from sales minus the cost of creating the goods

c) money gained from the sale of goods or services

______ is a rigorous process that evaluates an investment opportunity. a. Investment investigation b. Valuation c. Due diligence d. Investor assessment

c. Due diligence

What are the "3 Fs"? a. The three major sources of formal funding. b. A slang term meaning angel investors. c. Family, friends, and fools. d. Free financial funding.

c. Family, friends, and fools.

What two characteristics should a lawyer have when working with a startup? a. Years of experience and willingness to work at reduced charges b. Knowledge of laws across states and knowledge of the industry c. Industry knowledge and a willingness to work with startups d. Knowledge about all aspects of the business and laws across states

c. Industry knowledge and a willingness to work with startups

Which of the following is an advantage of bootstrapping? a. You can expand your business faster. b. You will avoid risk. c. Outside investors are more likely to fund you if you have bootstrapped. d. All of these.

c. Outside investors are more likely to fund you if you have bootstrapped.

What is the relationship between a growth mindset and grit? a. People with a growth mindset have less grit. b. People with a fixed mindset have more grit. c. People with a growth mindset have more grit. d. Mindset is unrelated to grit.

c. People with a growth mindset have more grit.

The traditional marketing mix is made up of these four main elements, known as the 4Ps: a. People, Prospect, Presence, Pitch b. Process, Presentation, Perception, Profit c. Product, Price, Promotion, Place d. Package, Passion, Perspective, Personality

c. Product, Price, Promotion, Place

______ is/are provided to help implement an entrepreneur's research and development. a. Startup loans b. Seed-stage financing c. Startup financing d. Early-stage financing

c. Startup financing

A brand strategy can best be described by which of the following? a. The logo and labeling on the product or service b. The plan to market the product c. The plan to communicate the brand messages to the target audience d. The plan that organizes, controls, and legally protects the brand

c. The plan to communicate the brand messages to the target audience

The primary goal of the business pitch is which of the following? a. To have people immediately purchase your product or service b. To finalize your audience's commitment to funding your product or service c. To start a discussion that may lead to a favorable outcome d. All of these

c. To start a discussion that may lead to a favorable outcome

Who is involved in the due diligence process? a. only angel investors b. only venture capitalists c. angel investors and venture capitalists d. banks

c. angel investors and venture capitalists

The costs that include design, material, manufacturing, packaging, and other costs before a sale can be made to the customer is referred to as: a. customer directed costs b. presales costs c. cost of goods sold d. operating costs

c. cost of goods sold

Using the Internet to attract, aggregate, and manage ostensibly inexpensive or even free labor from enthusiastic customers and like-minded people is called _____________. a. crowdfunding b. penny pinching c. crowdsourcing d. bootstrapping

c. crowdsourcing

Unlike Kickstarter, Crowdfunder and Circle Up ________________. a. allow funding requests under $1000 b. allow funding requests over $5 million c. give backers the opportunity to become shareholders in a company d. do not allow companies to offer equity as a reward

c. give backers the opportunity to become shareholders in a company

Which of the following reflects the three dimensions of social capital? a. financial, product, and service b. financial, production, and market c. relational, structural, and cognitive d. relational, durational, and commitment

c. relational, structural, and cognitive

What business entity refers to a business owner who has not formed a seperate entity to run the business? a. sole practitioner b. self-employed c. sole proprietorship d. nonentity small business

c. sole proprietorship

Equity financing is defined as ______. a. the value of the total company assets b. the value a company earns and borrows against c. the sale of shares of stock in exchange for cash d. a debt incurred by a company

c. the sale of shares of stock in exchange for cash

Which of the following is a professional investor who generally invests in early-stage and emerging companies because of perceived long-term growth potential? a. crowdfunder b. angel investor c. venture capitalist d. friend

c. venture capitalist

Different revenue streams may affect which of the following: a. the industry your company operates in b. the geography your company will operate in c. who your customers will be d. all of these

c. who your customers will be

__________ consists of larger amounts of funds provided for companies that have a team in place and a product or service tested or piloted, but as yet show little or no revenue. a. Startup loans b. Seed-stage financing c. Startup financing d. Early-stage financing

d. Early-stage financing

Which of the following is true about a revenue model? a. It is the same as a business model. b. It is a separate planning model from the business model. c. It is minor component of the business model. d. It is a key component of the business model.

d. It is a key component of the business model.

Venture capitalists often reject plans and proposals for which of the following reason(s)? a. the business is not a good fit with the fund's criteria b. the VC only invests in companies with a referral c. the VC does not operate in your geographical area d. all of these

d. all of these

What businesses can use crowdfunding? a. mostly photographers and filmmakers b. mostly high-tech startups c. mostly retail and real estate d. all of these

d. all of these

A(n) ______ is a type of investor who uses his or her own money to provide funds to young startup private businesses run by entrepreneurs who are neither friends nor family. a. seed investor b. bridge investor c. equity investor d. angel investor

d. angel investor

The process of creating a name, term, design, symbol, or any other feature that identifies a product or service and differentiates it from others is known as: a. marketing b. positioning c. packaging d. branding

d. branding

What is the best advice for building networks? a. build networks with people who are powerful b. build networks with people in your industry c. build networks focusing on investors d. build networks with people who share your values

d. build networks with people who share your values

How much money can be raised through crowdfunding? a. only small amounts, under $1,000 b. small amounts, generally under $5,000 c. as much money as can be raised through family and friends d. from small amounts to amounts in the millions of dollars

d. from small amounts to amounts in the millions of dollars

Which of the following is included in the traditional marketing mix framework? a. mindset b. ideation c. market research d. product

d. product

With which of the 4 Ps is the question "How will they know my business exists?" associated? a. price b. product c. place d. promotion

d. promotion