Bus 100 Test #2 Ch.5

A small business is one that is dominant in its field.

A. True
B. False

According to a recent survey, 44 percent of new businesses survive for at least seven years.

A. True
B. False

The small-business share of new jobs is greatest in professional services.

A. True
B. False

People under 25 and over 40 are less likely to start their own business.

A. True
B. False

A business plan is described as a control tool.

A. True
B. False

Often, owners of small businesses start their own companies because they have no "entrepreneurial spirit".

A. True
B. False

A disadvantage of operating a small business is its limited ability to obtain capital.

A. True
B. False

The SBA provides small-business owners with free counseling, courses, conferences, workshops, and a wide range of publications.

A. True
B. False

Small-business development centers (SBDC) is a university-based group that provides individual counseling and practical training primarily for members of racial and ethnic minorities.

A. True
B. False

Venture capital is invested in small firms that have the potential to become very successful.

A. True
B. False

Small businesses drive the U.S. economy. They represent _____ percent of all employer firms in the United States.

A. 49.8
B. 70
C. 65.2
D. 99.7
E. 88.6

Statistically, seven out of ten new businesses fail within their first five years. These failures are the result of:

A. disagreements among the partners
B. employee theft and embezzlement
C. a lack of capital and machinery
D. regulatory difficulties
E. mismanagement resulting from a lack of business know-how

What is the major source of capital for entrepreneurs?

A. investors
B. personal resources
C. government
D. lending institutions
E. friends or relatives

The Service Corps of Retired Executives (SCORE):

A. is a group of retired executives who volunteer services to small businesses through the SBA.
B. is a group of active managers who cousel small-business owners on a fee basis
C. provides service for a small fee
D. is a group of active managers who counsel small-business owners on a volunteer basis
E. is a group of retired executives from Sears, Roebuck and Co.

Why have women and minority entrepreneurs received special attention from the Small Business Administration (SBA)?

A. Businesses owned by women and minorities will provide over 50 percent of the jobs in this country.
B. Twenty-two percent of the loans made to women and minority business owners are past due.
C. Raising money is nagging problem for women and minority business owners.
D. About two out of three firms owned by women and minorities go out of business within four years of their founding.
E. Women and minorities have a greater knack for business.

A business plan is a carefully constructed guide that should serve as:

A. a worksheet
B. a road map to making profits
C. a technical plan
D. a financial tool
E. communication, management, and planning tools

Why are fewer small businesses in production industries, compared with distribution industries or service industries?

A. Manufacturers are up against more competition.
B. Production industries usually require large initial investments in machinery and equipment.
C. The typical entrepreneur has more skills in retailing and consumer services than in manufacturing.
D. Entrepreneurs consider manufacturing industries to be in decline and thus look elsewhere for opportunities.
E. The SBA is more willing to assist firms in service or distribution industries.

Which of the following is NOT an advangtage of a small business?

A. Ability to adapt to change
B. Potential for employee advancement is limited
C. Owners can set their own work hours
D. Close personal relationships between managers and employees
E. A checkbook and a cash-receipts journal make up the records system

Small-business investment companies (SBICs) are:

A. owned by governmental agencies, such as the SBA
B. not intended to be profit-making organization
C. organized to offer financial advice to small enterprises
D. privately owned firms that provide venture capital to small entrepreneurs
E. a source of capital for promising businesses of any size

Which is NOT an advantage of the franchisor in franchising?

A. A franchisor benefits from the motivation of the franchisee
B. The franchise can start a business with limited capital
C. Outlets are maintained according to standards
D. Distribution of products can expand at a faster rate
E. Franchisor has more capital to use for advertising

An advantage of franchising is that the franchisor retains a great deal of control.

A. True
B. False

Contract disputes are the cause of many lawsuits involving franchising.

A. True
B. False

The franchisor pays the franchisee a royalty on gross revenue.

A. True
B. False

During the last decade, the number of small businesses in the United States hs increased 49 percent.

A. True
B. False

More than 70 percent of Americans would prefer being an entrepreneur to working for someone else.

A. True
B. False

Service industries account for 25 percent of all small businesses.

A. True
B. False

Family background is a key personal factor that can determine small business success.

A. True
B. False

In 2008, at least 50 percent of all small businesses were owned by women.

A. True
B. False

A disadvantage of a small business is the:

A. heavy risk of going out of business
B. amount of financial resources available to the owners
C. ability to raise capital
D. management skills of the owner
E. all of these are disadvantages

Which question is NOT answered in a business plan?

A. How much will the new venture cost?
B. Why is the new enterprise a good idea?
C. What exactly is the nature and mission of the new venture?
D. How will the business be resolved?
E. What are the businesses personal goals?

The Small Business Training Network (SBTN) is:

A. a group of senior and graduate students who provide counseling
B. a group of retired business people who volunteer their services
C. an online training network consisting of eighty-three SBA-run courses, workshops, and resources.
D. a group that provides venture capital for training
E. a university-based group that provides practical training to owners

Studies show that the incidence of innovation among small-business workers is ______ than among workers in large businesses.

A. extremely lower
B. significantly higher
C. slightly lower
D. marginally higher
E. five times more
e.

About what percentage of all small businesses are involved in distribution industries?

A. 33 percent
B. 60 percent
C. 19 percent
D. 48 percent
E. 8 percent

Small businesses can challenge larger, established businesses by:

A. offering free services, such as warranties
B. cutting their own prices
C. becoming more responsive to consumer needs
D. aggressive advertising and promotion
E. asking the government to protect small business with subsidies and other forms of assistance.

The Small Business Administration (SBA):

A. has one office in each of the fifty states
B. was created by congress in 1953
C. was created by the Better Business Bureau
D. was bolished during the Reagan administration
E. provides loans to all small businesses

Which statement is NOT true about small businesses?

A. 91 percent of all small business have no employees
B. about 60 percent of home-based businesses are in the service industries
C. High-tech teen entrepreneurship is exploding
D. The average age of small business entrepreneurs is between 44 and 64 years old
E. over one-half of small businesses are home-based

Research shows that the typical entrepreneur:

A. did not grow up in a family-owned business
B. is over the age of 45
C. would actually prefer to work for someone else, if the right job came along
D. is an outstanding manager
E. is highly-motivated and possesses the "entrepreneurial spirit"

Franchising arrangements include all EXCEPT which of the following?

A. Coco-Cola gives a distributor the right to sell its product to retailers
B. Dairy Queen controls the marketing strategies of its franchised outlets
C. McDonald's supplies techniques and training to its franchise restaurant owners
D. Holiday Inn pays its franchisees a royalty
E. GM authorizes a dealership to sell Cadillacs to customers

One attractive (and highly successful) means of starting and operating a small business is to:

A. buy out someone else's business
B. form and S-corporation
C. start a proprietorship
D. form a partnership with other owners
E. buy a franchise

As a franchisor, you gain all EXCEPT which of the following?

A. Outlets maintained according to your own standards
B. Selective distribution of products without high operating costs
C. Guidance and advice
D. More capital available for production and promotion
E. Highly motivated franchisees, who are likely to produce more sales

A carefully constructed guide for the person starting a business

A license to operate an individually owned business as though it were part of a chain of outlets or stores

A person or organization purchasing a franchise

The actual granting of a franchise

An individual or organization granting a franchise

A group of retired businesspeople who volunteer their services to small businesses through the SBA

One that is independently owned and operated for profit and is not dominant in its field

A governmental agency that assists, counsels, and protects the interests of small businesses in the United States

University-based groups that provide individual counseling and practical training to owners of small businesses

Groups of senior and graduate students in business administration who provide management counseling to small businesses

Privately owned firms that provide venture capital to small enterprises that meet their investment standards

Money that is invested in small (and sometimes struggling) firms that have the potential to become very successful