Chapter 6 Quiz

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Question #1

After personal savings, the next largest source of capital for entrepreneurs is from

A friends and family.

B the Small Business Administration.

C state and local governments.

D large multinational banks.

Question #2

Small business owners often struggle in attracting qualified workers. Which of the following contributes to this problem?

A Many jobs in small firms have low pay and few benefits.

B Owners will not often listen to ideas suggested by the workers.

C Managers in small firms tend to be disrespectful to the workers.

D Employee relations are especially poor in small firms.

Question #3

A ________ refers to people with unsatisfied wants and needs who are willing and able to buy a product or service.

A consumer cooperative

B market

C consumer collective

D buyer’s cooperative

Question #4

Tucker is an intrapreneur for a multinational wearable electronics company. Which statement best describes Tucker’s duty?

A He is concerned mainly with improving the firm’s public image.

B He will use the firm’s existing resources to develop new products.

C He is expected to recruit new managerial talent for his firm.

D He will concentrate on creating new ventures that can be spun off to become independent firms.

Question #5

Caleb inherited a successful dry cleaning business from his parents. Just as his parents did, he offered high-quality service to all the customers he served. As the surrounding towns grew, several customers recommended that Caleb expand the business to offer service in new locations. He chose to maintain only one operation, so as not to lose control and to keep his work life and home life balanced. Caleb is a good example of a(n) ________.

A small business affiliate

B micropreneur

C intrapreneur

D enterprise zone participant

Question #6

One of the challenges of running a home-based business is

A an increase in business risk.

B managing the extra time on your hands.

C burdensome tax laws.

D keeping work and family tasks separate.

Question #7

A Small Business Investment Company (SBIC) is a(n)

A agency set up by state governments to provide managerial advice and support to small businesses.

B private firm that offers loans to small businesses in return for a share of ownership in the firm.

C agency of the federal government that loans money to high-tech firms.

D private investment company that is licensed by the SBA to make loans to small businesses.

Question #8

Enterprise zones are

A government-owned properties that are available for entrepreneurial ventures at a reduced cost.

B similar to incubator facilities but strictly run by city and state governments

C specific locations across the U.S. where entrepreneurs can set up shop and receive tax breaks for operating in these areas.

D blighted areas that contain toxic materials making them unsuitable for business operations.

Question #9

When seeking financial backing from a venture capitalist, a small business owner should realize that the venture capitalist will

A expect an ownership stake in the company in exchange for financial backing.

B not be interested in the management of the business.

C charge an interest rate that is much higher than any other lender.

D demand that the money be repaid within 90 days or less.

Question #10

In order to improve his chances of small business success, DeMarcus worked hard to prepare his business plan. Most often, a positive outcome of this exercise is

A the plan enables DeMarcus to think carefully about all aspects of his business idea.

B the plan will protect DeMarcus from failure.

C the plan will meet federal reporting requirements of the Internal Revenue Service.

D the plan ensures financing will be available from the Small Business Administration.

Question #11

Mini-Case

Pepe Pieman believes that pizza is a much more versatile meal than most people realize. As the national marketing manager for Pizza Pals, he has watched how consumers ate up barbecue pizza, Hawaiian pizza, Mexican pizza, and other new and unique combinations. His superiors, however, met his suggestions for other unusual pizzas with a negative response. Even some of his teammates laughed at his ideas. Pepe’s confidence in his ability to understand the market has led him to focus on planning a business of his own. Pepe realizes that he will take a risk when he leaves his job with Pizza Pals and sets off on a new endeavor: Pepe’s Pizzazzeria. Pepe is excited about the potential of profitably catering to the unmet desires of pizza consumers.

Pepe is confident that Pepe’s Pizzazzeria will be a success, but only if he has enough money to do things right. Since Pepe has very little personal wealth, he knows he must find financial assistance. In order prepare for meetings with bankers and potential investors, Pepe should

A develop a business plan.

B hire a public relations firm to develop promotional materials.

C read a book on entrepreneurship.

D create a partnership contract.

Question #12

Although successful entrepreneurs are more tolerant of uncertainty,

A they always protect themselves from failure by taking out lots of insurance.

B they seldom start another business after a failure.

C they strive to take calculated risks.

D they develop mental games to see themselves through the risk game, especially.

Question #13

Increased participation in small business exporting owes credit to ________.

A political constituents who have made inroads abroad.

B large events such as the Olympics that have brought attention to the potential in world markets.

C technological advances such as the Internet and PayPal for safely fulfilling orders.

D partnerships that small businesses have formed with large businesses.

Question #14

A review of small business successes and failures indicates that the

A businesses that are easiest to start offer the greatest potential for long-term growth and profits.

B restaurant industry offers the least risk for entrepreneurs.

C businesses with the potential for high profit levels tend to be difficult to start and hard to keep going.

D reason the service sector is rapidly growing is that these firms are easy to start and keep going, and offer high levels of security and growth potential.

Question #15

Austin, Aiden, and Zara wanted to open A2Z Sports Bar that serves a unique offering of beer, weekend entertainment, and a limited menu of appetizers. In one of the preliminary meetings, Zara presented a list of reasons that small businesses fail. Although many of the ideas on this list were applicable to many types of business, one challenge pertained specifically to the restaurant and bar business. The challenge he referred to was

A carrying habits of personal extravagance into the business

B borrowing money without planning just how and when to pay it back.

C underestimating how much time it will take to build a market.

D some of the easiest businesses to start have the least growth prospects and greatest failure rates.

Question #16

The business plan will include ________.

A import/export information

B names of banks the owner plans to visit

C names of employees

D an analysis of the competition

Question #17

Small businesses

A deal with similar management issues that large companies face.

B deal with very different management issues due to the very different management challenges experienced by small businesses.

C concern themselves with state-of-the-art information and accounting technology but not employee relations due to their challenge to financially support employee benefits programs.

D do not seek government funding due to the fact that the federal government has made it very clear that it must support large operations before small operations.

Question #18

Which of the following statements is characteristic of entrepreneurs?

A They have the ability to visualize a clear path.

B They prefer to be inventive rather than worry about whether the invention solves a customer need.

C They look at problems and see opportunities.

D They like certainty.

Question #19

A(n) ________ is a group of experienced professionals from different areas of business who join together to develop, make, and market a new product.

A self-directed functional team

B managerial task force

C joint venture

D entrepreneurial team