Ch 5 – Small Business, Entrepreneurship, and Franchises Essay

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A carefully constructed guide for the person starting a business
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business plan
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A group of retired and active business people who volunteer their services to small businesses through the SBA.
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SCORE
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A government agency that assists counsels, and sometimes struggling) firms that have the potential to become very successful.
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SBA
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Money that is invested in small ( and sometimes struggling) firms that have the potential to become very successful.
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venture capital
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Group of senior and graduate students in business administration who provide management counseling to small businesses.
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small business institutes (SBI)
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A business that is independently owned and operated for a profit and is not dominant in its fields.
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small business
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A person or organization purchasing a franchise.
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franchisee
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A license to operate an individually owned business as though it were a part of a chain of outlets or stores.
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franchise
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The actual granting of a franchise.
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franchising
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An individual or organization granting a franchise.
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franchisor
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T/F The SBA has defined a small business as one independently owned, operated for profit, and not dominant in its field.
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True
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T/F The various types of businesses attracting small business are generally grouped into service industries, distribution industries and financial industries.
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False
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T/F Small businesses are generally managed by professional managers.
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False
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T/F Small firms have traditionally added more than their proportional share of new jobs to the economy.
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True
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T/F Economically, the U.S government is not concerned with whether or not small businesses make it.
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False
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T/F SCORE is a group of active business executives offering their services to small businesses for a fee.
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False
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T/F A small-business investment company (SBIC) is a government agency that provides venture capital to small enterprises.
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False
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T/F The purchaser of a franchise is called the franchisor.
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False
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T/F An agreement between two franchisors in which the two franchisors offer their products together is called double franchising.
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False
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T/F International trade will become more important to small-business owners in the new century.
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True
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What is the primary reason that so many new businesses fail? a. Owner does not work hard enough b. Mismanagement resulting from lack of business know-how c. Low employee quality for new busnesses d. Lack of brand-name recognition e. Inability to compete with well-established brand names.
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b. Mismanagement resulting from lack of business know-how
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Businesses such as flower shops, restaurants, bed and breakfasts, and automobile repair are good candidates for entrepreneurs because they a. do not require any skills b are most likely to succeed c. can obtain financing easily. d. require no special equipment e. have a relatively low initial investment.
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e. have a relatively low initial investment
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An individual’s desire to create a new business is referred to as a. the entrepreneurial spirit b. the desire for ownership c. self-determination d. self-evaluation e. the laissez-faire spirit
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a. the entrepreneurial spirit
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What is a common mistake that small business owners make when their businesses begin growing? a. they sell more goods and services b. the put too much money in advertising c. they move beyond their local area d. they over-expand without proper planning e. they invest too much of their own money
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d. they over-expand without proper planning
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The fact that insulin and power steering both originated with individual inventors and small companies is testimony to the power of small businesses as providers of a. employment b. competition c. technical innovation d. capital e. quality products
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c. technical innovation
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In her small retail shop, Jocelyn knows most of her best customers by name and knows their preferences in clothing and shoes. This demonstrates which advantage of a small business? a. ability to adapt to change b. independence from customer’s desires c. simplified record keeping d. personal relationships with customers e. small customer base
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d. personal relationships with customers
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What advice might you give to someone looking to expand their business and acquiring more equipment and employees? a. ask the bank for a loan for all the money necessary b. don’t attempt to get the money from the bank as banks only lend to well-established organizations c. sell their business d. stop accepting any new clients to end the need for new equipment and employees e. consider alternative sources of financing as banks will provide only a portion of the total capital to small businesses
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e. consider alternative sources of financing as banks will provide only a portion of the total capital to small businesses
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Volunteers for SCORE are a. mostly university business professor b. active executives from large corporations c. generally either lawyers or accountants d. graduate business students working on projects e. retired and active businesspeople from different industries
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e. retired and active businesspeople from different industries
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An individual or organization granting a license to operate an individually owned business as though it were part of a chain of outlets or stores is a(n) a. franchise b. franchisor c. franchisee d. venture capitalist e. entrepreneur
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b. franchisor
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Manju asks for your advice in opening a new business. She plans to provide tax-related services to individuals and small-business owners in her community. Of course, she wants an attractive means of starting and operating her business with a reasonable hope of succeeding in it. What will be your advice? a. start your own independent business b. form a partnership with CPA c. consider purchasing a franchise d. forget about opening the business because it is too risky e. first secure a loan from the Small Business Administration
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c. consider purchasing a franchise

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