Ch. 6 Quiz Answers Essay

question

A firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company is called a(n): Select one: a. corporate raider b. takeover specialist c. financial analyst d. venture capitalist
answer

d. venture capitalist
question

Bankers and potential investors are likely to read ___________ first. Select one: a. the executive summary b. the marketing plan c. the qualifications of the management team d. the analysis of the competition
answer

a. the executive summary
question

Which of the following will not help your small business succeed? Select one: a. Services you perform are easily replicated by larger companies, such as online banking b. You provide a unique service that requires a significant amount of personal attention such as a service that provides in-home care for seniors c. Investing in a franchise d. Your product is not easily mass produced, like professional photography
answer

a. Services you perform are easily replicated by larger companies, such as online banking
question

Intrapreneurs make use of __________ to develop and launch new products and generate new profits. Select one: a. their employer’s existing human, financial, and physical resources b. their own personal financial resources c. government-supplied physical and financial resources d. old ideas abandoned by entrepreneurs
answer

a. their employer’s existing human, financial, and physical resources
question

Small businesses are important to the U.S. economy because: Select one: a. they fill-in the gaps when large businesses want to let workers go on vacation; or when large businesses want to temporarily cease production b. banks and other financial services companies would not have borrowing customers, because small businesses borrow more than large businesses c. they pay most of the tax revenue collected by the U.S. government d. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP
answer

d. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP
question

Which of the following statements is characteristic of entrepreneurs? Select one: a. They like certainty b. They have the ability to visualize a clear path c. They look at problems and see opportunities d. They prefer to be inventive rather than worry about whether the invention solves a customer need
answer

c. They look at problems and see opportunities
question

Historically entrepreneurs in the U.S. Select one: a. created wealth for themselves, but have had a minor impact on the economy as a whole. b. started many small firms that later became major corporations employing thousands of workers. c. experienced success only when they worked in partnership with the federal government. d. played an important role, but are less important now in creating jobs and wealth.
answer

b. started many small firms that later became major corporations employing thousands of workers.
question

A market consists of potential buyers of a good or service. However, for a market to exist: Select one: a. the business requires wholesalers and retailers. b. one firm must dominate in sales and product development. c. people must have unsatisfied wants and needs as well as a willingness and ability to buy. d. the product must be laboratory tested and approved by the Food and Drug Administration (FDA).
answer

c. people must have unsatisfied wants and needs as well as a willingness and ability to buy.
question

When seeking financial backing from a venture capitalist, a small business owner should realize that the venture capitalist will: Select one: a. charge an interest rate that is much higher than any other lender b. not be interested in the management of the business. c. expect an ownership stake in the company in exchange for financial backing. d. demand that the money be repaid within 90 days or less.
answer

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

A__________ is a written document that details the business idea, the target market and the business’s competitive advantage, financial resources available for the business, and the qualification of the management. Select one: a. mission plan b. marketing plan c. business plan d. statement of intent
answer

c. business plan
question

A review of small business successes and failures indicates that the: Select one: 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 potential of 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.
answer

c. businesses with potential of high profit levels tend to be difficult to start and hard to keep going.
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________are private individuals who invest their own money in potentially hot new companies before these firms become larger, publicly traded companies Select one: a. Leveraged buyout specialists b. Angel investors c. venture capitalists d. corporate raiders
answer

b. Angel investors
question

Which of the following best describes the difference between an intrapreneur and an entrepreneur? Select one: a. Intrapreneurs start nonprofit organizations while entrepreneurs start profit-seeking businesses b. Intraprenuers are practical while entrepreneurs are creative c. Intrapreneurs work within existing corporations while entrepreneurs assume the risks of starting their own business d. Intrapreneurs limit their efforts to financial investments, while entrepreneurs are involved in the management of all areas of a business
answer

c. Intrapreneurs work within existing corporations while entrepreneurs assume the risks of starting their own business
question

Two key management functions that need particular attention when starting a business are: Select one: a. human relations and accounting b. planning and financing c. marketing and public relations d. staffing and controlling
answer

b. planning and financing
question

The Small Business Administration defines a small business as a firm that: Select one: a. has fewer than 100 partners. b. is independently owned but not dominant in its industry. c. is dominant in its industry, but small in the number of workers it employs. d. has annual receipts of more than a specified amount depending upon the industry.
answer

b. is independently owned but not dominant in its industry.
question

A good business plan will: Select one: a. focus on the big picture and omit the small details of operating the business. b. describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner’s qualifications. c. be purposefully vague, since specifics can restrict creativity and flexibility. d. focus on the nature of the business and the target market, omitting personal information about the owner in order to avoid personality issues
answer

b. describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner’s qualifications.
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Small businesses: Select one: 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. 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. d. 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.
answer

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

One reason we have seen continued growth in home-based businesses is: Select one: a. the location offers a more secure operational environment. b. affordable computer and information technology makes it easier to compete. c. people need something to do while they wait to return to work for a large corporation. d. it is less risky to start a home-based business than other types of entrepreneurial ventures.
answer

b. affordable computer and information technology makes it easier to compete.

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