Chapter 5 Wksht

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Business Plan
answer

A carefully constructed guide for the person starting a business
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SCORE
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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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SBA
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A government agency that assists, counsels, and protects the interests of small businesses in the United States
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Venture Captial
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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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Small-Business Institutes (SBIs)
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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 Buiness
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A business that is independently owned and operated for profit and is not dominant in its field
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Frachisee
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A person or organization purchasing a franchise
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Franchise
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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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Franchising
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The actual granting of a franchise
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Franchisor
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An individual or organization granting a franchise
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True
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The SBA has defined a small business as one independently owned, operated for profit, and not dominant in its field. True or False
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False
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The various types of businesses attracting small business are generally grouped into service industries, distribution industries, and financial industries. True or False
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False
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Small businesses are generally managed by professional managers. True or False
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True
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Small firms have traditionally added more than their proportional share of new jobs to the economy. True or False
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False
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Economically, the U.S government is not concerned with whether or not small businesses make it. True or False
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False
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SCORE is a group of active business executives offering their services to small businesses for a fee. True or False
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False
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A small-business investment company (SBIC) is a government agency that provides venture capital to small enterprises. True or False
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False – Franchisee
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The purchaser of a franchise is called the franchisor. True or False
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False
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An agreement between two franchisors in which the two franchisors offer their products together is called double franchising. True or False
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True
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International trade will become more important to small-business owners in the new century. True or False
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B
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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 businesses d. Lack of brand-name recognition e. Inability to compete with well-established brand names
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E
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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 the 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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A
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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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D
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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. They 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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C
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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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D
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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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E
answer

Shonta started a graphic design firm a year ago. The business has done well, but it needs a lot more equipment, computers, and employees to continue expanding. Shonta thinks she can get all the money she will need from her bank. What advice might you give to her? a. She is right—the bank is likely to lend her as much as she needs because banks primarily focus on supporting small businesses. b. She is crazy—banks do not lend money to small businesses but only to well-known, well-established organizations. c. She should sell her business immediately before it fails because most small businesses fail during the first five years. d. She should not accept any new clients so that she can end the need to add additional equipment and employees. e. She should consider alternative sources of financing because banks provide only a portion of the total capital to small businesses.
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E
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Volunteers for SCORE are a. mostly university business professors. 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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B
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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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C
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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 a 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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