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In the case of existing customers, _____ gives the information on the date and type of contact, since in many sales situations, it can take repeated contacts before a sale is made. A. channel data B. performance data C. intercommunication […]

Which of the following would have a very short-term approach to planning? A. Individuals who look for opportunities to achieve their goal, even if the opportunity isn’t the one related to their original goal. B. Individuals who develop long-range plans […]

Which of the following statements is true of business plans? A. Firms without a business plan are less likely to close down than firms with plans. B. External legitimacy for a firm is best established by creating business plans. C. […]

The elevator pitch is much shorter than a vision statement or tagline. Distributors and wholesalers prefer taking on start-up products as there are no setup charges involved. Answer: FALSE Unfortunately for the entrepreneur, many distributors and wholesalers are not interested […]

Factoring is a method of borrowing against payables. Small businesses start small but are intended to grow rapidly, often requiring a team of partners. Answer: FALSE High-growth ventures start small but are intended to grow rapidly, often requiring a team […]

Martin runs a successful house painting business. He runs his business out of his garage, which he got converted into an office space. Martin, who had previously worked as a house painter in another company had good know-how of how […]

Which of the following components, as suggested by Zig Ziglar, involves staying in touch with customers on a regular basis via visits, phone calls, e-mails, newsletters, and so on? A. Urgency B. Frequency C. Potency D. Recommendations The fourth step […]

A vending machine is a form of direct sales method. Ninety percent of all new businesses fail within two years. Answer: FALSE This is a myth about small-scale businesses. This statement is wrong in two major ways. First, the percentage […]

Pure innovation is an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas. Shake-out is a type of life cycle growth stage marked by a very rapid increase […]

According to Shepherd, Shanley, and Porter, which of the following is a small business supra-strategy? A. Altruism B. Single-mindedness C. Scope savings D. Technology Which of the following is a difference between a small business and a high-growth venture? A. […]

According to the BRIE model, which of the following is an element that is necessary to start a business? A. Boundary B. Recognition C. Efficiency D. Income Which of the following is a good technique to counter undercapitalization in part-time […]

Covenants are government specifications for acceptable use of land and buildings in particular areas. To prepare a cash flow statement, the cash inflows and outflows are categorized under cash from operations, cash from investing, and cash from financing. Answer: TRUE […]

Small-claims courts work only when a person or firms are owed money that can be proved and have exhausted other procedures like calls and letters to the customer. Money borrowed for the purpose of investment in a business is called […]

Which of the following terms refers to the accounting process that identifies the causes of all differences between book and bank balances? A. Clearing house B. Float C. Charge back D. Reconciling Blue Moss Inc. ensures that its detergent brand […]

Operational plans and private placement memos are the only two types of plans that add material to a full business plan. Sales leads who actually make some sort of effort to learn more about the product, service, or business in […]

Many owners of consulting companies took their own skills and launched businesses by selling those skills to other companies or individuals who needed them. This is an example of which of the following sources of business ideas? A. Family and […]

The best way to handle ownership problems is to come out right at the start and specify or negotiate who owns what. There is one specific pattern of entrepreneurial behavior or entrepreneurial type. Answer: FALSE There is no one pattern […]

A legal “artificial” entity that is formed by filing specific documents with a state government is called a _____. A. sole proprietorship B. partnership C. corporation D. general partnership A _____ displays characteristics related to the nature of a product […]

Which of the following is true of the differential revenues and expenses method? A. It is used to increase the magnitude and complexity of the information that must be considered in making an appropriate investment decision. B. It is estimated […]

Which of the following is true of financial management for a business exit? A. Its main emphasis is on conserving what little cash the business has. B. Its main emphasis is on maximizing the value of the business for successors. […]

The _____ is a schedule of the amounts and timings of payments of cash out of a business. A. comprehensive budget B. capital budget C. cash disbursements budget D. cash receipts budget Which of the following forms of direct response […]

Personal selling decreases business owners’ flexibility in their presentation. The competency suggested by exchange relates to the organizational and business processes of a firm called basic business competency. Answer: FALSE The competency suggested by boundary relates to the organizational and […]

Which of the following is true regarding the introduction stage of the product life cycle? A. Traditional marketing techniques raise profits at the start more than they do at later stages. B. The risks from competition in the introduction stage […]

_____ is described as setting the price for an item relatively low and then charging much higher prices for the expendables it uses. A. Bait pricing B. External reference pricing C. Captive pricing D. Odd-even pricing The group of people […]

The future action plan component of the feasibility study includes which of the following elements? A. Profitability B. The competition C. Legal restrictions and rights D. Writing a business plan Aaron, a businessman, has a method of keeping track of […]

Optimum price is the lowest price that will produce the desired level of sales in an intended market. Business plans are essential for external legitimacy and internal understanding. Answer: TRUE There are two circumstances under which creating a business plan […]

Every month, David, an assistant at a shoe store, steals money from his employer, after it has been received and recorded in the books, by altering the accounting records in the company book. David’s act falls under which of the […]

Most small businesses never go through the takeoff stage. The more time and energy one spends preparing for a small-scale part-time business, the longer it takes to make a profit. Answer: TRUE The more time and energy one spends preparing […]

_____ refers to a preliminary run of a business, sales effort, program, or Web site with the goal of assessing how well the overall approach works and what problems it might have. A. Conversion rate B. Pilot test C. Incubation […]

Regular and systematic reduction in income that transfers asset value to expense over time is called _____. A. appreciation B. contribution margin C. depreciation D. benchmarking Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business […]

_____ refers to the size of the market, whereas _____ refers to the geographic range covered by the market. A. Scope; scale B. Mass; niche C. Scale; scope D. Niche; mass _____ is the degree of attention a target market […]

Customers can never be a source of risk for businesses. Limited liability companies’ primary advantage is that owners may easily choose whether to be taxed as an entity or have tax items pass through. Answer: TRUE Limited liability companies (LLCs) […]

Which of the following is a financial statement that will be checked during due diligence when buying an existing business? A. White paper B. Balance sheet C. Codicil D. Amicus brief _____ is the amount of money left after deducting […]

Buy-ins can be made in any form of business. Price skimming involves setting a price above that of the competition so as to indicate a higher quality or that a product is a status symbol. Answer: TRUE Price skimming involves […]

For small businesses, professional management is an issue of education, titles, and credentials. One disadvantage of purchasing an existing business is that it requires more cash outlay than creating a start-up. Answer: FALSE Purchasing a business often requires less cash […]

It costs five times as much to get a purchase from a new customer compared to an existing one. Creating and distributing a catalog online saves the cost of printing and mailing. Answer: TRUE Online catalogs are a less expensive […]

A 20-year patent covering a process, machine, article of manufacture, composition of matter, or any new or useful improvement of an existing one is known as _____. A. plant patent B. utility patent C. design patent D. non-provisional patent Employee […]

Assigning a high value to inventory results in increased sales margin and reported profit, but at the price of paying increased income taxes. One technique to making bootstrapping work is leveraging low costs with free expertise. Answer: TRUE One technique […]

_____ are processes, benchmarks, or components of the business that are essential for the business to be profitable and competitive in its market. A. IPOs B. CSFs C. ESOPs D. BRIE Danielle, a graduate in fashion technology, always found it […]

The match between the needs, expectations, and culture of the small business with the expectations and the skills of the individual employee is called: A. employee referral. B. employee fit. C. job description. D. job analysis. Which of the following […]

Which of the following is a key benefit of the entry wedge of customer contracting? A. Scale savings B. Lower costs C. Scope savings D. Technology Which of the following is a type of termination? A. IPO B. Workout C. […]

Off-the-job techniques include apprenticeships, internships, and job rotation. Direct competition refers to a strategy where companies provide alternatives that are dissimilar to a firm’s product/service that consumers might choose to meet a similar need. Answer: FALSE Indirect competition refers to […]

_____ insurance is normally included in insurance on physical assets. A. Theft B. Credit C. Intellectual property D. Safety Which of the following is an element of a firm’s external environment? A. Employees B. Suppliers C. Owners D. Board of […]

A(n) _____ refers to having only sufficient amount of products on the shelves to meet immediate purchases and usually requires frequent shipment from the supplier. A. just-in-time inventory B. macro inventory C. micro inventory D. in-process inventory Rejecting existing ideas, […]

The concept of total product includes how customers describe one’s good or service. One of the ways harvests take place is through initial public offering or IPO. Answer: TRUE Some of the ways harvests take place are so well known […]

The two key factors in traditional leadership theories are task and person. Patents are essentially monopolies granted to inventors by the U.S. government giving patent owners the exclusive rights to make, use, or sell that invention for a certain period […]

Which of the following forms of direct marketing is the most expensive? A. Direct sales B. Telemarketing C. Direct mail D. Guerilla marketing Which of the following terms best represents something a business owns that has economic value or is […]

Which of the following primary research methods is the least expensive for small businesses? A. Conducting in-person surveys B. Conducting formal focus group interviews C. Using online survey services D. Hiring marketing research firms _____ advertisements provide both geographic and […]

When an individual buys products like shoes, music, or cell phones online, it is referred to as _____ type of e-commerce. A. business-to-business (B2B) B. business-to-consumer (B2C) C. consumer-to-consumer (C2C) D. business-to-Internet (B2I) The difference between an actual and budgeted […]

_____ means that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors. A. Bureaucracy B. Illiquidity C. Legitimacy D. Insolvency _____ are laws and regulations that specify […]

The research and development team of Leonide Inc. has generated five different product ideas. All five ideas are being rated against each other on their characteristics such as product uniqueness, idea profitability, protectable intellectual property, and product team quality. Based […]

It is nearly impossible to design a message that will appeal universally or to find media that will reach all consumers. Traditional small businesses’ schedules are defined by the owners’ needs. Answer: FALSE Traditional small businesses are the smallest full-time […]

Which of the following is a reward universally mentioned by entrepreneurs? A. Peer admiration B. Personal growth C. Political power D. Industry recognition In bonus pack pricing strategy: A. lower prices are charged at certain times to encourage customers to […]

The primary focus of corporate entrepreneurship is creating new civic organizations which are financially self-sufficient. Most small businesses-even part-time ones-need to have a website regardless of whether or not they use it for actual sales. Answer: TRUE Most small businesses-even […]

Greg has a press release for his new product that he wants to broadcast on television. His press release has a good story and visuals. It also includes content that illustrates broad cultural themes. Which of the following is Greg […]

_____ is money from selling part of a business to people who are not and will not be involved in the management of the business. A. Dividend B. Bond C. Equity capital D. Outside equity According to the SCAMPER tool, […]

_____ is a general term for real estate, but it can also be applied as a legal term for anything owned or possessed. A. Equipment B. Plant C. Inventory D. Property Changes in competitors, sales and profits in an industry […]

Setting prices higher than the competition without providing customers with the perception of receiving greater value will lead to lower overall volume. Off-the-job training is delivered to employees while they perform their regular jobs. Answer: FALSE On-the-job training is delivered […]

Which of the following is true of payment procedures? A. A letter of credit can be exercised only with specified shipping documents. B. Providing credit to customers is a risk to the customers. C. Up-front cash payment is a risk […]

Harry ordered a television online for $800, he was asked to pay $100 toward shipping charges, $50 as installation charges, and another $100 for extended warranty. This example best illustrates _____. A. bait pricing B. internal reference pricing C. partitioned […]

A(n) _____ is part of a contract in which a party intentionally gives up legal rights or claims. A. retainer B. easement C. arraignment D. waiver Which of the following problems is closely related to role conflict? A. Resource shortage […]

A business that collects, collates, and reports information concerning an entity’s use of debt is referred to as a(n) _____. A. accelerator B. credit reporting agency C. debt reporting organization D. community development organization Which of the following is true […]

Standard industrial classification system (SIC) codes have _____ digits. A. four B. six C. seven D. nine What would happen when a small business that is growing becomes too great to be handled alone by an individual owner? A. There […]

Gaining legitimacy in small businesses is especially difficult for entrepreneurs seen as “different”-women, minorities, home-based businesses, or businesses started by young people. In crafting a feasibility study, the goal is to assess if the idea can be profitably brought to […]

Which of the following will cause the maximum damage to an organization’s legitimacy? A. Promoting knowledge about the organization to customers B. Having people in the organization that customers know and respect C. Partnering with reputed businesses D. Directing customer […]

The first step in budgeting is to make a forecast of your future sales. The advantage of consignment approaches is that they permit full-time sales with only a part-time involvement from the owner. Answer: TRUE The advantage of consignment approaches […]

Outsourcing refers to the assignment of work to others over whom one has power. The employee referral method is an example of an overused, high-cost recruitment method. Answer: FALSE Employee referral is an underused, low-cost method which rewards your employees […]

Founders of small businesses often find it very difficult to give up decision-making authority to family members. Universalism is an ethical model that suggests people get their ideas of right and wrong from their family, religion, education, and community. Answer: […]

A(n) _____ is an action-oriented description of a business designed to sell the idea of the business to another. A. vision statement B. executive summary C. mission statement D. elevator pitch After being in business for 24 months, Paul’s auto […]

At times of great change, people become more willing to try extreme new ideas. Traditionally, manufacturing processes are laid out in one of the two formats: grid layout and free-form layout. Answer: FALSE Traditionally, manufacturing processes are laid out in […]

Which of the following situations indicates that it makes better sense to first undertake a part-time business? A. Byron has a full-time business plan. B. Jamie wants to start a franchise for an international brand. C. Cathy has funds to […]

Liquidity is a measure of the ability of a business to meet both short-term and long-term obligations. In family-owned businesses, the board of members can only be comprised of family members. Answer: FALSE The key difference between a family council […]

Press relations are a form of communication that encourage the customer to take immediate action. Success profits are intended as a secondary income for the entrepreneur, who has another job which provides his or her main income. Answer: FALSE Supplemental […]

Participating in trade shows and trade missions increase international contacts. For a small business, the amount and type of inventory held for resale is not important because the supply of inventory and demand of customers can be matched at all […]

_____ refers to the practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold. A. Barter B. Consignment C. Noncash incentive D. Benchmarking Which of the following is […]

Cash-to-cash cycle is also referred to as operating cycle. The bank available balance and the bank ledger balance will always show the same value. Answer: FALSE The bank available balance is the sum of money that has actually been received […]

In the case of mediation, the dispute is put to a neutral third party who has the powers of a judge. According to the rule of thumb in the resource maturity stage, keeping an existing customer costs five times as […]

A(n) _____ focus refers to an entrepreneur’s attention on maximizing gains and pursuing opportunities likely to lead to gains. A. comprehension B. promotion C. effectuation D. prevention Entrepreneurs who do not plan and prefer to let all actions be dictated […]

Which of the following is a disadvantage of leasing? A. It requires a considerably high initial cash outlay than building or buying. B. It is expensive than building or buying a property that are of the same value. C. Lease […]

Survival is the second riskiest period after emergence. Franchising a new business is one of the ways to business ownership. Answer: TRUE Franchising a new business is one of the ways to business ownership. The primary reason to acquire and […]

The advantage of legal protection methods for intellectual property is that there are multiple government agencies in each area that will assist a small business owner in maintaining their legal rights. A securities disclaimer on the title page of a […]

Which of the following is the formula for calculating owner’s return on equity (ROE)? A. Net Income/Average Investment B. Net Income/Owner’s Equity Investment C. Total Liabilities/Total Owner’s Equity D. Total Liabilities/Total Assets Which of the following is a reason for […]

Which of the following is a form of business termination that uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets? A. Bankruptcy B. Sell off C. Walkaway D. Workout The […]

For corporations, certification for businesses owned by women or minority is handled by organizations that are not affiliated with the government or big business. It is customary for a small business to concentrate its efforts on one target market at […]

The standard industrial classification system (SIC) codes have six digits. Research suggests that firms without a business plan are less likely to close down than firms with plans. Answer: FALSE Research suggests that firms without a business plan are more […]

When a bookstore starts to sell videos, music, and coffee as well, it uses which of the following elements of the SCAMPER tool? A. Rearrange B. Eliminate C. Combine D. Substitute Which of the following best exemplifies personality segmentation? A. […]

Torts can arise when a person’s legal rights are violated in ways other than from a breach of contract. The Sarbanes-Oxley Act only covers small businesses that are not publicly traded. Answer: FALSE The Sarbanes-Oxley Act is a federal law […]

A legal obligation to pay money in the future is called equity capital. A buyout refers to starting a business from scratch. Answer: FALSE The purchase of substantially all of an existing business is called a buyout. A trade secret […]

Which of the following categories does the majority of small businesses fall under? A. High-growth ventures B. High-performing small businesses C. Lifetime/Part-time firms D. Traditional small business Charging lower prices at certain times to encourage customers to come during slack […]

Typically, a probationary period for employees lasts for two years. One of the key elements of the BRIE model is a person’s intentions to start a business. Answer: TRUE Intention is the desire to start a business and is the […]

Identifying risks is the first task to be completed before a comprehensive insurance program can be developed for a business. Economic order quantity (EOQ) is also called reorder point. Answer: FALSE The optimum stocking level is also called reorder point. […]

Which of the following is true with regard to women in small businesses? A. Women-owned businesses are the slowest growing sector of all U.S. businesses. B. Women-owned firms accounted for 25 percent of small business revenue nationally. C. Women prefer […]

The existence stage is defined by: A. a period of exceptional growth. B. a stable level of sales, profits, and guarantee of sales. C. thoughts about starting a business. D. a lack of stability in terms of markets, operations, or […]

Which of the following is a critical risk to a business? A. Direct customer connection B. Surplus industry experience C. Overlooked competition D. Adequate payback Jake is a small business owner of Macho Doors, a manufacturer and installer of garage […]

Up-front cash payment by a consumer, prior to shipment of a product, is a payment risk to a company. Among surveys, in-person survey tends to be the least expensive method, with telephone coming in second, and mail the most expensive. […]

Which of the following is a characteristic of a lifestyle firm? A. It starts small and grows very rapidly to become a big business. B. It represents about 20 percent of all businesses. C. It typically has sales of $25,000 […]

_____ refers to the value of a business that exceeds the sum of the value of all individual assets but that cannot be sold separately from the business. A. Goodwill B. Collateral C. Inventory D. Debt Legal obligations to give […]