Chapter 01 Small Business: Its Opportunities and Rewards
Answer Key
True / False Questions
1.
(p. 5)
The U.S. government agency that helps people start small businesses is the U.S.
Department of Commerce.
FALSE
Small Business Administration (SBA) is a part of the U.S. government, which
provides support and advocacy for small businesses.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-01 Describe the scope of small business in the United States.
Level of difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere
2.
(p. 5)
Entrepreneurs are exclusively found in farming-related occupations.
FALSE
Entrepreneurs could be found in just about every type of work there is, literally in
hundreds of occupations.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-01 Describe the scope of small business in the United States.
Level of difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere
3.
(p. 6)
Small-scale entrepreneurs are only allowed to trade in sale of goods and not in
trades of service.
FALSE
As an entrepreneur, you may be the owner of the business, but your occupation
will depend on what type of goods or services you and your firm are producing.
AACSB: Analytic
Blooms: Remember
1-1
Learning Objective: 01-01 Describe the scope of small business in the United States.
Level of difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere
4.
(p. 6)
Truly entrepreneurial businesses are characterized by imitativeness in their
products, services, or business models.
FALSE
Truly entrepreneurial businesses are characterized by novelty, in their products,
services, or business models.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-01 Describe the scope of small business in the United States.
Level of difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere
5.
(p. 7)
Self-employed persons are not referred to as entrepreneurs.
FALSE
The self-employed, anyone who works for himself or herself instead of for others, is
also an entrepreneur. According to the Census Bureau, there were about 14.7
million self-employed people in 2010.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-01 Describe the scope of small business in the United States.
Level of difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere
6.
(p. 8)
Small businesses focus on effectiveness, whereas high-growth ventures focus on
efficiency.
FALSE
Small businesses focus on efficiency, whereas high-growth ventures focus on
effectiveness.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-02 Learn the difference between small businesses and high-growth ventures.
Level of difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere
1-2
7.
(p. 8)
Small businesses start small but are intended to grow rapidly, often requiring a
team of partners.
FALSE
High-growth ventures start small but are intended to grow rapidly, often requiring
a team of partners or managers to handle the growth.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-02 Learn the difference between small businesses and high-growth ventures.
Level of difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere
8.
(p. 8)
Lifestyle or part-time 0rms typically provide enough pro0t or salary to supplement
an income but usually not enough on which to live.
TRUE
Lifestyle or part-time 0rms typically have sales of $25,000 a year or less, which
provides enough profit or salary to supplement an income but usually not enough
on which to live.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-03 Understand the four types of 2rm level growth.
Level of difficulty: 1 Easy
Topic: Entrepreneurs and Firm Growth Strategies
9.
(p. 9)
Traditional small businesses’ schedules are defined by the owners’ needs.
FALSE
Traditional small businesses are the smallest full-time businesses, with schedules
defined by customer, not owner, needs.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-03 Understand the four types of 2rm level growth.
Level of difficulty: 1 Easy
Topic: Entrepreneurs and Firm Growth Strategies
1-3
10.
(p. 9)
High-growth ventures are also known as main street businesses.
FALSE
Main street businesses include the lifestyle firms, the traditional small businesses,
and the high-performing small businesses.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-03 Understand the four types of 2rm level growth.
Level of difficulty: 1 Easy
Topic: Entrepreneurs and Firm Growth Strategies
11.
(p. 10)
Flexibility rewards refer to the money made from owning a business.
FALSE
Income rewards refer to the money made from owning your own business.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-04 Explore the rewards entrepreneurs can achieve through their businesses.
Level of difficulty: 1 Easy
Topic: Rewards for Starting a Small Business
12.
(p. 10)
Flexibility rewards are the most rapidly growing type of reward.
TRUE
Flexibility rewards are perhaps the most rapidly growing type of reward. They refer
to the ability of business owners to structure their lives in the way that best suits
their needs.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-04 Explore the rewards entrepreneurs can achieve through their businesses.
Level of difficulty: 1 Easy
Topic: Rewards for Starting a Small Business
13.
(p. 12)
Using low-cost or free techniques to minimize cost of doing business is referred to
as bootstrapping.
TRUE
Bootstrapping is using low-cost or free techniques to minimize cost of doing
business.
AACSB: Analytic
Blooms: Remember
1-4
Learning Objective: 01-05 Be able to dispel the key myths about small businesses.
Level of difficulty: 1 Easy
Topic: Myths about Small Businesses
14.
(p. 12)
Ninety percent of all new businesses fail within two years.
FALSE
This is a myth about small-scale businesses. This statement is wrong in two major
ways. First, the percentage is wrong. Studies show that 69 percent of businesses
are still going after two years, 51 percent are still going at 5 years, 34 percent
make it past 10 years and 25 percent survive 15 years. Second, looking at the
businesses that close, the vast majority close but don’t fail.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-05 Be able to dispel the key myths about small businesses.
Level of difficulty: 1 Easy
Topic: Myths about Small Businesses
15.
(p. 13)
The most frequently occurring element of the BRIE model is intention.
TRUE
Intention is the desire to start a business and is the most frequently occurring
element of the BRIE model.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-06 Identify actions key to becoming a small business.
Level of difficulty: 1 Easy
Topic: Getting Started Now: Entry Competencies
16.
(p. 13)
In the BRIE model, exchange refers to moving resources, goods, or services to
others, in exchange for money or other resources.
TRUE
Exchange refers to moving resources, goods, or service to others, in exchange for
money or other resources.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-06 Identify actions key to becoming a small business.
Level of difficulty: 1 Easy
Topic: Getting Started Now: Entry Competencies
1-5
17.
(p. 13)
The disadvantage of the BRIE model is that it does not mention the management
of resources.
FALSE
In order to start a business, you need four elements to come together—boundary,
resources, intention, and exchange. This is referred to as the BRIE model.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-06 Identify actions key to becoming a small business.
Level of difficulty: 1 Easy
Topic: Getting Started Now: Entry Competencies
18.
(p. 13)
One of the key elements of the BRIE model is a person’s intentions to start a
business.
TRUE
Intention is the desire to start a business and is the most frequently occurring
element of the BRIE model.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-06 Identify actions key to becoming a small business.
Level of difficulty: 1 Easy
Topic: Getting Started Now: Entry Competencies
19.
(p. 17)
High-growth ventures and big businesses generally do not succeed without small
businesses offering supporting services.
TRUE
Without small businesses offering supporting services or offering to subcontract at
low cost to the high-growth ventures and big businesses or creating the kinds of
communities where creative and entrepreneurial people like to live, the big
businesses will not succeed.
AACSB: Analytic
Blooms: Understand
Learning Objective: 01-07 Recognize how small business is important to our economy and your community.
Level of difficulty: 2 Medium
Topic: Small Business and the Economy
1-6
20.
(p. 18)
Entrepreneurship levels are very high in e7ciency-driven economies.
FALSE
Entrepreneurship levels in efficiency-driven economies are in the middle range.
AACSB: Analytic
Blooms: Understand
Learning Objective: 01-07 Recognize how small business is important to our economy and your community.
Level of difficulty: 1 Easy
Topic: Small Business and the Economy
21.
(p. 20)
The primary focus of corporate entrepreneurship is creating new civic
organizations which are financially self-su7cient.
FALSE
Social entrepreneurship involves creating new charitable and civic organizations
which are financially self-suffcient.
AACSB: Analytic
Blooms: Remember
Learning Objective: 01-07 Recognize how small business is important to our economy and your community.
