Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 1
Indicate whether the statement is true or false.
1. Successful entrepreneurs should be aware of their strengths and weaknesses and be willing to strive toward goals.
a. True
b. False
2. Entrepreneurs should avoid hiring mediocre people.
a. True
b. False
3. Xavier had many ideas about new products but no one in his corporation seemed interested. So Xavier left and founded
his own company to create these new products. Xavier is a corporate refugee.
a. True
b. False
4. Self-employed people are less likely to be millionaires than are those who work for others.
a. True
b. False
5. The entrepreneur personality thinks in terms of opportunities rather than skills.
a. True
b. False
6. The primary motivation for starting a new business should be to make as much money as possible.
a. True
b. False
7. An entrepreneurial legacy is limited to the tangible assets of the business.
a. True
b. False
8. A primary reason for becoming an entrepreneur should be to create a product or service that improves the lives of
customers.
a. True
b. False
9. According to the text, the term entrepreneur refers to small business founders only.
a. True
b. False
10. Franchisees could be considered to be limited entrepreneurs because they have a contract with a franchising
organization.
a. True
b. False
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 2
11. According to the text, managers who buy out founders of existing firms may be classified as entrepreneurs.
a. True
b. False
12. Most entrepreneurs work shorter hours in their own businesses than they did when working for someone else because
they have no boss to report to.
a. True
b. False
13. Good customer service can be provided by a business of any size but small entrepreneurial companies do it better.
a. True
b. False
14. Josie’s position was eliminated when the company moved its operations to another state so she started her own
business. Josie is a reluctant entrepreneur.
a. True
b. False
15. An entrepreneurial team consists of the owner, the financier, and one key employee.
a. True
b. False
16. The mission of XYZ Company is to reduce landfill waste by recycling plastic containers into other useful
products. XYZ Company is a social entrepreneurship.
a. True
b. False
17. The universally accepted definition of the term small business is based on the number of people employed by the firm.
a. True
b. False
18. Many small business owners fail to identify and capture new opportunities to grow their businesses.
a. True
b. False
19. The term bootstrapping refers to the practice of bartering rather than buying with cash or credit.
a. True
b. False
20. According to Stephen Covey, if we want to make important changes in our lives, we need to change from the inside
out.
a. True
b. False
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 3
Indicate the answer choice that best completes the statement or answers the question.
21. Lance has set for his business the goal of increasing revenues by 20% and profits by 15% by the end of the
year. Lance is likely high in:
a. risk tolerance. b. opportunity obsession.
c. leadership. d. motivation to excel.
22. Ursula feels trapped in her dead-end job in a large corporation. She daydreams about opening her own boutique at the
seashore. Ursula is:
a. a social entrepreneur. b. a reluctant entrepreneur.
c. a corporate refugee. d. a bureaucrat.
23. When a Fortune 500 business lays off workers, some displaced employees may decide to start their own
businesses. They are best described as
a. foreign refugees. b. welfare profiteers.
c. corporate entrepreneurs. d. reluctant entrepreneurs.
24. Zelda worked for years in a medical clinic as a biller and coder. Now she operates her own billing service for several
doctors. Zelda has a(n) ___________ personality.
a. technician b. manager
c. entrepreneur d. artisan
25. The daughter of the owner of a large business disliked her father’s criticism and eventually decided to quit the family
business and start her own business. The daughter is a
a. corporate opportunist. b. gazelle.
c. reluctant entrepreneur. d. corporate refugee.
26. Valerie has been described as a “free spirit.” She has tolerated but seldom appreciated parental, academic, or even job
authority. The factor most likely to lure her to entrepreneurship is
a. profit opportunities. b. freedom to operate independently.
c. enjoyment of doing what she likes to do. d. satisfaction in serving
the community through the business.
27. Lucien recently opened a shop to repair antique furniture. Which of the following best describes Lucien?
a. founder b. general manager
c. franchisee d. two of the above are correct.
28. Xavier believed his labor was only making others rich while he struggled from paycheck to paycheck. He started his
own small business and now labors only for himself. Xavier’s motivation is:
a. personal fulfillment. b. personal satisfaction.
c. independence. d. financial rewards.
29. Walter wanted to be able to make decisions about issues that directly affected his department but in his corporation,
the managers made all the decisions. So Walter left the corporation and started his own firm. Walter was looking for:
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 4
a. personal fulfilllment. b. personal satisfaction.
c. independence. d. financial rewards.
30. Darlene was disappointed with mass-produced children’s clothing that fell apart after a couple washings so she and
her few employees began making garments that would hold together until they were outgrown. Darlene’s competitive
edge is:
a. customer focus. b. quality performance.
c. niche markets. d. integrity and responsibility.
31. Small businesses that have great prospects for growth are called:
a. gorillas. b. antelopes.
c. jaguars. d. gazelles.
32. Natalie enjoyed yarn crafts so she opened a yarn and craft store in her small town. Sales have been dismal; few people
visit her store. What mistake did Natalie make?
a. She overestimated what she could do. b. She lacked an
understanding of the market.
c. She hired mediocre people d. She failed to share ownership.
33. Flora built her business from two employees to over 2,000 during her 30 years in business. She was able to endow a
scholarship fund to the community college and to leave her children a perpetual income. We call this her:
a. corporate responsibility. b. social mission.
c. good citizenship. d. entrepreneurial legacy.
34. A prospective entrepreneur wants to find a career doing what she enjoys most. She might be drawn to try an
entrepreneurial venture
a. to enjoy satisfying work. b. for substantial long-term profits.
c. to have freedom from a managerial hierarchy. d. for a sense of self-esteem.
35. By the time Jobs and Wozniak had moved out of the garage and into their first production facility, the business would
have been labeled as a(n):
a. high-potential venture. b. attractive small firm.
c. microbusiness. d. lifestyle business.
36. Jasper is so convinced he will succeed he has mortgaged his home, maxed out his credit cards, and borrowed from his
retirement savings to finance his business. Jasper is:
a. high in commitment. b. high in leadership.
c. high in creativity. d. high in risk tolerance.
37. Entrepreneurs are more likely than large corporations to capitalize on innovations because:
a. entrepreneurs have more time to be creative. b. larger
corporations must satisfy stockholders and cannot take risks.
c. entrepreneurs are more likely to find grants for research. d. larger
corporations may be too focused on existing products.
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 5
38. Francesca convinced her aunt to invest in her day spa in exchange for a percentage of the profits. Francesca is:
a. taking advantage of her aunt. b. capitalizing on an opportunity.
c. conserving her own resources. d. bootstrapping.
39. Although Abner started the business by making his own product, his greater talent is planning for the future and
arranging for growth. Abner has a(n)___________ personality.
a. technician b. manager
c. entrepreneur d. opportunistic
40. Tatiana was laid off from her manufacturing job and in desperation launched a business providing transportation
services for the non-drivers in her community. We would classify Tatiana as:
a. a social entrepreneur. b. a creative entrepreneur.
c. a corporate refugee. d. a reluctant entrepreneur.
41. Which of the following types of businesses makes up the largest sector of the US economy?
a. small business
b. microbusiness
c. lifestyle business
d. attractive small firm
42. Which of the following best fits the definition of a small business?
a. A manufacturer with 75 investors b. A hardware store franchise with
20 employees
c. A fast food franchise with locations in three states d. A
campground with gross revenues of $4 million per year.
43. Bill Gates and Steve Ballmer, founders of Microsoft, would be considered:
a. franchisors. b. franchisees.
c. an entrepreneurial team d. sole proprietors.
44. Oscar wants everything in his restaurant to be perfect so he points out every little mistake his servers make. He has
high turnover among his staff. Why?
a. Oscar is a domineering manager b. Oscar is not a team player.
c. Oscar lacks risk tolerance. d. Oscar does not know his market.
45. A significant number of entrepreneurs are motivated by
a. an easy life. b. financial rewards.
c. freedom from long hours. d. job security.
46. A prospective entrepreneur is evaluating the suitability of his own characteristics for an entrepreneurial career. He
realizes that he should be prepared to assume:
a. moderate risks. b. no risks—that is, he should plan to operate
conservatively.
c. risks similar to those a gambler assumes in Las Vegas. d.
psychological risks but not financial risks.
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 6
47. Calvin knew his small local hardware could not compete on price with the big-box discounters so he began offering
classes for new homeowners and found other ways to provide services the bigger stores don’t. Calvin’s competitive edge
is:
a. customer focus. b. quality performance.
c. innovation d. niche markets.
48. Martina expected to build her direct sales business ot the point that she can quit her day job after six months. Five
months later she barely has any customers. Martina:
a. has overestimated what she can do. b. knows her market well.
c. is a domineering manager. d. should take on a partner.
49. Sabrina has figured out how to recycle clear plastic bottles into woven fabric and has launched a new
business. Sabrina is:
a. an entrepreneurial team member. b. a social entrepreneur.
c. risk averse. d. a franchisee.
50. Isabella overheard her customers discussing their desire for more baked treats suitable for diabetics. Immediately she
added sugar-free items to her inventory. Isabella has strong:
a. creativity. b. leadership.
c. opportunity obsession. d. risk tolerance.
51. A firm that provides substantial profits to its owner is called a(n):
a. franchise. b. high-potential venture.
c. attractive small firm. d. lifestyle business.
52. Geraldo often would rather go fishing than work his business. Geraldo lacks:
a. commitment. b. leadership.
c. creativity. d. tolerance of risk.
53. Lydia works as a senior network administrator and is dissatisfied with the stifling bureaucratic environment of her
job. She is considering venturing out on her own as a consultant. If she carries through with her intentions, she would be
considered a(n)
a. corporate pariah b. entrepreneurial dilettante
c. bureaucratic emigrant d. corporate refugee
54. Using the criteria in the text to define a small business, Table Occasions will not be considered a small business once
the company:
a. is financed by three individuals. b. has sales greater than 20% of other firms
in the industry.
c. is operating in numerous states. d. has 50 employees.
55. Henry is well respected by his employees. He models the highest integrity and encourages teamwork. What attribute
does Henry display?
a. determination b. leadership
c. risk tolerance d. motivation
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 7
56. Bailey works as a self-employed golf pro at the local country club, allowing him to spend more time with his young
family. He’ll never earn much but he and his family are happy. Which type of small business does Bailey have?
a. gazelle b. attractive small firm
c. microbusiness d. lifestyle business
57. Sally, a single mother, opened a florist shop to support her family after losing her job in a corporate layoff. She is a(n)
a. woman without a portfolio. b. parental refugee.
c. reluctant entrepreneur. d. independent refugee.
58. Vincent’s business has grown; he now employs 14 people. He enjoys teaching new employees the skills they need to
make his products. One of Vincent’s reasons for being in business for himself is:
a. personal satisfaction. b. independence.
c. financial rewards. d. being the best he can be.
59. The first goal of an entrepreneur should be:
a. to meet financial goals. b. to maximize shareholder wealth.
c. to operate the business ethically. d. to create a product or service that
improves the lives of others.
60. Evelyn opened a small boutique catering to a very narrowly defined target market. Evelyn’s competitive edge is:
a. the niche market. b. customer focus.
c. quality performance. d. innovation.
61. Compared to large corporations, small businesses
a. play just as important if not a larger part in the economy. b.
represent less than 1 percent of all firms with employees.
c. account for 55 percent of private payrolls. d. generated 20–40
percent of all new jobs in the last decade.
62. Ben seems to have the Midas touch. He can recognize opportunity where others see only problems. His focus is on
creating solutions for customers. Ben has a(n) _____________ personality.
a. technician b. manager
c. entrepreneur d. opportunistic
63. Adam has contracted with about a third of the dozens of artisans in his town in the mountains of South Carolina. His
reputation has grown; he now believes the sky’s the limit for this web page design and maintenance business. What kind
of small business does Adam have?
a. lifestyle business b. microbusiness
c. high-potential venture d. attractive small firm
64. Kevin developed a clever marketing campaign that increased his sales by 48%. Kevin is high in:
a. commitment. b. leadership.
c. creativity. d. risk tolerance.
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 8
65. Garner places great emphasis on operating his business to the highest standards of honesty and ethics. Garner likely
believes:
a. the end justifies the means. b. how you achieve is as important as what
you achieve.
c. the customer is always right. d. good guys finish last.
66. Eduardo took out a second mortgage on his home to finance his new business. He makes all the decisions and keeps
all the profits. Eduardo is:
a. bootstrapping. b. an entrepreneur.
c. an administrator. d. a partner.
67. Which of the following sectors is one where women-owned businesses are performing especially well?
a. real estate
b. marketing
c. financial services
d. healthcare
68. A paradigm shift is:
a. when you move capital
b. a change in opportunity
c. a change in how we fundamentally see a situation
d. a reorganization of a company
69. Raold operates a fast-food restaurant. He is under contract to the organization under whose name he does
business. The contract limits what Raold can do with his business. Raold is a:
a. franchisor. b. franchisee.
c. contract employee. d. partner in an LLC.
70. Sometimes entrepreneurs spend so much time and energy building the business that relationships are
destroyed. Which phrase best describes this misfortune?
a. Some sacrifices are necessary for the greater good. b. You’ve
got to give a little to get a little.
c. What goes around comes around. d. It’s possible to score
points in the wrong game.
71. A corporate manager chafes under red tape and bureaucratic regulations until finally deciding to start a separate
business. The apparent reward he seeks is
a. community service. b. a satisfying way of life.
c. independence. d. the satisfaction of working with people.
72. Pauley launched a new business designing and producing embroidered goods. Pauley is:
a. a founder. b. an entrepreneur.
c. both a founder and an entrepreneur. d. neither a founder nor an entrepreneur.
73. Legend holds that Abraham Lincoln walked miles to return two cents change to a customer. His actions demonstrate:
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 9
a. customer focus. b. quality performance.
c. integrity and responsibility. d. social entrepreneurship.
74. A camera hobbyist starts a photographic supplies store. The most obvious reward for this entrepreneur is the
opportunity to:
a. serve other photography enthusiasts. b. enjoy satisfying work.
c. be independent. d. work with people.
75. Devon believes now is the time to launch his welding business since the only competitor has just announced his
retirement. Devon has identified:
a. an entrepreneurial opportunity. b. a bootstrap opportunity.
c. a small business opportunity. d. a lifestyle business opportunity.
76. Carmen operates a franchise tanning salon. Negative publicity about the effects of tanning has diminished her ability
to grow the business. Carmen has a(n):
a. high-potential venture. b. attractive small firm.
c. lifestyle business. d. microbusiness.
a. bootstrapping
b. entrepreneur
c. entrepreneurial legacy
d. entrepreneurial team
e. franchisee
f. gazelle
g. lifestyle business
h. mentor
i. microloans
j. paradigm shift
k. small business
l. technician personality
77. Material assets and intangible qualities passed on to both heirs and society
78. Very small loans, often provided to entrepreneurs in developing countries
79. Two or more people who work together as entrepreneurs on one endeavor
80. A change in how we fundamentally see a situation
81. A person who relentlessly pursues an opportunity, in either a new or an existing business
82. A business with growth potential that is small compared to large companies in an industry, has geographically
localized operations, and is financed by only a few individuals
83. A knowledgeable person who can offer guidance based on experience in a given field
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 10
84. An entrepreneur whose power is limited by a contractual relationship with an organization
85. A personality that focuses on an already developed technical skill, wants to be left alone to get the job done, and is
primarily concerned about the present
86. A microbusiness that permits the owner to follow a desired pattern of living
87. Doing more with less in terms of resources invested in a business
a. attractive small firm
b. corporate refugee
c. entrepreneur personality
d. entrepreneurial opportunity
e. founder
f. high-potential venture
g. manager personality
h. microbusiness
i. niche market
j. reluctant entrepreneur
k. social entrepreneurship
l. technician personality
88. A person who becomes an entrepreneur to escape an undesirable job situation
89. A personality that is pragmatic and likes order and planning operations
90. An economically attractive and timely opportunity that creates value for interested buyers or end users
91. A specific group of customers with an identifiable but narrow range of product or service interests
92. A small firm that provides substantial profits to its owner
93. Entrepreneurial activity whose goal is to find innovative solutions to social needs, problems, and opportunities
94. A small firm that has great prospects for growth
95. A person who becomes an entrepreneur as a result of some hardship
96. An entrepreneur who brings a new firm into existence
97. A small firm that provides minimal profits to its owner
98. A personality that focuses on the business as a whole and providing results for the customer
99. Malinda wants to start a restaurant in her city of about 50,000 people. There are already 325 restaurants in this
city. Malinda’s reasons include that she is a good cook who enjoys working in the kitchen and she wants to involve her
three children aged 9 to 15 in the venture. She has not decided what types of foods she will offer.
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 11
If Malinda launches this business, do you think it will succeed? Why or why not? What advice would you give her?
100. List and briefly explain the six categories of “desirable and acquirable attitudes and behaviors” found in Spinelli’s
and Adams’ research on entrepreneurial characteristics.
101. Explain the nature of and differences among microbusinesses, attractive small firms, and high-potential ventures.
102. Identify and explain the four fundamental reasons entrepreneurs own their own businesses.
103. Explain the advantages of a social entrepreneurship. Give an example of such a business.
104. Explain the difference between personal fulfillment and personal satisfaction as an entrepreneurial motivation.
105. Define entrepreneurial opportunity. Using one of the three success stories in Section 1-2b, explain how the owners
identified their opportunity.
106. Identify the six attitudes and behaviors entrepreneurs should avoid. For each, explain the likely result of engaging in
that behavior or holding that attitude. Simply saying “the business will likely fail” is insufficient.
107. Explain how a small business can be more innovative than a large firm.
108. Discuss similarities and differences of entrepreneurs and small business owners.
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 12
Answer Key
1. True
2. True
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 13
26. b
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 14
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 15
77. c
Name:
Class:
Date:
chapter 1
Copyright Cengage Learning. Powered by Cognero.
Page 16
Name:
Class:
Date:
chapter 1