Entrepreneurs are people who grow existing businesses by careful management of
existing resources.
In exchange for the financing they receive from venture capitalists, entrepreneurs must
give up a portion of their businesses, sometimes surrendering a majority interest and
control of its operations.
To prepare the cash flow statement, the owner must assemble the balance sheets and the
income statements summarizing the present year’s operations.
The objectives of cash management are to adequately meet the cash demands of the
business and to avoid retaining unnecessarily large cash balances.
The marketing mix consist of the “4Ps” : Product, Plot, Place, Promotion.
For a small business, cash planning is relatively simple since cash and profits are the
same.
Creativity is “caught” as much as it is “taught.”
The back office is less important than the Web site.
When a small business owner moves to an empowering management style, he/she
should expect to lose about 5% of the workforce because that represents the number of
workers who do not want to work in that type of environment.
An important management issue to consider before going international is to decide who
will be responsible for the export entity’s organization and staff.
The business plan needs to address, in the management section, how important officers
will be encouraged to remain with the company.
The bargaining zone is the area within which the buyer and the seller cannot reach an
agreement.
A skimming pricing strategy permits a small business owner to correct pricing mistakes
more quickly and easily than a penetration pricing strategy.
A missing quantity term in an offer usually defeats a contract.
Today’s business environment requires firms to separate their pricing strategy with their
credit strategy.
Very few nations interfere with free international trade by erecting trade barriers with
tariffs, quotas, and embargoes.
“Angels” typically invest in businesses in the start-up phase, providing the seed capital
needed to get the business going.
To cope successfully with the myriad ethical decisions they face, entrepreneurs must
develop a workable ethical framework to guide themselves and the organization.
It is important to develop a list of criteria that a potential business acquisition must
meet.
Intrapreneurs are entrepreneurs who operate within the framework of an existing
business.
The Small Business Technology Transfer Act of 1992 supports the SBIR program by
exploiting promising technological developments that come out of small businesses and
funds and guides their practical application to the commercial world.
A differentiation strategy carries a risk with it, in that a firm may not adequately
segment the market and properly target those special needs.
A sales contract designated F.O.B. buyer requires the seller to deliver the goods to the
buyer’s place of business (or some other designated location), and risk of loss does not
pass to the buyer until the goods are so delivered.
The SBA’s immediate participation loans are a mix of private and public funds, and the
SBA is prohibited from financing more than 75% of the loan.
One-third of the Fortune 500 companies are family businesses.
“Corporate dropouts” are middle managers who are laid off from large corporations and
decide to start their own businesses rather than return to a corporate job.
Successful Total Quality Management (TQM) requires leadership from the top.
Ralph buys a software business from Waldo in Columbus, Ohio. As part of the deal,
Waldo signs a covenant not to compete by opening another software business anywhere
in Ohio for the rest of his life. Such a covenant would be enforceable.
The primary benefit of television ads is their ability to demonstrate a good or service in
a graphic, vivid manner.
A significant disadvantage of television advertising is the difficulty in changing an ad to
match the rapidly changing marketplace.
Satisfied customers exhibit at least one of three characteristics: loyalty, resistance to
competition’s attempts to lure them away with lower prices, and increased purchases.
A time frame for achieving objectives is important.
One reason why an owner is selling the business is because the business location may
have become unsatisfactory.
A buy/sell agreement often also uses life and disability insurance to ensure the
surviving co-owners have the means to buy the business.
The largest single source of external equity capital for small businesses is:
A) angels.
B) venture capitalists.
C) Small Business Administration loans.
D) commercial bankers.
The ultimate goal for every business is to drive the inventory to ________.
A) zero
B) below average
C) average
D) above average
A number of organizational factors encourage employee theft including:
A) being permitted to manage their own work and time schedules.
B) working with one-of-a-kind items the employee could never afford to buy.
C) having too elaborate of financial and inventory controls in place.
D) a low probability of getting caught.
A type of non-tariff barrier to trade that consists of selling large quantities of products in
foreign countries below cost is referred to as:
A) dumping.
B) clearance selling.
C) bartering.
D) exporting.
When workers are empowered:
A) there tends to be increased confusion over specific responsibilities.
B) they are more successful on the job.
C) they initially experience significant anxiety of using their skills.
D) the company will lose about 20% of its workforce that doesn’t want the
responsibility.
The typical private placement of debt is characterized by:
A) a variable interest rate.
B) a maturity shorter than most bank loans.
C) more restrictions imposed on the borrower than with a comparable bank loan.
D) a spreading of risk by the selling of the debt to one or more small investors.
The entrepreneur can implement and maintain ethical standards by:
A) performing periodic ethical audits.
B) making examples of clearly visible violators.
C) handing down a strict code of ethics established by upper management.
D) doing all of these.
________ refers to buying much needed materials, equipment, and supplieswithout
using cash.
A) Sweeping
B) Bartering
C) Purchase on an account
D) Net terms
The CDC is the for-profit arm of the SBA.
In the creation of the balanced scorecard, the entrepreneur needs to:
A) assess competitor’s strengths and weaknesses and set measures against them.
B) establish goals for each critical factor of company performance.
C) think about the resource requirements necessary to implement the action plans.
D) do all of these.
Competitive advantage is:
A) to be easily duplicated by competitors.
B) to have a super idea.
C) theaggregation of factors that sets the small business apart from its competitors and
gives it a unique position in the market.
D) None of the above
Which of the following statements is correct?
A) Benchmarking is the process of calculating carrying cost, EOQ and other inventory
management procedures and being able to compare it to others.
B) Benchmarking is the process of identifying world-class processes or procedures
currently being employed and building higher quality standards around these for your
firm.
C) Benchmarking is the when a firm evaluates all its supply chain management for
higher quality and price.
D) All of the above
Under what circumstances would a typical franchiser have the right to cancel a
franchise contract?
A) The franchisee declares bankruptcy.
B) The franchise fails to follow retail pricing guidelines set by the franchiser.
C) Within five days of the initial signing of the contract
D) If the franchiser decides he/she wants to buy back the franchise
The first step in developing a vendor certification process is to:
A) develop a grading scale for vendors.
B) identify the most important criteria.
C) create a list of vendors to be evaluated.
D) weight the criteria used to evaluate the vendors.
Pure franchising is also referred to as:
A) trade name franchising.
B) business format franchising.
C) product distribution franchising.
D) all of the above.
A reliable cost accounting system is necessary for accurate pricing. The traditional
method of product costing, where the costs of direct materials, direct labor, and factory
overhead are included, is called ________ costing.
A) absorption
B) break-even
C) direct
D) variable
________ ratios measure the financing supplied by business owners and that supplied
by the firm’s creditors.
A) Leverage
B) Profitability
C) Liquidity
D) Operating
The Pastry Shop normally sells cheese Danishes for 60 cents each. On Mondays and
Tuesdays, its slowest days, The Pastry Shop offers cheese Danishes at “4 for $2.00.”
This is:
A) price lining.
B) leader pricing.
C) multiple unit pricing.
D) odd pricing.
A(n) ________ is a contract that co-owners often rely on to ensure the continuity of a
business.
A) irrevocable trust
B) buy/sell agreement
C) trust
D) grantor retained annuity trust (GRAT)
Entrepreneurial success requires both persistence and ________.
A) education
B) connections
C) resilience
D) reluctance
A cash budget is only as accurate as the ________ forecast from which it is derived.
A) profit
B) receivables
C) income
D) sales
To avoid a bumpy transition, a business buyer should do the following:
A) concentrate on communicating with employees.
B) be honest with employees.
C) devote time to selling your vision for the company to its key stakeholders.
D) All of the above
The ________ is the first part of the business plan. It summarizes all the relevant points
of the deal, but it should be the last part written.
A) executive summary
B) mission statement
C) industry analysis
D) marketing strategy
Creativity is “________” as much as it is “taught.”
A) bought
B) caught
C) sought
D) concocted
The “wait to go effective” is the time period when:
A) the SEC registration statement is being prepared.
B) the underwriter decides what regulation to file under.
C) the firm prices the stock for the offering.
D) the company is waiting for SEC approval after filing the registration statement.
If a contract for the sale of goods omits the place for delivery, the Code states that
delivery will take place at:
A) the seller’s place of business.
B) the seller’s residence.
C) the buyer’s place of business.
D) the buyer’s residence.
Small business owners can make a number of mistakes in their management succession
plan including:
A) naming a successor too early.
B) having another manager in the company mentor the successor.
C) assuming his/her children want control of the business.
D) All of these
When Chapters, a small book store, donates a dollar for each book sold to help promote
reading among children, Chapters is using:
A) sales promotion.
B) advertising.
C) cause marketing.
D) personal selling.
Minorities cite which of the following as the primary barrier to their entrepreneurship?
A) Skepticism
B) Access to capital
C) Discrimination
D) Social pressure
The strategic management process:
A) is especially difficult for the small business because of its limited resources.
B) divides mass markets into smaller, less homogeneous units.
C) provides the small business owner with the tools for managing the uncontrollable
elements in the external business environment.
D) helps a small business develop the game plan that guides it in creating its mission,
vision, goals, and objectives.
The practice of moral management by the small business generally results in:
A) a stronger competitive position.
B) a weaker competitive position.
C) increased governmental scrutiny of the company’s business practices.
D) lower operating costs and increased employee satisfaction.
The simplest and least expensive way to conduct international business is through:
A) foreign licensees.
B) a Web site.
C) joint ventures.
D) trade intermediaries.