Web-based entrepreneurs often discover that the greatest challenge their businesses face
is attracting customers on the Web and not necessarily creating a workable order
fulfillment strategy.
The balance sheet provides owners with an estimate of the firm’s worth for a specific
moment in time.
The executive summary is a written version of what is known as “the elevator pitch.”
Web success requires a company to develop a plan for integrating the Web into its
overall strategy.
Entrepreneurs can outsource many of the operations of their companies.
The net profit to equity ratio (or the return on net worth ratio) measures the owners’ rate
of return on investment.
The nature of competitors’ goods does not influence the small firm’s pricing policies.
The trends or shifts in population components, such as population age, have more
meaning for the small business owner than total population trends.
Carrying too much inventory increases the chances that a business will run out of cash.
Businesses have social responsibility to several constituencies: the environment, their
employees, their shareholders, the community, and their customers.
An important advantage of buying an existing business is the greater likelihood that it
will continue to survive and thrive in the marketplace.
Small businesses can save on advertising expenditures by repeating successful ads and
running ads when customers are most likely to buy.
To calculate break-even sales, use the equation: break-even sales (in dollars) = total
variable costs divided by contribution margin as a percentage of sales revenue.
One way ad effectiveness can be measured is to simply measure the increased volume
of traffic into the store as a result of the ad.
Domain names are given on a first-come, first-serve basis.
Industrial revenue bonds are a relatively inexpensive source of funds for small
manufacturers.
It is possible for a small business owner to gather competitive data inexpensively, even
data on other companies’ financial condition.
It is relatively easy and inexpensive to convert existing businesses into LLCs.
According to research by Intuit, supplier connection is one of the “enablers” of small
business innovation.
Depreciation costs of holding inventory represent the reduced value of inventory over
time.
Angels are an excellent source of “IPO money.”
To be most effective, an outdoor ad should be located on the right-hand side of the
highway.
The Sherman Anti-Trust Act outlaws the restraint of trade and any attempt to
monopolize.
Most marketing experts contend that the greatest marketing mistake small businesses
make is defining their target market too specifically or clearly.
Small business owners can use market research to uncover potential market
opportunities.
Conversion rate is not the same as the click-through rate.
Transit ads offer the advantages of wide coverage and low costs for advertising
messages.
“Knocking on the doors” of businesses an entrepreneur would like to buyalthough they
are not advertised “for sale”is a waste of time.
Nearly 80% of companies in the United States use leases to help cash management.
Most venture capitalists prefer to purchase ownership through common stock or
convertible preferred stock.
Developing deep, lasting relationships with customers is not as important since the
customers look for best prices.
For manufacturers, the pricing decision requires the support of accurate sales records.
The difference between the total sources of funds and the total uses of funds represents
the increase or decrease in a firm’s working capital.
Approximately one-half of all SBA loan guarantees are for machinery and equipment or
working capital.
Once the merchandise is received, it is not necessary for the buyer to verify its identity
and condition.
Logic is not a valuable part of the creative process.
The main advantage of cost-plus pricing is its simplicity.
If a sole proprietorship fails, the owner is not liable for its debts since the business is a
separate legal entity.
Intrusion detection software constantly monitors the activity on a company’s network
server and sounds an alert if it detects someone breaking into the company’s computer
system or if it detects unusual network activity.
The use of a credit card by small business customers costs the small business from 10 to
15 percent of the price of the product.
________ pricing policy is used to introduce a relatively low-priced good into a market
where no “elite segment” exists.
A) Penetration
B) Skimming
C) Discount
D) Sliding-down-the-demand-curve
According to Ted Levitt, innovation is ________ new things.
A) thinking
B) doing
C) corroborating
D) emulating
The intangible C that lenders examine in evaluating the business plan is that of:
A) capital.
B) character.
C) collateral.
D) capacity.
When selecting a city, an entrepreneur will need to factor into her decision:
A) the population density and growth trends.
B) the nature of competition.
C) the cost of the location.
D) All of the above
In the stages of team development, a team is at the performance stage when it:
A) has its highest expectations.
B) recognizes fully the time and effort that will be involved.
C) begins to reset its goals and roles.
D) achieves commitment to the process and task.
Billy Bob’s swamp racers are the fastest swamp mud racing machines in the country.
Unfortunately drivers have to be careful because they are easily tipped over due to their
high center of gravity. This is unfortunate because most swamp mud racers consider
stability an important quality in their racers. Billy Bob has installed numerous decals in
prominent places that state, “This sucker turns over easily but goes really fast.” Still,
Billy Bob could be sued for product liability under:
A) negligent manufacturing.
B) failure to warn.
C) implied warranty to perform.
D) negligent design.
Joanne is thinking about running her own business. What risks does she face?
A) Getting stuck in a job she hates
B) Having to deal with more government regulation than if she were a manager in a
larger company
C) Having less status in society, as most people do not respect small business owners
D) Losing her entire invested capital
________ is a remedy for breached contracts that deal with unique items and is
designed to make the injured party “whole again.”
A) Consequential damage
B) Specific performance
C) Remedy at law
D) Monetary damage
Normally, when buying a business, the seller:
A) does not sign a restrictive covenant.
B) notifies creditors 10 days prior to the sale of the business.
C) cannot assign his credit arrangements with suppliers to the buyer.
D) has little formal role or obligation in preparing documents and information
necessary to the sale.
The most effective businesses know that what is required is not simply the technology
but the ________ with suppliers who are themselves technologically sophisticated
enough to interact on a real time basis to deliver what is needed when it is needed.
A) credit terms
B) electronic data interchange
C) critical strategic alliances
D) None of the above
A small manufacturer of candles forecasts demand for upcoming year to be 20,000
which costs the company $1.00 plus $0.10 for packaging and shipping per candle which
the company pays. The total annual cost of units is:
A) $20,000.00.
B) $20,000.10.
C) $2,000.00.
D) $22,000.00.
A contract entered into by a(n) ________ person can be void, voidable, or valid,
depending on the mental state of the person.
A) minor
B) insane
C) intoxicated
D) All of the above
As with any new venture, the entrepreneur needs to ask, and answer, all of the
following questions about the business except:
A) Is there a profitable market in which our firm has the potential to be successful for
an extended period of time?
B) Does our firm have the specific resources, skills and commitment to succeed in this
venture?
C) Are there pressures domestically that are forcing the firm to seek global
opportunities?
D) Are we able to efficiently travel to, from, and within our global market?
An effective market analysis identifies:
A) your product’s competitive advantage.
B) how you will achieve your market goals, what methods will be used.
C) the officers’/owners’ resumes.
D) how the product will be advertised.
The primary variable(s) that influence(s) the scope of a trading area is (are):
A) the character of the transportation network.
B) the nature of competing businesses.
C) the type and size of the business operation.
D) the racial and political barriers in the local community.
________ costing includes only those costs that vary directly with the volume of an
item produced.
A) Absorption
B) Break-even
C) Indirect
D) Direct
Which of the following is a fair definition of price?
A) In purely economic terms, price is the monetary value of a good or service.
B) Price is a measure of what a customer is required to give up to obtain a good or
service.
C) None of the above
D) Both A and B
When a small business practices price lining, it most commonly carries lined
merchandise in sets of ________ different ranges.
A) 2
B) 3
C) 4
D) 5
A company whose reorder point model includes a 95% desired service level will
experience stockouts ________% of the time.
A) 1
B) 5
C) 50
D) 95
The manufacturing layout that arranges workers and equipment according to sequence
of operation and is best suited for highly standardized or mass-produced products is
called:
A) process layout.
B) fixed-position layout.
C) function layout.
D) product layout.
________ are long-range, broad statements of what the company plans to accomplish in
the distant future, and they guide the overall direction of the company.
A) Policies
B) Goals
C) Procedures
D) Objectives
The Economic Order Quantity assumes:
A) a 30-day cycle in filling orders.
B) orders are filled instantaneously.
C) usage will impact delivery time.
D) None of these things
The area from which a small business expects to draw customers over a reasonable time
span is its:
A) trading area.
B) metropolitan statistical area.
C) enterprise zone.
D) incubator.
A(n) ________ is a business that buys and sells products in a number of countries,
offering a range of servicesimporting, exporting, shipping, distributing, and othersto
their clients.
A) foreign joint venture
B) export trading company
C) foreign licensee
D) resident buying office
When creating financial forecasts in a business plan for a proposed venture, an
entrepreneur should:
A) be sure that all forecasts are realistic.
B) embellish all forecasts to make the numbers look really impressive.
C) include any assets of the officers/owners that can be used as collateral.
D) list all previous loans which are in default.
For most retailers and wholesalers, the investment in ________ is the largest capital
outlay next to payroll.
A) office equipment, computers, etc.
B) vehicles, automobiles and trucks
C) inventory
D) taxes and licensing fees
________ involves cross-training employees so they can move from one job in the
company to others, giving them a greater number and variety of tasks to perform.
A) Job enlargement
B) Job simplification
C) Open-book management
D) Job rotation
A federally-sponsored program which offers loan guarantees to create and expand
businesses in areas with below-average income and high unemployment is called:
A) the Small Business Administration.
B) the Economic Development Administration.
C) SBIC.
D) the Farmers Home Administration.
The type of business that does well when located near competitors is:
A) one that has a unique product line, dissimilar to that of its competitors.
B) one that sells high-priced products that customers comparison shop for.
C) one whose location is part of its trademark.
D) one located in an incubator.
Life insurance differs from all other types of insurance in that:
A) it cannot be purchased by the one who benefits from the loss.
B) it does not pertain to avoiding risk.
C) it is federally insured.
D) it doesn’t pay unless there is a loss.
When collecting for the sale of foreign goods, a small business will use a ________, an
agreement between their bank and the foreign buyer’s bank that guarantees payment.
A) bank draft
B) foreign sales agreement
C) tariff voucher
D) letter of credit
A recent study of top salespeople found that they:
A) do most of the talking during the sales call.
B) work from the customer’s perspective and use past “success stories.”
C) tend to be indirect, taking their time to get to the point with the customer.
D) see themselves as vendors and tend to not leave sales materials with the customer.
To protect investors from unscrupulous franchisers, the regulatory body is the:
A) FCC.
B) Justice Department.
C) FDA.
D) FTC.
The final step of the strategic planning process is:
A) establishing accurate controls.
B) translating the strategic plan into operational plans.
C) evaluating the competitive environment.
D) choosing a marketing strategy to pursue.
The FTC forbade the practice of:
A) interlocking directorates.
B) mergers.
C) acquisitions.
D) price discrimination.