When evaluating an existing building’s interior, the entrepreneur should pay particular
attention to the building’s structural components and the suitability for his/her business.
Most of the time of a performance evaluation should be spent discussing the future and
what can be done to improve performance.
Small business owners should avoid cutting prices on slow-moving items since it is
better to hold onto them and try to sell them later at normal prices.
A buyer should never trust the firm’s balance sheet evaluation of inventory but should
conduct an independent assessment of inventory age and salability.
If an entrepreneur is not willing to risk funds in a business venture, other potential
investors and lenders are not likely to provide capital either.
Banks focus on a small business’s ability to generate a positive cash flow when lending
money.
The break-even selling price is calculated by dividing the profit desired plus the
variable cost per unit times the quantity produced plus the total fixed cost by the
quantity produced.
SBA loans do not carry special deals or interest rates and typically are set at prime plus
2.25% for loans under seven years in length.
Company culture is a process by which a firm determines the duties and nature of the
jobs to be filled and the skills and experience required of the people who are to fill
them.
The functional aspects of a building’s interior are more important than its exterior
considerations.
Carrying unsold inventory from one year to the next is senseless since it represents an
investment earning no return and it ties up working capital that could be put to more
productive uses.
All firms within an industry have the same price floor.
Any liens against a business must be satisfied by the current owner before the sale can
be consummated.
A variance is a special exception to a zoning ordinance.
The Clayton Act permits suppliers to charge customers different prices for the same
product based on what the market will bear.
The safest course of action for a small business to take with an employee who has AIDS
is to fire him.
The “competitor analysis” section of the business plan is optional since few lenders and
investors are concerned about a small company’s rivals in the marketplace.
Open-book management is when employees have access to all of a company’s records,
except financial statements.
Multiple unit pricing is a technique used to simplify the pricing decision by setting the
same price for items in the same line.
The competitive profile matrix matches the firm’s core competencies with those of
selected competitors.
The first phase in selecting a location is determining what regions of the country are
experiencing substantial growth.
98% of the time, shoplifters are successful in their thefts.
One of the issues an entrepreneur must address before going global is whether or not
there is a profitable market in which the firm has the potential to be successful for an
extended period of time.
An embargois a total ban on imports of certain products or all products from a
particular nation.
New online funding options are emerging to help small businesses with credit.
It is better to maintain too little rather than too much inventory because there are
significant storage costs for excess inventory, but few if any costs associated with
understocking inventory.
Shoplifters motivated to steal to support a drug or alcohol habit are usually hard to
detect because their behavior is usually stable and consistent.
A major advantage of trade shows is their ability to provide a pre-selected audience of
potential customers.
CAPs are designed to encourage lending institutions to make loans to businesses that do
not qualify for traditional financing.
One “break” small business gets over large companies is a significantly lower rate of
substance abuse due to the “family-like” atmosphere that tends to prevail in small
companies.
Job sharing is a work arrangement in which employees work at a place other than the
traditional office, such as a satellite branch closer to their homes or, in some cases, at
home.
Jerry Turner and Michael Clarke needed money to buy equipment and weren’t able to
get either trade credit or a bank loan because they had no assets and didn’t have the cash
for a down payment.
The small business owner should open an interview with a major question.
Carrying too much inventory decreases the chances that a business will run out of cash.
The effectiveness of banner ads is judged through the pop-up rate.
In a two-bin system, the amount of stock in the second bin should equal the quantity
ordered.
The greatest strength of direct mail is its ability to allow the owner to select the specific
audience to receive the message.
The key to successful innovation is spending “megadollars” on research and
development and hiring staff who are very creative.
The most important ingredient that venture capitalists look for in judging the potential
success of a small business is a competent management team.
Credit checking customers is an example of a risk reduction strategy.
The nation is rapidly moving from:
A) industrial to capitalism.
B) capitalism to industrial.
C) industrial to knowledge-based.
D) None of the above
________ is (are) a method of financing frequently employed by retailers of “big ticket
items”autos and major appliances.
A) Discounted installment contracts
B) Trade credit
C) Installment loans
D) Floor planning
Gusti agrees to maintain Mrs. Poppendraius’s yard, pulling weeds, cutting the grass
weekly, and trimming the shrubbery once during the summer for $30 a month. Gusti
makes a half-hearted attempt at pulling weeds, cuts the lawn once all summer and never
touches the shrubbery. No damage is done except that Mrs. Poppendraius’s yard appears
neglected and unkempt. In terms of contract law:
A) Gusti is not contractually obligated because he is a minor.
B) Mrs. Poppendraius may collect compensatory damages.
C) Gusti is in breach of contract.
D) Mrs. Poppendraius may collect consequential damages.
A limited partnership is a modification of a(n) ________ form of ownership.
A) sole proprietorship
B) general partnership
C) corporation
D) S-corporation
Term loans impose restrictions called:
A) loan boundaries.
B) covenants.
C) financial limits.
D) margins.
A firm sells small-ticket items to their regular customers on customer charge accounts
and then bills the customers each month. This type of credit arrangement is called:
A) trade credit.
B) charge account credit.
C) installment credit.
D) debit card credit.
Which of the following are the categories of quality?
A) Vendor based
B) Distribution based
C) User based
D) None of the above
An American executive went to a foreign country to sign a business contract. While
there, he found that there were numerous government regulations his company needed
to meet before closing the deal. This executive was experiencing which barrier to
international trade?
A) Non-tariff
B) Political
C) Cultural
D) Domestic
You should identify your key people, explain their backgrounds and what they bring to
the business, in:
A) the executive summary.
B) the description of the management team.
C) the strategic plan.
D) the business strategy.
The “big three” of cash management include:
A) accounts receivable, overhead, and inventory.
B) accounts payable, accounts receivable, and taxes.
C) accounts receivable, accounts payable, and inventory.
D) accounts receivable, prices, and expenses.
Floating spots are common in what type of advertising media?
A) Radio
B) Newspaper
C) Magazine
D) Television
________ puts the customer at the center of a company’s thinking, planning, and action
and shifts the focus from a product or service to customers and their needs and wants.
A) Guerilla marketing strategy
B) Data mining
C) Customer relationship management (CRM)
D) Entertailing
In reviewing the company’s balance sheet, Andy noticed that the total asset is stated as
$5,500,000 and the total liability is $3,250,000. There is no paid-in capital or value for
common stock. What are the company’s retained earnings?
A) Can’t determine with the information given
B) $8,750,000
C) $2,250,000
D) There are no retained earnings
Trade discounts are offered on the basis of the:
A) size of the order.
B) position of the business in the distribution channel.
C) time of payment.
D) type of payment.
An amortization schedule is:
A) a breakdown of the loan payment which includes the interest rate and number of
years for the loan to be paid.
B) a breakdown of all fixed assets with their depreciation schedule.
C) a schedule the company has to provide the bank as part of their financial statements.
D) All of the above
Every business is characterized by a set of controllable variables called ________ that
determines the relative success (or lack of it) of market participants.
A) distinctive competencies
B) key success factors
C) opportunities and threats
D) competitive edge
Once an entrepreneur has evaluated him/herself, the next step in the acquisition process
would be to:
A) explore financing options.
B) prepare a list of potential candidates and investigate them.
C) work on a smooth transition.
D) evaluate the physical condition of the business.
The typical household receives an average ________ pieces of direct mail annually.
A) 52
B) 624
C) 236
D) 354
In most cases, a ________ pricing strategy is used to introduce relatively low priced
goods into the market where no elite segment and little opportunity for differentiation
exist.
A) skimming
B) penetration
C) geographic
D) opportunistic
The ________ becomes the heart of a company’s advertising message.
A) USP
B) brand equity
C) price
D) product
________ is not a primary goal of a competitive intelligence program.
A) Avoiding surprises from existing competitors’ new strategies and tactics
B) Identifying potential new competitors
C) Improving reaction time to competitors’ actions
D) All these are primary goals of a competitive intelligence program.
________ is (are) creditors’ claims against an existing business.
A) Assets
B) Liens
C) Equity
D) Accounts receivable
________ is a system that divides a county or a city into small cells or districts to
control the use of land, buildings, and sites.
A) An enterprise zone
B) Zoning
C) TIGER
D) A central business district
Conversion rates range from:
A) 8-10 percent.
B) 2-6 percent.
C) ten plus percent.
D) 1-4 percent
Managers have discovered that a quality approach to doing business:
A) is much more expensive than a nonquality focus, but worth it.
B) can lower employee turnover, increase market share, and decrease costs.
C) is easier to achieve than expected when TQM is implemented in an existing
business.
D) works in manufacturing but is not applicable to the purchasing process.
Employees contribute a portion of their earnings over time toward purchasing shares of
the company’s stock from the founder until they own the company outright. This is a
characteristic of a(n):
A) leveraged buyout.
B) sale for cash plus a note.
C) ESOP.
D) ESPO.
In the creative process, the transformation phase requires two types of thinking:
________ and ________.
A) convergent, parallel
B) divergent, parallel
C) investigative, parallel
D) convergent, divergent
A resident buying office is:
A) a business that buys and sells products in many countries, either in its own name, or
as an agent for its buyer-seller clients.
B) a firm in an overseas distribution network selling noncompetitive products made by
other firms.
C) a government-owned or business-owned facility set up in a foreign country to buy
products that are made there.
D) formed by an agreement where a licenser gives a foreign licensee the right to use a
patent, trademark, copyright, technology, and products in return for a percentage of the
licensee’s sales or profits.
One of the reasons for the significant drop in the number of public offerings since 2001
is:
A) the U.S. economic crisis.
B) the global economic meltdown.
C) the Quattrone Act, 2002.
D) the Sarbanes-Oxley Act, 2002.
There are two main risks in purchasing a franchise. First, that of the franchiser’s
experience and business system, and second:
A) the brand name recognition of the franchise.
B) the entrepreneur’s managerial skills and motivation.
C) the franchiser’s financing.
D) the economy trends in the country at the time the franchisee begins operation.
The items purchased most often online are:
A) apparel.
B) computer hardware.
C) books.
D) All of the above
________ is grouping together several products or services, or both, into a package that
offers customers extra value at a special price.
A) Leader pricing
B) Price lining
C) Discount pricing
D) Bundling