Essentials of Entrepreneurship & Small Business Mgmt., 7e (Scarborough)
Chapter 1 The Foundations of Entrepreneurship
1) One of the most significant economic developments in recent business history relates to the:
A) growth of blue-chip corporations.
B) development of Pacific Rim countries.
C) entrepreneurial spirit.
D) additional employment opportunities offered by government institutions.
2) The recent number of job losses in large corporations compared to the jobs created by small
business has changed the perception of ________ for launching a new business.
A) prestige
B) risk
C) financing opportunities
D) short-term potential
3) The profile of an entrepreneur includes:
A) a desire for responsibility and moderate risk.
B) confidence in the ability to succeed and determination.
C) a high level of energy, a desire for immediate feedback and a future orientation.
D) All the above
4) An entrepreneur is one who:
A) is willing to attempt to implement a business concept and then give up if it does not meet
immediate expectations.
B) understands the process of developing an idea and does not need to understand what it means
to bring that idea to a viable business concept.
C) knows that the concept they are about to develop will result in a profitable business.
D) creates a new business concept for the purpose of achieving profit and growth by assembling
the necessary resources to capitalize on identified opportunities.
5) All of the following are characteristics of the typical entrepreneur except:
A) confidence in his/her ability to succeed.
B) value of money over achievement.
C) desire for immediate feedback.
D) a future orientation.
6) Entrepreneurs are characterized by:
A) skill at organizing.
B) desire for immediate feedback.
C) high energy levels.
D) All of the above
7) Entrepreneurs who repeatedly start businesses and grow to a sustainable size before striking
out again are known as ________ entrepreneurs.
A) opportunistic
B) persistent
C) serial
D) classic
8) Entrepreneurs typically possess:
A) the ability to easily access capital.
B) a set of unique skills that is usually accompanied by advanced degrees in several areas.
C) a high level of commitment, have a tolerance for ambiguity, are flexible and tenacious.
D) specialized technical abilities.
9) Entrepreneurs who start businesses because they cannot find work any other way are:
A) necessity entrepreneurs.
B) serial entrepreneurs.
C) opportunity entrepreneurs.
D) corporate cast-offs.
10) In addition to the opportunity to create their own destiny and enjoy what they do,
entrepreneurs also benefit from the ability to:
A) earn tremendous wealth without risk and uncertainty.
B) make a difference in an area important to them and be recognized for those efforts.
C) create wealth without providing true value.
D) exploit the opportunities that the free enterprise system offers.
11) In a large organization, an individual may be stifled and limited by a wide variety of factors.
However, by owning one’s own business, the only limits are one’s own creativity, talent, and
determination. In this sense, small business ownership offers the advantage of the:
A) opportunity to reach one’s full potential.
B) opportunity to reap unlimited profits.
C) chance to learn from other’s mistakes.
D) ability to accumulate certain wealth.
12) Which of the following is a benefit of entrepreneurship?
A) The opportunity to gain control over your own destiny.
B) The opportunity to reach your full potential.
C) The opportunity to do what you enjoy.
D) All of the above
13) Potential drawbacks of entrepreneurship may include:
A) uncertainty of income, risk, long hours, and high stress.
B) uncertainty of income, risk, easy hours, and frequent vacations.
C) uncertainty of income, risk, long hours, and the immediate accumulation of wealth.
D) certainty of income, risk, long hours, and high stress.
14) It is estimated that ________ percent of new businesses fail within two years, while
________ percent fail within five years.
A) 31; 51
B) 51; 64
C) 35; 41
D) 51; 31
15) Within five years, ________ percent of new businesses will fail.
A) 31
B) 45
C) 51
D) 65
16) The majority of new business owners work:
A) fewer than 40 hours per week.
B) more than 40 hours per week.
C) more than 70 hours per week.
D) more than 80 hours per week.
17) Nearly ________ of entrepreneurs start their businesses between the ages of 25 and 44 and
the number of Americans in that age range currently is ________ .
A) one-half; 8.5 million
B) two-thirds; 85,000
C) two-thirds; 85 million
D) on-fourth; 85 million
18) Factors that feed the economic boom behind entrepreneurship include:
A) demographic and economic factors.
B) technology and cloud computing.
C) the shift to a service-based economy and international opportunities.
D) All of the above
19) Which of the following is NOT one of the forces driving the entrepreneurial trend in our
country?
A) Shift away from a service economy
B) Independent lifestyle
C) International opportunities
D) E-commerce and the World Wide Web
20) Which of the following technological forces is driving the entrepreneurial trend in our
nation?
A) Cloud computing
B) E-commerce
C) Technological advancements
D) All of the above
21) Entrepreneurs may find benefit from the Internet due to its potential:
A) if the organization is willing to invest millions of dollars in this effort.
B) only if the entrepreneur has a high level of technical abilities.
C) as a relatively low-cost solution to expand its revenue-generating abilities.
D) to take all pressure off other attributes of the business venture.
22) International opportunities are:
A) clearly out of reach for entrepreneurial businesses.
B) now within the reach of entrepreneurial businesses and may present significant opportunities.
C) highly limited for entrepreneurs.
D) risky and do not merit serious consideration by the entrepreneur.
23) Which of the following statements concerning small businesses and international markets is
false?
A) Although terrorism and global recession have slowed the growth of international trade
somewhat, global opportunities for small businesses have a long-term positive outlook.
B) Although the U.S. is an attractive market, approximately 95 percent of the world’s population
lives outside its borders.
C) Because exporting is so complex and requires a company to have so many international
experts on staff, exporting is not feasible for small businesses.
D) Small companies comprise 97 percent of all businesses engaged in exporting, yet they
account for only 30 percent of the nation’s export sales.
24) Small companies that operate globally from their inception are referred to as:
A) micromultinationals.
B) intrapreneurial ventures.
C) global companies.
D) international companies.
25) Small companies that have expanded successfully into foreign markets tend to rely on all but
which of the following strategies?
A) Research foreign markets thoroughly.
B) Focus on many countries initially.
C) Utilize government resources designed to help small companies establish an international
presence.
D) Forge alliances with local partners.
26) Entrepreneurial couples who work together as co-owners of their business are referred to as:
A) dual entrepreneurs.
B) corporate dropouts.
C) corporate cast-offs.
D) copreneurs.
27) Women in business still experience ________ as they attempt to break the “glass ceiling.”
A) success
B) opportunities
C) discrimination
D) ease of navigation
28) The demographic attributes of successful entrepreneurs are:
A) limited to specific ages, genders, and ethnic backgrounds.
B) uncertain and have not been fully studied or analyzed.
C) are key predictors that determine how long the business will survive.
D) highly diverse relating to age, gender, and ethnicity.
29) Which of the following statements is not true regarding the diversity of entrepreneurs?
A) Minority-owned businesses have come a long way in the past decade, and their success rate is
climbing.
B) Minority-owned businesses now account for approximately 22 percent of all businesses in the
U.S.
C) Immigrants with more education and experience than those of the past are coming to the U.S.
and succeeding in entrepreneurial ventures.
D) The numbers of part-time and home-based entrepreneurs are rising.
30) Which of the following statements about women-owned businesses is false?
A) The businesses women start tend to be smaller than those men start.
B) Women own about 28 percent of all privately held businesses in the U.S.
C) The survival rate of women-owned businesses is much lower than that of U.S. businesses
overall.
D) Most women-owned companies are concentrated in retailing and services.
31) ________ percent of all U.S. businesses are family owned and managed.
A) Twenty-five
B) Fifty
C) Seventy
D) Ninety
32) “Copreneurs” are defined as:
A) entrepreneurs that work part-time.
B) highly successful entrepreneurs with prior company experience and background.
C) those entrepreneurs that will eventually combine their business with another venture.
D) entrepreneurial couples that work together as co-owners of their business.
33) Which of the following is NOT a characteristic of a successful working relationship between
copreneurs?
A) A clear definition of one partner as “boss” and the other as “subordinate”
B) Compatible business and life goals
C) Complementary business skills
D) A clear division of roles and authority based on each partner’s skills and abilities
34) Which of the following is a characteristic of copreneurs?
A) Mutual respect
B) Complementary business skills
C) A clear division of roles and authority
D) All of the above
35) Approximately ________ percent of corporate managers who are “cast off” as companies
downsize become entrepreneurs.
A) 5
B) 15
C) 20
D) 45
36) Melinda and John Perez, both corporate attorneys in New York City, have grown tired of
their lengthy daily commute, the stress of their jobs, and the overbearing policies of their
employers. They have decided to leave their six-figure jobs and together open a guide service in
Wyoming. Melinda and John are examples of:
A) corporate castoffs and corporate dropouts.
B) corporate dropouts and copreneurs.
C) corporate castoffs and copreneurs.
D) copreneurs and serial entrepreneurs.
37) Entrepreneurs that use their skills to create a profitable business that is designed to achieve
social and environmental goals for the common good are known as:
A) social entrepreneurs.
B) not-for-profit entrepreneurs.
C) copreneurs.
D) serial entrepreneurs.
38) Of the 28 million businesses in the United States, more than ________ are considered small.
A) 50 percent
B) 75 percent
C) 88 percent
D) 99 percent
39) According to the U.S. Small Business Administration, a common delineation of a small
business is one that employs fewer than:
A) 50 people.
B) 100 people.
C) 250 people.
D) 500 people.
40) The nation’s small businesses:
A) employ more than 51 percent of the nation’s private sector workforce.
B) create more jobs than do big businesses.
C) account for 47 percent of business sales.
D) All of the above
41) Small companies:
A) created fewer jobs than big companies in the last decade.
B) are concentrated in the manufacturing and retail sectors.
C) are the leaders in offering training and advancement opportunities to workers.
D) account for approximately 10 percent of the nation’s GDP and 25 percent of business sales.
42) The majority of small companies are concentrated in the ________ and ________ industries.
A) manufacturing; retail
B) manufacturing; service
C) retail; service
D) wholesale; retail
43) David Birch, president of the research firm Cognetics, suggests that three percent of small
businesses create approximately ________ percent of new jobs.
A) 50
B) 60
C) 70
D) 80
44) David Birch describes small companies growing at 20 percent or more per year with at least
$100,000 in annual sales that create 70 percent of the net new jobs in the economy as:
A) “assertive.”
B) “antelopes.”
C) “aggressive.”
D) “gazelles.”
45) Small companies are incubators of new sales ideas, products and services and create
________ times more patents per employee than large companies.
A) 3
B) 5
C) 10
D) 13
46) One hallmark of successful entrepreneurs is the ability to:
A) be willing to gamble.
B) fail intelligently.
C) overlook past successes.
D) repeat the same mistake.
47) John has come to you for advice on starting a business venture. He wants to know the best
way to gain the experience he’ll need. You suggest that he:
A) read a small business book.
B) seek knowledge and experience in the field he wishes to enter.
C) determine his weaknesses and return to school for a term or two.
D) just jump in and learn as he goes.
48) Most startup companies can expect to need ________ capital than they anticipate.
A) less
B) the same
C) more
D) within 10% of the
49) The primary cause of small business failures is:
A) the lack of capital.
B) management mistakes.
C) poor location.
D) improper inventory control.
50) Entrepreneurs tend to be overly ________ and commonly misjudge the ________
requirements of going into business.
A) optimistic; personal
B) optimistic; financial
C) pessimistic; financial
D) optimistic; professional
51) The only people who ________ are those who never do anything or never attempt anything
new.
A) succeed
B) prosper
C) profit
D) fail
52) Which of the following was not identified as one of the suggestions for small business
success?
A) Develop a business plan as you grow your business.
B) Manage your financial resources and understand financial statements.
C) Know your business in depth.
D) Learn to manage people successfully.
53) Which of the following is/are true regarding business plans?
A) Provide a pathway to success.
B) Allow entrepreneurs to replace faulty assumptions with facts before making the decision to go
into business.
C) Create a benchmark against which entrepreneurs can measure actual company performance.
D) All of the above
54) Most entrepreneurs believe that ________ is what matters most, but ________ is the most
important financial resource for a small business owner.
A) cash; profit
B) profit; cash
C) profit; inventory
D) inventory; cash
55) Entrepreneurs can increase their chances for success if they:
A) know their business in depth and develop a solid business plan.
B) manage their financial resources and understand financial statements.
C) learn to manage people and keep in touch with how they react to stress and balance their
health needs with the needs of the business.
D) All of the above
56) The 21st century has seen record numbers of entrepreneurs launching businesses on a global
basis.
57) Current competitive conditions favor large companies over smaller ones because of their
flexibility combined with their ability to use their size to achieve efficiency and economies of
scale.