86. All of the following are advantages that small businesses have except
a. the ability to adapt to change.
b. personal relationships with their customers.
c. simplified record keeping.
d. independence.
e. greater potential for making a profit.
87. Your friend, Shonta, started a graphic design firm about a year ago. The business has done well, but it needs a lot
more equipment, computers, and employees to continue expanding. Shonta does not see any problem because she
thinks she can easily get all the money she will need from her local bank. What advice might you give her?
a. She is right, the bank is likely to lend her as much as she needs because banks primarily focus on supporting
small businesses.
b. She is crazy, banks do not lend money to small businesses but only to well- known, well-established
organizations.
c. She should sell her business immediately before it fails because most small businesses fail during the first five
years.
d. She should not accept any new clients so that she can end the need to add additional equipment and
employees.
e. She should consider alternative sources of financing because banks provide only about one-fourth of the total
capital to small businesses.
88. The disadvantages of small businesses include all of the following except
a. limited potential for growth.
b. a high risk of failure.
c. no opportunity to support your family.
d. limited ability to raise capital.
e. limited advancement opportunities for employees.
89. According to Census Bureau and Federal Reserve surveys, about 50 percent of all new businesses begin with less
than in total capital.
a. $1,000 b.
$25,000 c.
$30,000 d.
$50,000 e.
$100,000
90. Beau works for a small pest-control company that has a total of five employees. From his point of view, the
primary disadvantage of a small business is the
a. risk of failure.
b. limited ability to raise capital.
c. limited potential for him to advance.
d. personal relationship with his employer.
e. complicated management structure.
91. A carefully constructed guide for the person starting a business is a(n)
a. business plan.
b. marketing plan.
c. organizational plan.
d. articles of business.
e. business budget.
92. Before seeking financial backing for his new business, Tyler puts together a concise document explaining the
nature, mission, and goals of his new business and its expected costs and potential. Tyler has constructed a(n)
a. marketing plan.
b. organizational mission statement.
c. business policy.
d. business plan.
e. organizational guide.
93. As a businessperson planning to open a new small business, you know that the business plan should not contain
a. a discussion of the nature and mission of the new business.
b. information about how much it will cost to open and operate the new business.
c. any mention of the businessperson’s goals; financial institutions just aren’t interested in these.
d. an explanation of why opening a business of this type makes good business sense.
e. pages and pages of detailed facts and figures.
94. Cindy compiles a business plan for a business she hopes to start. This plan should answer all of the following
questions except
a. How much will the new business cost?
b. Why is this new business a good idea?
c. What are Cindy’s goals for the business?
d. What is the nature and mission of the business?
e. How often will the business have a sale?
95. “This business will create a caring, learning environment for elementary school children after regular school hours
to meet the needs of working parents.” This statement answers which of the following issues that should be
addressed in a business plan?
a. How much will the new business cost?
b. Why is this new business a good idea?
c. What are Cindy’s goals for the business?
d. What is the nature and mission of the business?
e. How often will the business advertise?
96. The following statement answers which major question that a business plan should address? “This business will
serve over 200 customers by the end of the year and employ seven full-time employees.”
a. How much will the new business cost?
b. Why is this new business a good idea?
c. What are the goals for the business?
d. What is the nature and mission of the business?
e. How often will the business advertise?
97. SBA stands for
a. Special Business Agency.
b. Small Bond Administration.
c. Society for Business Alliances.
d. Special Business Association.
e. Small Business Administration.
98. What organization created by Congress in 1953 assists, counsels, and protects the interests of small businesses?
a. SCORE
b. FTC
c. SBIC
d. SBA
e. SBDC
99. What is the most popular course offered by the SBA?
a. A “How to Get Rich Quick” course
b. A course about accounting for a small business
c. A course that surveys eight to ten areas of business management
d. A course on motivating and encouraging your employees
e. A course on how to obtain more financing for your business
100. Professors at most universities are highly encouraged to participate in community service. What organization that
provides low-cost courses and workshops would welcome management professors with an interest in small
companies?
a. FDIC
b. FDA
c. SBA
d. SCORE
e. SBI
101. Through her university, Gwen and her classmates work together to provide management counseling to small
businesses in their community. This is called a
a. small-business administration.
b. small-business development center.
c. small-business investment company.
d. small-business institute.
e. community improvement council.
102. Ronald is the director of a university-based group that provides individual counseling, specialized training, and
research data to owners of small businesses. Ronald’s group is called a
a. small-business institute.
b. university small-business administration.
c. small-business development center.
d. small-business improvement coalition.
e. center for small businesses.
103. The acronym SCORE stands for
a. Standard Card Options for Retirees.
b. Sam’s Cooperatives Operating in Reno.
c. Service Corps of Retired Employees.
d. Service Corps of Retired Executives.
e. Sonoma City Options for Retired Employees.
104. David Fisher, a recently retired corporate executive, is becoming restless in his new role and would like to make
this transition smoother by participating in the business community in some limited manner. Since David is
financially secure and primarily interested in some sort of volunteer work, he should consider becoming involved
with which of the following SBA programs?
a. ACE
b. SBIC
c. SBDC
d. SBI
e. SCORE
105. The SBA makes a special effort to
a. assist minorities wanting to start small businesses or expand existing ones.
b. send SCORE program executives to high schools.
c. hand-deliver their publications.
d. raise money for small businesses.
e. encourage teenage entrepreneurship.
106. University-based groups providing individual counseling and practical training to owners of small businesses are
known as
a. the Small Business Administration.
b. small-business development centers.
c. small-business institutes.
d. special task forces.
e. none of the above.
107. A group of senior and graduate students in business administration providing management counseling to small
businesses is known as a
a. small-business administration.
b. small-business development center.
c. small-business institute.
d. special task force.
e. none of the above.
108. The SBA places special emphasis on aid to
a. new businesses.
b. those in production industries.
c. minority-owned businesses.
d. franchise outlets.
e. those in need of guaranteed loans.
109. Most Small Business Administration loans are actually made by
a. the Small Business Administration.
b. the government.
c. private lenders.
d. private foundations.
e. insurance companies.
110. What organization issues management, marketing, and technical publications of interest to present and prospective
small-business managers that can be obtained from the U.S. Government Printing Office?
a. SBI
b. SBIC
c. SEC
d. SBA
e. SBDC
111. A guaranteed SBA loan may be as large as
a. $5 million.
b. $3.5 million.
c. $2.0 million.
d. $1.5 million.
e. $750,000.
112. The average size of an SBA-guaranteed business loan is about
a. $25,000.
b. $100,000.
c. $200,000.
d. $300,000.
e. $500,000.
113. Jamie applies for a small-business loan from the SBA. If he is approved for the loan, where will the money actually
come from?
a. The government
b. Private lenders
c. Venture capitalists
d. The Small Business Administration
e. Other small businesses
114. Money that is invested in small and sometimes struggling firms that have the potential to become very successful is
called
a. seed money.
b. franchise funds.
c. SBA-guaranteed loans.
d. growth funds.
e. venture capital.
115. Small-business investment companies
a. are an extension of the SBA.
b. are individual, nonprofit organizations.
c. are profit-making organizations.
d. do not expect a return on their investments.
e. make loans to small businesses.
116. The average life for an SBA-guaranteed business loan is years.
a. twenty-five
b. eighteen
c. fifteen
d. twelve
e. eight
117. The primary financial function of the Small Business Administration is to
a. lend money.
b. guarantee loans.
c. find sources of financial aid.
d. help owners apply for loans.
e. provide aid only when a natural disaster occurs.
118. Privately owned firms providing venture capital would be identified as
a. the Small Business Administration.
b. small-business development centers.
c. small-business investment companies.
d. small-business institutes.
e. the Active Corps of Executives.
119. A franchisor supplies all of the following except
a. land to place the business on.
b. the name of the shop.
c. the methods of doing business.
d. any necessary training.
e. advertising materials.
120. You have decided to open a pet store and have engaged in a contract with Dog N’ Cat Centers, Inc. You and the
company have drawn up an agreement that allows you to use the company’s name and its proven method of doing
business, to receive training, and to use its advertising materials. In this agreement, Dog N’ Cat is the
are the ____.
a. entrepreneur; corporation
b. franchisor; franchisee
c. employee; employer
d. entrepreneur; local chain
e. corporation; manager
and you
121. An individual or organization granting a license to operate an individually owned business as though it were part of a
chain of outlets or stores is a(n)
a. franchise.
b. franchisor.
c. franchisee.
d. venture capitalist.
e. entrepreneur.
122. Eric decides to purchase and operate a Subway restaurant. Eric is the
a. franchise.
b. franchisee.
c. licensor.
d. franchisor.
e. trainer.
123. The franchisee supplies
a. the required training for the franchised business.
b. a known and advertised business name.
c. a method of doing business.
d. the required materials for the franchised business.
e. labor and capital, and owns and operates the outlet.
124. In a franchise business, the party paying the franchise fee is known as the
a. franchisee.
b. franchisor.
c. entrepreneur.
d. business owner.
e. manager.
125. You have been running a successful art and framing shop for three years. You have decided to allow others to use
your business name, materials, and methods in operating their own business for a fee. You are going to enter a
a. joint venture.
b. small-business development center.
c. franchise agreement.
d. venture capitalist agreement.
e. business contraction.