1. How does the SBA define a small business? Approximately what percentage of all businesses in the United States
are considered “small”?
2. Why do certain industries tend to be more attractive for the start-up of a small business?
3. Give examples to support the statement, “There must be some motivation to start a business.”
4. Why are small businesses prone to failure?
5. Data from 2013 from the Small Business Administration shows women-owned businesses as a dominate part of the
U.S. economy. What were some of the findings of that data?
6. What do small businesses as a group contribute to the U.S. economy?
7. What are the advantages of owning a small business? Give examples.
8. What are the disadvantages of owning a small business?
9. What is a business plan? What are its components? Why is it so important?
10. What is a small-business development center (SBDC)?
11. What is the Small Business Administration? Who created it?
12. What is the Service Corps of Retired Executives (SCORE)? How does it assist small-business owners?
13. What is a small-business institute? How does it help small-business owners?
14. What is the primary function of SBA financial assistance? Where do most SBA loans originate?
15. What are small-business investment companies? Name some companies that were financed through SBICs during
their initial stages.
16. What is a franchise? Name several and popular franchises.
17. What are the advantages and disadvantages to the franchisee of having a franchise?
Personal Wellness
Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail
business that sells sporting goods equipment. When she started to work there, she noticed several things that were
possibly the cause of the business not doing as well as it hoped. Angela has been thinking of starting her own small
business because she feels she has learned much through working for Personal Wellness.
Angela’s manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan
would put things into perspective to help the company do better. After creating the plan, Angela suggested that
Personal Wellness contact a group of senior and graduate students to provide management counseling for the
company. Angela wants to make sure that her leaving does not become the cause of the company going under.
18. Refer to Personal Wellness. Personal Wellness can be classified as operating in what type of industry?
a. Service
b. Production
c. Manufacturing
d. Distribution
e. Wholesaling
19. Refer to Personal Wellness. What is not one of the key reasons Personal Wellness would possibly fail?
a. Capital
b. Employees
c. Management
d. Money
e. Planning
20. Refer to Personal Wellness. In preparing the business plan, Angela would have incorporated all of these
components except
a. company and industry descriptions.
b. an exit strategy.
c. government regulations.
d. benefits to the community.
e. a marketing plan.
21. Refer to Personal Wellness. A business plan should answer all of the following questions except
a. “Which accounting firm will audit the company?”
b. “What exactly is the nature and mission of the new venture?”
c. “Why is this new enterprise a good idea?”
d. “How much will the new venture cost?”
e. “What are the entrepreneur’s goals?”
22. Refer to Personal Wellness. When Angela suggested that the company contact a group, what type of group was
she referring to?
a. Strategic institute
b. Small–business institute
c. HR institute
d. Management institute
e. Business institute
Mc–King Chicken
Brian decided to open a local franchise of the well-known Mc–King Chicken, a fast-food restaurant. Before he took
the initiative to open the franchise, he tried to weigh all the advantages and disadvantages. He decided, based on his
research and understanding, that it would be beneficial to open a local fast-food restaurant.
23. Refer to Mc-King Chicken. When Brian opens the Mc-King Chicken restaurant in his town, he would be known as
the
a. franchisor.
b. franchising.
c. franchise.
d. franchisee.
e. franchises.
24. Refer to Mc-King Chicken. Which of the following would not be an advantage of a franchise?
a. He gains fast and well-controlled distribution.
b. He has more capital available to expand.
c. Outlets are maintained and operated according to a set plan.
d. He has the opportunity to start a business with limited capital.
e. Success will cause another outlet to be opened nearby.
25. Refer to Mc–King Chicken. Which of the following would be an advantage for Brian?
a. Guidance from the franchisor
b. Franchise holders paying for their security
c. Disagreements increasing
d. Contract disputes
e. The franchisor maintaining a great deal of control
26. Michael Tucker operates Tucker Farms in northern Illinois. Last year, his annual receipts were just under $750,000.
According to the Small Business Administration, Tucker Farms is a
a. small business.
b. medium-sized business.
c. large business.
d. franchise.
e. joint venture.
27. A small business is all of the following except
a. independently owned.
b. operated for profit.
c. dominant in its field.
d. difficult to manage.
e. demanding of the owner’s time and attention.
28. Which of the following organizations would be considered a small business?
a. Producer of semiconductors with 2,000 employees
b. Wholesaler with 50 employees
c. Retail clothing store chain with annual sales of $26 million
d. Construction company with average annual receipts of $32 million
e. Farmer with annual receipts of $10 million
29. To qualify as a small business, a manufacturing plant can employ no more than people.
a. 500
b. 1,000
c. 2,000
d. 3,000
e. 3,500
30. To qualify as a small business, a retailing establishment may not exceed annual sales of
a. $1.2 million to $4 million.
b. $2.6 million to $5 million.
c. $3 million to $6 million.
d. $7 million.
e. $12.5 million.
31. To qualify as a small business, an agricultural company’s maximum annual receipts must be no more than
a. $500,000.
b. $9 million.
c. $800,000.
d. $1 million.
e. $750,000.
32. Approximately how many businesses are there in the United States?
a. 900,000
b. 11 million
c. 27 million
d. 1 billion
e. 4 billion
33. Mary‘s cleaning business has several customers but is not dominant in its field. This is an example of a(n)
business.
a. entrepreneurship
b. unsuccessful
c. small
d. manufacturing
e. large corporate
34. A company generally needs more than employees in order to be considered large.
a. 50
b. 100
c. 300
d. 500
e. 1,000
35. What is the primary reason that so many new businesses fail?
a. Owner does not work hard enough
b. Mismanagement resulting from lack of business know-how
c. Low employee quality for new businesses
d. Lack of brand-name recognition
e. Inability to compete with well–established brand names
36. Approximately what percentage of the jobs in the United States do small businesses provide?
a. 5 percent
b. 10 percent
c. 30 percent
d. over 50 percent
e. nearly 90 percent
37. Which of the following is not considered a category in the distribution industries?
a. Manufacturing
b. Wholesaling
c. Retailing
d. Transportation
e. Communications
38. Which of the following would least likely be started as a small business?
a. Flower shop
b. Restaurant
c. Electricity company
d. Landscaping business
e. Furniture repair store
39. Businesses such as flower shops, restaurants, bed and breakfasts, and automobile repair are good candidates for
entrepreneurs because they
a. do not require any skills.
b. are the most likely to succeed.
c. can obtain financing easily.
d. require no special equipment.
e. have a relatively low initial investment.
40. Statistically, approximately what percentage of all new businesses can be expected to fail within their first seven
years?
a. 10
b. 24
c. 50
d. 31
e. 69
41. Ben has been thinking about going into business. However, he has discounted entering automobile manufacturing
because it
a. requires little skill and knowledge.
b. is not a part of the production industry.
c. requires huge investments in machinery and equipment.
d. is unprofitable.
e. requires by law a corporate form of business.
42. Businesses are generally placed into three broad categories: service industries, production industries, and
industries.
a. financial
b. manufacturing
c. distribution
d. transportation
e. retailing
43. Price Waterhouse, a large accounting firm, would be most properly classified in the industry, whereas a
grocery store such as Kroger would be included in the
a. distribution; production
b. service; distribution
c. production; service
d. service; production
e. distribution; service
industry.
44. Service industries account for approximately what percentage of all small businesses?
a. 25
b. 35
c. 50
d. 70
e. 80
45. Distribution industries account for approximately what percentage of all small businesses?
a. 20
b. 25
c. 33
d. 55
e. 70