100. (p. 162) Traditionally small business statistics classified the retirement of an owner of a sole proprietorship as
a business failure.
101. (p. 161) Small businesses lack the resources to compete directly with big businesses.
102. (p. 162) Your brother, a family dentist, has opened a new office in your home town. As a business student
you know that this type of business experiences both low failure and growth rates.
103. (p. 162-163) Wei wants to start a small business. If her primary goal is fast growth and high profits, her best
chances would be in the manufacturing sector.
104. (p. 163) While Jing wants to start a small business, she has not yet uncovered an opportunity that would offer
her security and the likelihood of high profits. Jing will likely find that these two goals can seldom be achieved
by the same business.
105. (p. 161) Because of their superior financial resources and specialized staffs, big corporations can almost
always outperform small businesses.
106. (p. 163) The best way to learn about small business is to start your own.
107. (p. 163) Individuals desiring to learn about small business operations would be well advised to learn from
other entrepreneurs.
108. (p. 163) Many entrepreneurs got the idea for their own business from their experience of working for others.
109. (p. 163) Since entrepreneurs are starting new businesses, experience gained from working for an established
business isn’t particularly helpful.
110. (p. 164) Corporate management has been the training ground for many new entrepreneurs.
111. (p. 164) Offering to manage an established business for a percentage of the profits plus a salary offers
experience to the would-be entrepreneur and free time to the business owner.
112. (p. 163) There is no better way to learn about small business operations than to work for a small business
owner.
113. (p. 163) Entrepreneurs are well advised to avoid starting businesses in the same market in which they were
previously employed.
114. (p. 163) Carlos hopes to start his own business. He needs to avoid talking to other small business owners
about his plans because they might steal his ideas.
115. (p. 163) Sharaf decided to work for a floral design studio before opening her own shop. She will find that this
was a waste of time as her work is used to make someone else successful.
116. (p. 165) As an employee of a small business, DeMonte has observed the owner’s desire to retire. Since
DeMonte would like to buy the business, he needs to determine how much the business is worth. In order to
determine a fair price for the business, DeMonte should add up the market value of all of the firm’s physical
assets such as buildings, machinery, equipment, and inventory.
117. (p. 165) The primary concerns of an entrepreneur starting a new business would be planning and record
keeping.
118. (p. 165) According to the Small Business Administration, poor management is the cause of the majority of
small business failures.
119. (p. 165) A business plan is necessarily a bit vague since it is prepared prior to the beginning of business
operations.
120. (p. 165) A good business plan describes the nature of the proposed business, the target market, the
competitive advantages, and the qualifications of the owners.
121. (p. 166) Bankers and investors require entrepreneurs to present a well-conceived business plan.
122. (p. 166) In discussions with bankers, entrepreneurs should be prepared to personally guarantee the loan for
their business.
123. (p. 166) An entrepreneur’s personal financial position will have a minor impact on negotiations with bankers
for a small business loan.
124. (p. 166) Getting a business plan into the hands of the right people is nearly as important as getting the right
information in the plan.
125. (p. 166) The personal character of an entrepreneur is irrelevant to bankers when determining the credit
worthiness of a business loan.
126. (p. 166) Software designed to help create business plans has proven to be of little value because of the great
variety in the types of businesses.
127. (p. 166) Since creating a “perfect business plan” is impossible, entrepreneurs should focus on the other tasks
needed to get their firm started.
128. (p. 165) Identifying “poor management” as the cause of a small business failure likely includes poor
capitalization.
129. (p. 165) Poor management, as a cause of small business failure, may include problems in obtaining,
managing, and using money.
130. (p. 165) Identifying “poor management” as the cause of a small business failure likely covers a variety of
problems.
131. (p. 166) Aside from personal savings, the only other viable source of financing for an entrepreneur would be
funds available from friends and family.
132. (p. 168) Potential suppliers can be an excellent source of financing for a new business since lending money to
a new customer may be very much in their own interest.
133. (p. 168) Angel investors are the government agencies that invest money in new companies before they go
public.
134. (p. 168) Venture capitalists provide funds for startup businesses in exchange for part ownership in the new
firm.
135. (p. 168-169) State and local governments often act as venture capitalists.
136. (p. 168-169) While the Small Business Administration provides management advice to new business owners, it
is not empowered to provide financial assistance.
137. (p. 168) Venture capitalists provide funds for small businesses as part of their philanthropy programs.
138. (p. 168) Venture capitalists prefer investing in smaller start up businesses in order to reduce their overall risk.
139. (p. 168) The burst of the dot.com bubble caused venture capitalists to limit their funding of new businesses.
140. (p. 169) The Small Business Administration’s microloan program offers small businesses very small loans.
141. (p. 169) Small Business Administration microloans are based on the borrowers’ integrity rather than collateral
and credit history.
142. (p. 169) In order to qualify for a microloan from the SBA, an entrepreneur must have adequate collateral, and
a proven track record of success.
143. (p. 169, figure 6.6) Anti-discrimination laws prohibit the Small Business Administration from offering loans
specifically aimed towards women and/or minorities.
144. (p. 169) Small Business Investment Companies (SBICs) are privately owned companies licensed by the Small
Business Administration to lend money to small businesses.
145. (p. 169, figure 6.6) The SBA may guarantee loans made by a financial institution and repay them if the borrowers
stop making payments.
146. (p. 170) Success in running a business depends on knowing your customers, managing your employees, and
keeping efficient records.
147. (p. 170) In the business world, a market consists of those people who have a willingness to buy a particular
product.
148. (p. 170) Adequate funding for a small business venture insures its success.
149. (p. 170) One of the greatest advantages that small businesses have over larger ones is the ability to know their
customers better and to adapt quickly to the customers’ needs.
150. (p. 170) Attracting qualified workers presents a problem for small businesses since they usually offer less
money, fewer benefits, and less room for advancement than larger firms offer.
151. (p. 170) As their firms grow and prosper, busy entrepreneurs take pleasure in delegating authority to others.
152. (p. 170-171) Studies show that seniority is the most important criteria when selecting employees for promotion
to management positions.
153. (p. 170) Compared to employees of large businesses, small business employees are less satisfied with their
work because they see their jobs as less challenging.
154. (p. 171) Hiring family members offers the best answer to the problem of attracting qualified employees.
155. (p. 171) Questions about how much authority to delegate, and to whom, are easier issues for a family-run
businesses since they “can’t fire family.”
156. (p. 171) With fewer employees and less revenue, small businesses have less need for detailed records than do
larger business organizations.
157. (p. 171) Many small business owners report that the most important assistance they needed in starting and
managing their business involved accounting.
158. (p. 172) Commercial loan officers and insurance agents offer expert assistance that can be valuable to small
business owners.
159. (p. 172) One way to control the legal costs associated with operating a small business is to purchase a prepaid
legal plan.
160. (p. 172) Commercial loan officers serve as a resource for small business owners for information regarding
risk management.
161. (p. 172) A presence on the Internet can benefit a business even if their product can’t be sold to customers from
the Web.
162. (p. 172) The SCORE (Service Corps of Retired Executives) program, sponsored by the SBA, is designed to
provide financial assistance to minorities and women.
163. (p. 166) Prior to creating a business plan, discussions with bankers and investors can help entrepreneurs
determine the amount of financing available.
164. (p. 165) An effective business plan analyzes the competition and identifies the resources required to
profitably serve a target market.
165. (p. 165) When writing a business plan, prospective entrepreneurs should remember to omit details regarding
their experience and education since investors are only interested in the proposed business.
166. (p. 165-166) A major advantage of preparing a formal business plan is that prospective entrepreneurs must
identify the resources and activities required to successfully operate their proposed venture.
167. (p. 165) Bankers and venture capitalists prefer to meet face-to-face with prospective entrepreneurs rather than
review a formal business plan.
168. (p. 168) As a prospective entrepreneur, Ebony considered a variety of financing sources. Her discussions with
a venture capitalist revealed that this type of investor expects to receive a significant ownership interest in her
firm.
169. (p. 168) As opposed to venture capitalists, angel investors prefer to target their investments in new firms
requiring large sums of money.
170. (p. 168-169) Prospective entrepreneurs turned down by private lenders have little hope of getting financial help
from the Small Business Administration, since the SBA’s standards are even tougher than those of private
lenders.
171. (p. 168-169) Hoping to qualify for a microloan from the Small Business Administration, Madonna’s business
plan clearly identifies her strategy to profitably serve a target market. Unfortunately, her lack of business
experience and limited collateral greatly reduce her chances of obtaining the microloan.
172. (p. 168) Song’s interest in computers helped fuel her design of a new hard drive that is far superior to
anything on the market. Her desire is to start her own business and she is frustrated because she lacks the
needed financial resources. Even after the crash of the dot.com bubble, Song’s product and business plan will
likely attract several sources of financing if she is willing to give up part ownership in her company.
173. (p. 170) Because college students realize the importance of nursing homes for our aging population, the
students comprise an attractive market for nursing home insurance policies.
174. (p. 170-171) In order to better serve their customers, small business owners should avoid delegating authority
to their employees.
175. (p. 171) In managing employees, small business owners would be well advised to implement a policy of
promoting the employees with the greatest seniority.
176. (p. 171) Justin feels that his family-run business will be more likely to avoid the problems many growing
businesses have with managing employees. His attitude will likely hinder the growth of his company.
177. (p. 171-172) Whitney wants to start her own business, but she is concerned about her limited financial
resources. She would be well advised to save money by delaying her meeting with lawyers and accountants
until the business has been operating for a few years.
178. (p. 173) While only a small percentage of small businesses export, the number has increased dramatically in
the last decade.
179. (p. 173) Large multinational firms dominate the international market, leaving few opportunities for small
businesses.
180. (p. 173) One advantage enjoyed by small businesses in international markets is that overseas buyers like
dealing with individuals rather than large corporate bureaucracies.
181. (p. 173) Due in part to government support, the majority of U.S. small businesses are involved in exporting.
182. (p. 173) While there are only about 290 million people in the U.S., there are over 6 billion people in the
world.
183. (p. 173) Exporting offers small businesses opportunities to reduce their dependence on domestic sales and
extend product lives.
184. (p. 174) Small Business Administration loans help firms finance their domestic operations. These funds
however, cannot be used to finance exports since the money is provided by U.S. taxpayers.
185. (p. 173) Small businesses can provide more personalized service than a large corporation to overseas
customers.
186. (p. 173) The Internet has slowed small businesses participation in international markets.
187. (p. 174) As the owner of a small manufacturing business, Myles has an interest in exporting. However, he
doesn’t know how to get started. Fortunately, the government provides an abundance of information to
encourage entrepreneurs like Myles.
188. (p. 173) From a competitive standpoint, small businesses cannot expect to successfully compete with large
corporations in international markets.
189. (p. 173) The only real barrier preventing small businesses from exporting is insufficient knowledge of the
opportunities available.