Chapter 6 4 Employees of small businesses often have greater job satisfaction than do employees of larger firms. One reason for this difference in job satisfaction is that employees of small businesses often

254. (p. 163) When starting a small business, it’s important to remember:

A. luck is the critical factor in achieving small business success.

255. (p. 165) ________ are the primary concerns of someone starting a business.

D. Staffing and controlling

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Nickels – Chapter 06 #255

256. (p. 165) The business plan of a new entrepreneur should include which of the following?

D. names of employees

257. (p. 165) A detailed written statement that describes the nature of the business, the target market, the firm’s

D. professional action plan.

258. (p. 166) Entrepreneurs seeking financial support from bankers and potential investors should:

259. (p. 166) Which of the following is important to creditors as they consider making a small-business loan?

D. the number of micropreneurs in the community

260. (p. 166) After personal savings, the next largest source of capital for entrepreneurs is from:

A. large multinational banks.

261. (p. 168) ________ are private individuals who invest their own money in potentially hot new companies

before these firms sell stock publicly.

D. Corporate raider investors

262. (p. 168) A firm or individual providing financial capital to small businesses in exchange for an ownership

stake in the company is called a(n):

A. corporate raider.

263. (p. 168-169) Which of the following government agencies is responsible for encouraging the development of

small business?

D. Federal Microloan Authority

264. (p. 169) The Small Business Administration’s microloan program awards loans to entrepreneurs based

primarily on their:

A. collateral.

265. (p. 169) A Small Business Investment Company (SBIC) is a(n):

D. agency set up by state governments to provide managerial advice and support to small businesses.

266. (p. 169) One of the best places for young entrepreneurs to start shopping for a SBA loan is a(n):

D. the Internet web page of the Venture Capitalists Association.

267. (p. 170) A ________ refers to people with unsatisfied wants and needs who are willing and able to buy a

product or service.

D. buyer’s cooperative

268. (p. 170) To be considered part of a market, an individual must:

A. be a registered buyer.

269. (p. 170) Which of the following would be a disadvantage of working for a small business?

D. more challenging jobs

270. (p. 170) Small business owners often struggle in attracting qualified workers. Which of the following

contributes to this problem?

A. Bosses in small firms tend to be disrespectful to the workers.

271. (p. 170) Employees of small businesses often have greater job satisfaction than do employees of larger firms.

One reason for this difference in job satisfaction is that employees of small businesses often:

A. earn higher wages.

272. (p. 172) A(n) ____________ is a valuable source of information regarding techniques to reduce a firm’s

exposure to risk.

D. union business agent

273. (p. 172) The Small Business Administration sponsors volunteers from industry, trade associations, and

education who offer advice to small business owners. These volunteers are called:

A. the Small Business Council of Volunteers.

274. (p. 172) SCORE refers to a(n):

D. government program designed to help start-up business ventures by providing low cost office space and

basic business services.

275. (p. 172) After retiring as an oil industry executive, Paul was asked to join SCORE. As a SCORE counselor

Paul will:

A. provide venture capital funds for aspiring small businesspeople.

276. (p. 166) Entrepreneurs applying for a bank loan should realize that bankers will:

D. offer only short-term financing.

277. (p. 165) A good business plan will:

D. focus on the nature of the business and the target market, omitting personal information about the owner in

order to avoid personality issues.

278. (p. 166) When preparing the executive summary section of a business plan, it is important to remember that:

D. an accountant should prepare the financial information that is included in the executive summary.

279. (p. 168) When seeking financial backing from a venture capitalist, a small business owner should realize that

the venture capitalist will:

A. charge an interest rate that is much higher than any other lender.

280. (p. 170) A market consists of potential buyers of a good or service. However, for a market to exist:

A. wholesalers and retailers are involved in the distribution of the product.

281. (p. 170) Mary works a part-time job to put herself through college. She enjoys looking at fashion magazines

and wishes she could afford the clothes that are advertised. Mary is not in the market for the designer clothes

D. the clothes wouldn’t look good on her.

282. (p. 170) Small business employees:

A. usually dislike their jobs and look forward to finding employment with major corporations.

283. (p. 171) Entrepreneurs often discover that there are many legal and financial issues involved in starting their

business. The best way for the small business owner to resolve these issues and protect the firm’s resources is:

A. for the owner to trust their common sense.

284. (p. 165) Bubba, a licensed real estate broker, received notification that his application for a business loan was

denied. The bank refused his request because he failed to provide a blueprint identifying the intended target

D. loan advocate.

285. (p. 165) Lamont wants to improve his chances to be a successful entrepreneur and so he has written a

business plan. One advantage of developing this plan is that it:

A. meets federal reporting requirements of the Internal Revenue Service.

286. (p. 168) As a ________ Rick searches for firms in need of additional funding to achieve their goals. In return

for his investment, Rick becomes a part owner in the business.

D. securities trader

C. is involved in providing startup money for new churches and other nonprofits.

D. provides assistance for struggling entrepreneurs.

288. (p. 168-169) Samantha recently applied for a microloan from the SBA. The SBA’s decision to grant or deny the

loan will be largely based on Samantha’s:

A. credit history and the collateral she can offer.

289. (p. 170) Holiday Shores is an expensive, five-star restaurant with an outstanding reputation. Although located

about two miles from a high school, the restaurant does not view the students as part of their market. The

restaurant’s view is likely correct because:

A. the school is more than a mile from the restaurant.

290. (p. 170-171) Ming Wu’s three employees have been with her since the beginning of her business, nearly 10

years ago. She plans to open a new branch and now needs an assistant manager. Unfortunately, Ming likes these

employees but she doesn’t believe that any of them would make a good manager. Faced with this difficult

situation, she should:

A. appoint one of the three anyway to show that she appreciates their loyalty and commitment.

291. (p. 171) Kathy, like many others in her extended family, works in the furniture store started by her

grandfather. Her older brother is in charge of purchasing inventory for the store yet often the store runs out of

popular furniture or is overstocked with pieces that must be marked down to be sold. Kathy majored in

purchasing at Arizona State hoping that when she graduated her grandfather would appoint her to her brother’s

job. When she graduated and returned to the store she did not get the purchasing job. She is likely most

frustrated because:

A. suppliers are reluctant to do business with a family-run business.

292. (p. 171) As a small business owner, Tanika can’t afford to provide her employees with the high wages and

benefits offered by big corporations. One way to retain her employees and create a high level of motivation

would be to:

A. threaten to fire her existing employees and hire new workers.

293. (p. 173) There are about ________ people in the United States, but over ________ in the world.

D. 275 million; 1 billion

294. (p. 173) According to the U.S. Department of Commerce, a ________of small businesses export their goods.

D. decreasing percentage

295. (p. 173) One of the hurdles small businesses face when deciding to export is:

D. American products are perceived as inferior.

296. (p. 173) One reason why many U.S. small businesses are not involved in exporting is:

A. there is a limited market for their products.

297. (p. 174) The SBA’s ________ program provides export financing opportunities for small businesses.

A. global trade funding

298. (p. 174) Small business owners interested in finding out more about exporting will find that:

A. there is very little information on exporting relevant to small businesses.

299. (p. 173) Which of the following best describes the opportunities available to small businesses in international

markets?

D. Higher business costs eliminate the profit opportunities in global markets.

300. (p. 173) Small businesses often have advantages in international markets. One advantage is:

A. a greater expertise in managing the paperwork required to sell goods in international markets.

301. (p. 174, Reaching Beyond Our Borders box) According to the “Reaching Beyond Our Borders” box in Chapter 6, a tariff

engineer is a person who:

A. inspects goods for appropriate tariffs as they enter a country via train.

302. (p. 173) Luis is a partner in a firm that specializes in producing vitamins and health food products. While the

business is considered small by U.S. standards, he is attempting to persuade his partner to expand

internationally. Luis would list which of the following as an advantage of going international?

D. Selling your products in other markets reduces their life cycle, making them more attractive.

303. (p. 173) Anthony, a small business owner, is considering marketing his product in Brazil. If he enters the

Brazilian market, he is likely to face which of the following problems?

D. resistance of Brazilian firms to buying American products

304. Not everyone dreams of owning their own business. Identify and describe at least three attributes of

successful entrepreneurs.

305. What is an entrepreneurial team? What benefits does a team offer compared to an individual entrepreneur?

306. Discuss the benefits exporting offers to small businesses. Given these benefits, why don’t more small firms

sell in international markets?

307. Discuss several ways the Small Business Administration assists entrepreneurs.

308. (p. 150) Given Peppy’s willingness to accept the risks of opening and running Pizza Whirl, he is clearly an

example of a(n):

A. arbitrageur.

309. (p. 151) Peppy remains confident and enthusiastic even though his colleagues have poked fun at his ideas.

This shows that Peppy is:

D. auto-inspirational.

310. (p. 165) Peppy is confident that Pizza Whirl will be a success, but only if he has enough money to do things

right. Since Peppy has very little personal wealth, he knows he must obtain financial help. In order to be

D. create a partnership contract.

311. (p. 169) Peppy has inquired about the possibility of obtaining a microloan from the SBA. This type of loan is

awarded primarily on the basis of the:

D. age of the borrower, since only senior citizens qualify.

312. (p. 171) Peppy knows a lot about marketing, but not much about the legal or financial aspects of starting a

new business. He is thinking about consulting with a lawyer and accountant, but his budget is tight with all of

the expenses involved in getting Pizza Whirl up and running. Peppy should:

A. delay talking with a lawyer and accountant until the business has established a positive cash flow for at least

one year.

c6 Summary