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The Business Model Canvas consists of six elements.
NAFTA includes provisions reducing tariff and nontariff barriers and toughening health
and safety standards.
Rather than relying primarily on a single source of funds as they have in the past,
entrepreneurs today must piece together their capital from multiple sources, a method
known as layered financing.
Before entering a franchise contract, a potential investor should ask, "What can a
franchise do for me that I cannot do for myself?"
During a brainstorming session, company rank and department affiliation are irrelevant.
Which of the following bootstrap marketing tactic(s) allow a small company to utilize
relationship marketing successfully?
A) Keep in close contact with customers with "thank you's" and other personal
communication techniques.
B) Organize and sponsor a service or community-oriented project.
C) Launch a loyalty or frequent buyer program.
D) All of the above
The foundation of every business is ________.
A) its products and services
B) satisfying the customer through a customer-driven marketing strategy
C) doing whatever it takes to earn a profit
D) operating in a socially responsible manner
________ is the distinctive, unwritten code of conduct that governs the behavior,
attitudes, relationships, and style of an organization.
A) Organizational structure
B) Company culture
C) Hierarchy of command
D) Formal organization
Once a small business has established a firm written credit policy and has clearly
communicated it, the next step in building an effective credit policy is to ________.
A) send invoices promptly
B) determine what percentage of sales are being written off as bad debt
C) create a simple credit application
D) create a "tracking file" of events
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
The ________ is also known as the "elevator pitch" and is written last, but is included
as the first part of the business plan and should summarize all the relevant points in
about two pages.
A) loan proposal
B) business history
C) business profile
D) executive summary
A pricing technique that sets different prices on the same products and services for
different customers using the information that a company collects about its customers is
called ________.
A) market penetration
B) customized or dynamic pricing
C) predatory pricing
D) price skimming
The first step in managing cash more effectively is ________.
A) having an adequate cash reserve for emergency expenditures
B) rapid payment of accounts payable
C) speeding up payment of accounts receivable
D) understanding the company's cash flow cycle
Sarah's Smart Shop has an inventory turnover ratio of 3 times per year and an average
inventory of $156,000. If Sarah could manage her inventory better and increase the
number of turnovers to the industry average of 6 times per year, what average inventory
would she need to generate the same level of sales?
A) $78,000
B) $52,000
C) $468,000
D) $312,000
Successful interviewers always listen for these in an interview to see whether it matches
the candidate's words. This interviewer is referring to the candidate's ________.
A) work experience
B) job-related skills
C) nonverbal clues or body language
D) nervousness
Small businesses can compete with larger rivals with bigger budgets by employing
unconventional, low-cost creative techniques known as ________.
A) market research
B) astonishing customer service
C) bootstrap marketing strategies
D) psychographics
Assume you own a small print shop. Who are your competitors and why is it important
for you to monitor your competitors' activities? Describe at least five techniques you
might use to monitor competitors' strategies and actions ethically and inexpensively.
Mini-Case 13-1: "Where do I go now ...?
Christine Hernandez is in the process of launching a restaurant. Christine has never
owned her own restaurant before, but she has worked for two of the best restaurants in
town. Starting out as a hostess, Christine developed a special knack for the business and
quickly worked her way up to the job of manager. Her 18 years of experience have
given her a solid foundation for running her own restaurant.
Christine has worked with a counselor at a nearby Small Business Development Center
and a counselor from the Service Corps of Retired Executives to prepare a business
plan. She asked two other consultants and an accountant to review the plan and
incorporated their suggestions into the finished product. When Christine took her plan
to her bank however, the bank turned down her loan request of $165,000 citing the
venture as "too risky, given the failure rate of restaurants." The bank acknowledged her
experience as "a major asset," but said that it "could not expose itself to such risks in its
portfolio." Christine heard the same story from three other banks.
Christine is confident in her ability to manage her own restaurant successfully, and she
is determined to get the financing she needs to launch it.
What other sources of capital would you suggest that Christine explore?
Describe what is meant by bootstrap marketing. What objectives should a bootstrap
marketing plan accomplish? List at least five bootstrap marketing tactics your small
business might be able to use successfully.
Mini-Case 11-2: Bowden Brake Service (Part B)
One day while you are in Bowden Brake Service getting your brakes repaired, Jim
storms into his office, slamming doors and shouting about the local financial
institutions. After a few minutes of building your courage, you approach Jim and ask
him what the problem is. He shouts, "It's the financial institutions in this town! Not one
of them will lend me the money I need to expand my business. They all said I needed to
take a closer look at my financial position before I consider expanding. One of them
said something about ratio analysis. I know a lot about cars and brakes, but what is ratio
analysis?"
You tell Jim you will perform a ratio analysis for the business if he gives you a free
brake job. Jim provides you with the following financial statements.
Were the bankers correct? Do you think Jim should expand the business?
Why is it important for a small business to keep existing customers satisfied? How can
a company achieve such customer satisfaction?
What is Miller Manufacturing's break-even price?
Sarah's aunt and cousin have offered to provide some financial assistance for her new
business. Should an entrepreneur turn to friends and family members for money to
launch a company? Why or why not? If so, under what conditions?
What is an IPO? What type of companies should go public? Outline the advantages and
disadvantages of an IPO. Also, outline the steps a company should follow in taking a
company public.
Mini-Case 8-1: Customers: Key to Success
Lloyd Dixon has owned and operated a small dress shop for the past three years. Each
fashion season, Lloyd attends the apparel shows and he is always very impressed by the
glamour and the hundreds of different manufacturers, all with the merchandise that they
say will be this season's biggest sellers. Lloyd caters to an older market and baby
boomers. He hopes to tap into the upscale market.
After his first year of operation, Lloyd recognized that some of his merchandise was not
selling. The "inventory close-out sale" did rescue his investment in this merchandise but
did not make him a profit or contribute much to his overhead. Lloyd knew that it was
not reasonable to expect to sell everything you bought, but he was not sure exactly how
much of his inventory was comprised of slow movers. Lloyd believed that when he
went into business he knew what women wanted in dresses. He had always prided
himself on having good taste. When he had the opportunity to open this store, he was
confident that he could choose merchandise that would be well received. In the first
three years of operations, sales have not met Lloyd's expectations.
Faith Popcorn offers several ways Lloyd Dixon could collect information about his
customers and competitors. Explain at least five of those ways.
Assume you own a small camera shop that sells and repairs cameras and equipment.
Discuss some of the methods you might select to allow you to successfully compete
against the many large retailers that are nearby.
