Listening to customers and responding to what you hear from them is a highly effective
way to achieve stellar customer service.
A retailer who buys a product for $19.75 and has a desired markup of retail price of
55% should establish a retail price of $43.89.
George Washington signed the first patent law in 1790.
Many business owners whose companies are losing money mistakenly believe that the
problem is inadequate sales volume; therefore, they focus on pumping sales at any cost.
The EDA makes low-interest loans to create new businesses in economically depressed
areas with below-average incomes and high unemployment rates.
A small business owner should avoid borrowing money when he/she sees a downturn in
business or to refinance existing debt.
To summarize the presentation to each potential financial institution or investor, the
entrepreneur should write an executive summary. It should be concisea maximum of
four pagesand should summarize all of the relevant points of the proposed deal.
Most small businesses prefer to express their break-even point in dollars rather than
units produced or sold, unless they are retailing.
In most other countries, American business owners and managers find human resource
laws to be very similar, if not more stringent, than they are in the United States.
One force driving the move to JIT inventory management is competition among
companies to provide excellent customer service.
The most effective job interviews are unplanned, unstructured interactions between the
small business owner and the job applicant.
One reason employees usually don’t do what they are expected to do is because they
lacked the skills to perform the task.
The executive summary should highlight significant financial and operational events.
When designing an outdoor ad, the small business owner must remember that “more” is
better and put as much information as possible in the ad.
Stockholders in the corporation have the same kind of liability as do general partners in
a partnership.
In the early imaginative phases of the creative process, logical thinking can restrict
creativity.
Coping with AIDS in the workplace is not like managing normal health care issues.
The maximum disaster loan usually is $2 million.
For a small business, an airport is a nontraditional location.
Even companies whose financial statements are too weak to produce other types of
loans can get asset-based loans.
It is possible for a business to make a profit and go out of business due to cash flow
problems.
In breach of contract, the injured party may only recover compensatory damages,
moneys which place him/her in the same position he/she would have been had the
contract been performed.
Experts estimate that $10.4 trillion dollars in wealth will be transferred from one
generation to another by 2040.
The Uniform Commercial Code has been adopted, at least in part, by all 50 states.
When an account becomes overdue, entrepreneurs must take immediate action.
Central business districts have convenient and safe parking.
The FTC Trade Regulation Rule applies to all franchisors in all states regardless of state
disclosure laws.
A cash budget is the document that shows a company the margin between its profit and
its costs of goods and how to manage it.
Some feel the worst mistake an entrepreneur can make is to fail to define the target
market.
Lack of experience is the number one cause of small business failures.
Capital Access Programs (CAPs) that are designed to encourage lending institutions to
make loans to businesses that do not qualify for traditional financing.
Despite all of the modern communication tools available, the grapevine, the informal
lines of communication that exist in every company, remains a non-important link in a
company’s communication network.
Statistical process control is central to the success of Total Quality Management efforts.
Partnership agreements do not cover how to dissolve a partnership or sell a partnership
interest.
Profit is the difference between a company’s total revenue and its total expenses.
Unlike an EMC or an ETC, manufacturer’s export agents are international sales
representatives who work on commission in a short-term relationship with the small
domestic company.
Spreading a small advertising budget evenly and thinly over a 12-month period is a
right choice.
________ refers to coping with financial realities of estate and gift taxes.
A) Stage 2
B) Stage 3
C) Stage 4
D) Stage 5
The advantages resulting from concentrating purchases with a single supplier include:
A) protection from fraudulent vendors and excess inventory.
B) a longer lead time.
C) lower usage rates.
D) the ability to negotiate the best price package.
XYZ manufactures computer hardware. The marketing executives, in order to increase
the market share, forced a business to accept a suggested retail price and not to sell the
items below the stated price.
A) This practice violates the Sherman Antitrust Act.
B) There is no violation. According to a recent Supreme Court decision, this is fine.
C) This practice violates the Fair Price Protection Act.
D) As long as the manufacturer offers rebates, they can do whatever they want.
Creativity is “caught” as much as it is “________.”
A) bought
B) sought
C) concocted
D) taught
Of the three domestic barriers exporters face, ________ is the biggest.
A) information
B) attitude
C) financing
D) language
When franchise contracts are renewed:
A) the existing contract is merely annotated and signed by both parties.
B) a new UFOC must be issued.
C) all terms of the previous contract may be renegotiated.
D) a new contract must be drawn up by the two parties.
To establish a reasonable, profitable price for service, the small business owner needs to
know:
A) fixed and variable costs, the break-even point, and his/her contribution percentage.
B) competitors’ prices, and costs of direct and indirect labor.
C) the cost of materials, direct labor, and overhead for each unit of service.
D) full-absorption costs, direct and indirect labor, and the break-even point.
Jeff is forming a company. If he chooses a(n) ________ form of ownership, he can have
no more than 100 stockholders and must have only one class of stock.
A) partnership
B) corporation
C) S-corporation
D) master limited partnership
When a computer manufacturer offers its computer with software pre-installed, a
printer, and Internet service, as all part of one price, the manufacturer is using a:
A) bundling strategy.
B) multiple pricing strategy.
C) suggested retail price strategy.
D) skimming pricing strategy.
SBICs must invest at least ________ percent of their capital in smaller businesses,
which are defined by the SBA as those with a tangible net worth of less than $6 million
and an average of $2 million in net income over the previous two years at the time of
investment.
A) 75
B) 60
C) 25
D) 50
One-to-one marketing is a marketing strategy that:
A) gathers data on individual customers and then tailors an appeal to their needs and
tastes.
B) uses technology to make customers feel like they are being treated special.
C) focuses on the use of personal selling and consultative advising of customers.
D) relies heavily on geographic data but ignores demographic and psychographic data.
When buying an existing business, one should remember that:
A) it is generally not important to independently evaluate the inventory.
B) you are always buying goodwill with the tangible assets of the business.
C) it is as easy to make change in an existing business as it is in a start-up.
D) the real reason for selling is seldom stated honestly.
When conducting a self-evaluation, it is important to consider:
A) what kind of business you want to have and what kind you want to avoid.
B) how much money you have to invest.
C) what kind of people you like to work with.
D) how good are your sales and negotiating skills.
Which of the following is true about the content of a standard partnership agreement?
A) It does not specify how profits and losses will be distributed.
B) It includes the Certificate of Incorporation.
C) It specifies how the partnership may be dissolved and assets divided.
D) While it specifies the location of the business and its purpose, it does not name the
partners or their legal addresses in order to maintain privacy for the partners.
The formula for calculating the cost of carrying inventory is:
A) Q/2 H.
B) D C.
C) D/Q S.
D) Q/H S.
A small firm’s ability to identify and manipulate the ________ in its business
determines its ability to compete effectively.
A) key success factors
B) corporate vision and mission
C) opportunities and threats
D) market environment
In a partnership, each partner acts as a(n) ________ for the business.
A) agent
B) manager
C) supporter
D) guarantor
Corey notices a “backlash” against health food among people who eat out. He decides
to open a restaurant that stresses “good home cooking,” heavy with gravies, breads, oils,
etc. Corey has identified and is trying to capitalize on a(n) ________ in the market
environment.
A) strength
B) weakness
C) threat
D) opportunity
________ are typically wealthy individuals or entrepreneurs themselves.
A) Venture capitalists
B) Seed funders
C) Venture funders
D) Angels
The other name for virtual order fulfillment is:
A) drop-shipping.
B) instant shipping.
C) convenience shipping.
D) group shipping.
The C of the five Cs that relates to the circumstances relating to the business, such as
potential growth in the market, form of ownership, location, etc., is called:
A) capital.
B) capacity.
C) conditions.
D) character.
Tami is developing a promotional campaign for her small business. The first step in this
process is to:
A) choose an advertising agency to assist her.
B) determine how much she can spend.
C) identify her target audience.
D) define her unique selling proposition.
Juan is able to work well in a constantly changing atmosphere and has little concern for
what tomorrow will bring. Juan demonstrates which of the following characteristics of a
typical entrepreneur?
A) The willingness to take extreme risks
B) A desire for immediate feedback
C) A tolerance for ambiguity
D) A future orientation
Which method of business valuation relies on three forecasts of future
earningsoptimistic, pessimistic, and most likely?
A) Balance sheet technique
B) Excess-earnings method
C) Discounted future earnings
D) Market approach
One of the disadvantages of using transit advertising is its:
A) limited appeal.
B) narrow exposure.
C) lack of repeat exposure.
D) high cost.
Asset-based lenders avoid inventory-only deals; they prefer to make loans backed by
inventory and:
A) experienced management.
B) good market reputation.
C) more secure accounts receivable.
D) All of the above
The recommended step(s) when buying a business is (are):
A) investigate the potential acquisitions.
B) explore a variety of financing options.
C) analyze your skills and abilities.
D) All of the above
Ansel, a sugar manufacturer, agrees to sell Keith 10,000 pounds of sugar at the “usual
price.” A shortage forces the price of sugar up and Ansel charges Keith nearly 50%
more for the sugar. In response, Keith disaffirms the contract. Which ruling is correct?
A) The modification is enforceable because Ansel has the right to unilaterally modify
the contract.
B) The Code would confirm the contract and assign a price reasonable at the time of
shipment.
C) Keith would be permitted to void the contract since he has not agreed to the price
increase.
D) This contract is not covered by the Code, therefore, the common law applies and the
modification is unenforceable.
For small businesses, ________ are the heart of the financial market.
A) banks
B) finance companies
C) private placement
D) insurance companies
Newspaper advertising is characterized by:
A) broad territory coverage.
B) high costs.
C) long ad life.
D) prompt responses to the ads.
Typically, the small business owner’s response to slow-moving inventory is to:
A) hold a one-day sale.
B) mark it down to move it out and put the cash generated into fresh inventory.
C) set up bargain tables or place it in a middle-of-the-aisle display.
D) postpone marking it down until it’s too late.
In the balance sheet, the current assets consist of:
A) accounts payable.
B) inventory.
C) revenue.
D) All of the above
________ ratios help a business owner evaluate the company’s performance and
indicate how effectively the business employs its resources.
A) Liquidity
B) Leverage
C) Operating
D) Profitability
To a business owner, the success of a trade show depends on:
A) understanding how a specific trade show might contribute to sales.
B) evaluating the alternative shows based on both cost and size.
C) Both A and B
D) selling a lot of products or services in a trade show.