A penetration pricing strategy allows the business to build market share quickly.
The average SBA loan guarantee is $150,000 and has an average duration of seven
years.
The Federal Trade Commission (FTC) enacted the Trade Regulation Rule, requiring all
franchisors to disclose detailed information on their operations at the first personal
meeting or at least ten days before a franchise contract is signed or any money is paid.
“What business am I in?” This is a question the entrepreneur needs to answer when
creating the mission statement.
By definition, a franchise is owned by a semi-independent franchisee who pays a fee to
a franchiser in return for the right to sell the franchised goods or services.
In a barter exchange, a company that manufactures electronics components might trade
its products for the coffee that a business in a foreign country processes, which it then
sells to a third company.
The left brain processes information all at once, relying heavily on images.
When an entrepreneur purchases an existing business, he or she essentially is
purchasing its future profit potential.
Even if a small business cannot differentiate its product by creating a distinctive image
in the consumer’s mind, it can afford its own line of prices.
Under the Uniform Commercial Code, the party who has title to goods also has the risk
of loss if those goods are lost, damaged, or destroyed.
The first line of defense against bad debt losses is to have a financial institution extend
loans to credit-seeking customers.
Small business owners should not press customers for payment of their past due
accounts for fear of losing them as customers altogether.
An effective leader helps employees focus their efforts on goals and keeps them driving
to accomplish them.
The problem with the lack of funding for start-ups is that the seed capital and funding
sources just aren’t there.
In order to grow their international business, Chong and Kelly’s Engineered
Demolitions, they have had to become more culturally sensitive.
There is a direct 1:1 relationship between a company’s expected average inventory
turnover ratio and the amount of cash required to launch it.
Direct mail has been a popular method of small business advertising for a long time.
Catalogs were printed as early as the 15th century.
Clean manufacturing systems stress recycling and reducing of materials.
In today’s economy, entrepreneurs are seen as heroes.
The primary market for U.S. franchisors is Europe.
For pay-for-performance systems to work, there needs to be frequent payouts to the
employees.
Although there are many costs associated with carrying large levels of inventory, the
opportunity costs of large inventories are virtually nonexistent.
The majority of small companies realize they have as big a drug problem with their
employees as larger companies do.
In a limited partnership, the “limited partner” is primarily an investor and can lose only
the amount invested in the business.
Radio ads require repeated broadcasting in order to be effective; one-time exposures
don’t work.
If a limited partner spent more than 500 hours in the company, he/she will be treated as
general partner and will lose their limited liability protection.
Poorly planned layouts undermine employee productivity and create organizational
chaos.
A sound mission statement needs to be lengthy in order for it to be effective.
If the entrepreneur forms teams around the natural work flow and/or involves teams in
deciding how to measure their own performance, the probability of success is
significantly improved.
Most small business owners believe it is relatively unimportant to monitor their
competitors’ activities.
The starting point for managing diversity is learning your own biases and prejudices.
Job rotation involves cross-training employees so they can move from one job in the
company to others, giving them a greater number and variety of tasks to perform.
Which of the following statements is correct?
A) A service mark is any distinctive word, phrase, symbol, or trade dress that a
company uses to identify the origin of a product or to distinguish it from other goods on
the market.
B) A trademark is any distinctive word, phrase, symbol, design or trade dress that a
company uses to identify the origin of a product or to distinguish it from other goods on
the market.
C) A service mark identifies and distinguishes the source of a service.
D) Both B and C
One of the biggest advantages of going public is:
A) the ability to attract low cost equity funding.
B) the ability to retain control while gaining maximum funding.
C) better employee morale and productivity.
D) enhanced credibility and improved corporate image.
When creating the pro forma income statement, the owner needs to translate the target
profit into a net sales figure. To do this, the owner needs:
A) to operate the business for one to two years to build a record.
B) published statistics for his/her specific type of business.
C) to divide actual net sales by the net profit projected.
D) a sales forecast, the amount of retained earnings, and current depreciation on assets.
Private “angel” investors tend to:
A) take 80% ownership by the time the company goes public.
B) provide seed money and less than $500,000.
C) look for returns of 60-75%.
D) only finance projects within their local area or region.
The members of the European Community have limited the number of cars Japanese
automakers can export into the European market. This is an example of which type of
trade barrier?
A) Tariff
B) Quota
C) Embargo
D) Dumping
In the balance sheet, intangible assets include items such as:
A) goodwill.
B) copyrights and patents.
C) Both A and B
D) accounts receivable.
The document outlining the details of the agreement between the entrepreneur and the
stock underwriter is called:
A) Regulation D.
B) a filing.
C) the letter of intent.
D) the registration statement.
When a bank proves the quality of its loan decisions to the SBA and becomes a
________ lender, the bank makes the final lending decision itself, subject to SBA
review for the guarantee.
A) preferred
B) qualified
C) certified
D) LDC
Which of the following is a disadvantage of the corporation form of ownership?
A) An inability to accumulate capital
B) The unlimited liability to the members of the board
C) Double taxation on profits and individuals
D) The lack of continuity
The focus of the competitor analysis section of the business plan is to:
A) demonstrate the existence of the market for your product.
B) show that your experienced management team is better than your competitors’.
C) demonstrate your company’s advantage over competitors.
D) describe your overall product line.
The corporate form of ownership has a significant advantage in that:
A) it is easy to transfer ownership.
B) it has a lower tax rate than either partnerships or sole proprietorships.
C) there is little cost to its formation.
D) there is little regulatory oversight by the government.
When choosing a form of ownership, the entrepreneur should realize that:
A) it is difficult if not impossible to change forms of ownership once the company is
established.
B) the expense of changing forms of ownership makes it prohibitively expensive to
change.
C) the most common form of ownership is the partnership and is the least expensive to
establish.
D) he/she will most likely change the form of ownership as the company grows in size
and revenues.
________ relies on data-driven statistical techniques to improve quality.
A) Six Sigma
B) Fishtake charts
C) EOQ
D) None of the above
The most common source of equity funds used to start a small business is:
A) private investors or “angels.”
B) loans from commercial banks.
C) the entrepreneur’s pool of personal savings.
D) public stock issues.
Which one of the following should NOT be part of a leader’s behavior?
A) Sets clear goals
B) Shares their vision
C) Maintains distance with employees
D) Rewards employees who meet or exceed the firm’s performance targets
Which one of the following is a suggestion to enhance creativity in organizations?
A) Include creativity as a core company value and make it an integral part of the
company’s culture
B) Hire for conformity
C) Eschew diversity
D) All of the above
Three objectives of new product pricing are:
A) get the product accepted, maintain market share as competition grows, and earn a
profit.
B) get the product accepted, avoid price wars, and earn a profit.
C) maintain market share as competition grows, earn profits, and increase sales.
D) None of the above
The most common method of controlling inventory in a small business is the ________
system.
A) floor sample
B) two-bin system
C) partial
D) visual
The cost of marketing a product is highest in the:
A) introductory stage.
B) growth and acceptance stages.
C) maturity stage.
D) saturation stage.
________ is the vehicle for gathering the information that serves as the foundation for
the marketing plan.
A) Target market identification
B) Market research
C) Banker identification
D) Competitive analysis
A(n) ________ is a hybrid between a conventional loan and a bond; at its heart it is a
bond, but its terms are tailored to the borrower’s individual needs, as a loan would be.
A) private placement
B) industrial revenue bond
C) 504 loan
D) zero coupon bond
To increase the effectiveness of communication between the small business owner and
his/her employees, he/she should practice:
A) selective listening.
B) being more sympathetic when listening.
C) giving as much information as possible in each communication.
D) telling the truth and encouraging feedback.
Traditionally, ________ were always set up as nonprofit corporations.
A) businesses
B) corporations
C) social enterprises
D) partnerships
Market research:
A) provides the information that is foundational to the marketing plan.
B) is the process used to set the goals and objectives of the marketing plan.
C) is prohibitively expensive for the small business owner.
D) is relatively unimportant to the small business owner if the owner is close to his/her
customers.
The path to success requires businesses to become ________ who see the world as their
market rather than just ________.
A) “exporters”; “insiders”
B) “insiders”; “exporters”
C) “importers”; “insiders”
D) “outsiders”; “exporters”
Gustavo is writing up a ________ in order to describe the best job candidate in terms of
skills, education, experience, and other personal job-related characteristics.
A) job specification
B) human resource plan
C) job description
D) job analysis
In franchising, the reputation of the franchiser is dependent on:
A) their locations and popularity with the local customer.
B) the brand name recognition and appeal.
C) the rate of growth and the number of national outlets.
D) the quality of the goods and services provided.
The choice of advertising medium is primarily determined by:
A) what media the competition uses.
B) what media the industry focuses on.
C) the target audience and the message.
D) the unique selling proposition and budget.
A technique that allows the small business owner to perform financial analysis by
understanding the relationship between two accounting elements is called:
A) creating the pro forma.
B) budgeting.
C) break-even analysis.
D) ratio analysis.
“F.O.B. buyer” means that:
A) title passes to the buyer when the seller delivers the goods to the shipper.
B) risk of loss passes to the buyer when the seller delivers the goods to the buyer’s place
of business.
C) the buyer pays all shipping and transportation costs.
D) both title and risk of loss pass to the buyer immediately upon payment of the
contract regardless of location of the goods.
Which of the following is not a critical area of business that is investigated during due
diligence?
A) Motivation
B) Employee issues
C) Asset valuation
D) Legal issues
The key to marketing success is:
A) economy of scale in promotion by creating broad-based ad campaigns.
B) understanding customers’ unique needs, wants and preferences.
C) the use of direct-marketing and e-commerce.
D) catering to teenagers.
What is relationship marketing? What characterizes each of the four levels of customer
involvement that is part of relationship marketing?
How does price convey an image for the product or service?
How can the entrepreneur interpret and use the various business ratios available to
him/her?
What causes ethical lapses?
What should the role of price be as an element of the purchasing process?
What do leverage ratios measure? Name and explain three of them.
How can a small business owner use publicity to the benefit of his/her business?
What is the value of ratio analysis to the small business owner and what are the four
categories of ratios he/she can use?
What questions does the small business owner need to answer in the developing of an
advertising strategy?
Your small firm is considering using print media, specifically, newspapers for an
advertising campaign. Explain the advantages and disadvantages of this medium.
Outline and briefly describe the common sources of equity capital.
What is the importance of strategic management to small businesses? In your
discussion, explain how strategic planning is different for a small business.
How do foreign licensing and international franchising differ? Why would a small
business owner choose one over the other in going global?
Outline Deming’s 14 Points.
What constitutes an agreement? What are the two key elements to agreement? Offer an
example of each.