Outdoor ads tend to reach people who are older, poorer, and not as well educated as the
average person.
The current ratio can sometimes be misleading, because it does not show the quality of
a company’s current assets.
Most business buyers can expect to find detailed, accurate, and audited financial
records in the companies they are looking at buying.
The pro forma shows the company’s current overall financial condition.
A small business’s responsibility to its customers includes the customers’ right to honest
communication and a right to choose among competing products.
High inventory levels could cause a business to be profitable but not have adequate
cash flow.
Partners can make provisions in the partnership agreement to avoid dissolution due to
death only if all parties agree to accept as partners those who inherit the deceased’s
interest.
Convincing alienated customers to return can be an inexpensive process that doesn’t
take long.
The management of diversity will require ongoing adjustments of your company to
your workers.
Any type word, phrase, symbol, design, name, logo, etc., may be a patent.
The Robinson-Patman Act focuses on preventing unfair labor practices.
According to research, creativity has gone up markedly among both children and adults
in the U.S. since 1990.
A benefit is what the customer gains from the product or service feature.
Simply duplicating the practices companies have adopted (and have used successfully)
in the domestic market and using them in foreign markets is an effective strategy for
entrepreneurs.
A company’s target audience and the nature of its message determine the advertising
media it will use.
Entrepreneurs’ resource limitations often disable their innovative capabilities.
Proper management of cash accounts can yield the owner additional leverage, the
equivalent to actually keeping the capital in the accounts.
Innovations are created proactively in response to customer feedback.
American small business owners are often astounded at how much less government
regulation there is in foreign countries.
The Commercial Service International Contacts List (CSIC) and the Country
Directories of International Contacts (CDIC) provide the same information but
organized in different ways.
The business plan should cover key people, the opportunity, provide a business context,
and explain the risks and rewards involved.
If the partners fail to create an agreement, the UPA says that the partners share equally
in the partnership’s profits, even if their original capital contributions are unequal.
New businesses should only plan or buy the space for which they have immediate need,
to conserve cash.
Recent amendments have expanded the FTC’s powers.
Company goals address the question, “Why am I in this business?”
According to the Trade Regulation Rule, every franchisor must provide detailed
information on their operations at the first personal contact, or at least 14 days before a
franchise contract is signed.
Angels often finance deals that venture capitalists would also consider.
The cost of units is simply the typical costs involved in having units in storage.
In addition to other fees, franchisees must also pay royalties but only on net profitsno
profits, no royalties.
The difference between weak customer service and “world-class” customer service is
attitude and attention to detail.
The key to establishing a successful relationship with a trade intermediary is to
thoroughly screen in order to determine what type of intermediary the small company
needs.
An owner should choose an S-corporation form of ownership when he/she:
A) has an established company that is suffering losses due to double taxation.
B) is starting up a company and anticipating either net losses or high profits with large
dividends.
C) owns a company in which net profits before any compensation to shareholders are
less than $100,000 per year.
D) has an existing sole proprietorship and wants to lower the tax bill through deducting
fringe benefits as business expenses.
When translating strategic plans into action plans, the small business owner should:
A) not delegate authority or responsibility at this point.
B) not assign priorities to the action plans, but manage the process from the conceptual
level.
C) not adjust or change the plan but commit to implementing as it stands.
D) remember that no strategic plan is complete until it’s put into action.
A(n) ________ layout has the advantage of creating a relaxed, friendly shopping
atmosphere encouraging shoppers to linger and increasing the number of impulse
purchases.
A) free-form
B) grid
C) angled
D) boutique
When managing your accounts payable, as a small business owner you should:
A) take advantage of any float you have before your check is cashed.
B) send second notices when payables are only 15 days past due.
C) pay payables as early as possible.
D) stretch out all payables as long as possible.
“Copreneurs” are marked by:
A) a division of labor by expertise.
B) their similarity to the traditional mom-and-pop operation.
C) a decline in the number of businesses.
D) a greater success at raising venture capital than sole proprietorship-type businesses.
The first step an entrepreneur should take when starting an export business is to:
A) recognize that the tiniest companies and least experienced entrepreneurs have the
potential.
B) research and pick target markets.
C) develop a distribution strategy.
D) find his/her customer.
Small business owners have a number of options for controlling health care costs, such
as:
A) increasing policy deductibles.
B) conducting a safety audit.
C) pursuing a loss-control program.
D) decreasing the dollar amount of employee contributions.
________ is the transfer of risk from one entity (an individual, a group, or a business)
to an insurance company.
A) Risk management
B) Trust
C) Pension and annuities
D) Insurance
A knowledge-based business economy favors small business because:
A) the cost of managing and transmitting knowledge is very low.
B) small businesses are more successful.
C) information technology is driving the cost of managing and transmitting knowledge
lower.
D) Both A and C
Which of the following refer to demographic / physical environment when screening a
country?
A) Urban and rural distribution
B) Climate and weather variations
C) Shipping distance & natural resources
D) All of the above
Kim, the human resources manager, is conducting an orderly and systematic evaluation
of all the facts about a new position in order to determine what kind of employee to hire
and how to compensate the position. This is called a:
A) job description.
B) human resource plan.
C) job specification.
D) job analysis.
Surveys show that owners of small businesses believe that:
A) they work harder on their own than if they worked for someone else.
B) they earn less than if they worked for someone else.
C) they are less satisfied than if they worked for someone else.
D) venture capital is relatively easy to raise.
Managing diversity begins with:
A) concentrating on communication.
B) recognizing your own biases and stereotypes.
C) valuing diversity as a core company value.
D) assessing your company’s diversity needs.
Globally, people spend ________ billion hours online per month.
A) 35
B) 25
C) 15
D) 5
A company’s P/E ratio is:
A) the price of one share of its common stock divided by its earnings per share.
B) its profits per share divided by its equity per share.
C) its profits per share divided by its excess cash flow per share.
D) the price of one share of its common stock divided by external capitalization.
An effective strategic plan does which of the following?
A) Identifies a complete set of success factorsfinancial, operating, and marketing, that
yield a competitive advantage for the company
B) Focuses on one generic strategy to the exclusion of all other strategies
C) Always seeks a high profile in the specific markets chosen
D) Is always cost based
Equity capital is also called:
A) equity money.
B) stock money.
C) risk capital.
D) None of the above
Corporations can also stimulate managers’ and employees’ incentive on the job by
creating an ________ (ESOP).
A) Entrepreneur Stock Ownership Plan
B) Employee Stock Ownership Plan
C) Employee Shares Ownership Plan
D) Entrepreneur Shares Ownership Plan
________ is the average markup required on all merchandise to cover the cost of items,
incidental expenses, and a profit.
A) Initial markup
B) Cost plus markup
C) Direct markup
D) Contributing margin
Sometimes small businesses have to use debt financing instead of equity financing.
When they do, they discover that:
A) banks give them a lower interest rate because of their closeness to the customer and
better management practices.
B) finance companies are their primary source for debt funding.
C) the cost of debt financing is often less than the cost of equity financing.
D) there are fewer lenders than investors in the marketplace, but the money is easier to
get from lenders.
To increase customer confidence and credibility, join programs such as:
A) Don and Brad Street.
B) TRUSTe.
C) BBBOnLine.
D) Both B and C
If an item costs a small business owner $15, and the desired markup on it is 60%, its
retail price would be:
A) $24.00.
B) $25.00.
C) $37.50.
D) $43.25.
The organization chart is described in which section of the business plan?
A) The plan of operation
B) The resumes of the officers/owners
C) The business strategy
D) The executive summary
A small brick manufacturer would be concerned most with which location criterion?
A) Business climate
B) Labor supply needs
C) Wage rates
D) Proximity to markets
Entrepreneur Wally Wilton wants to build a colossal amusement park for kids of all
ages. Wilton will need $48 million to get the first phase of “Wally World” into
operation. Which of the following is the type of loan best suited for Wally?
A) An asset-based loan, based on inventory or accounts receivable
B) A mortgage loan from an insurance company
C) A credit union loan
D) A MESBIC loan
A small business that uses factoring:
A) pledges its accounts receivable as collateral to obtain a loan from a financial
institution.
B) relies on a third-party consultant to apply for SBA-guaranteed loans.
C) sells its accounts receivable to a third party to get the capital it needs.
D) borrows money from lenders by offering them the option to convert the loan into
stock in the company.
Before your Web site can become the foundation for a successful e-business, you must
create it with your ________ in mind.
A) technology
B) employees
C) target audience
D) vendors
Businesses have which of the following responsibilities to their customers?
A) The right of choosing the products they buy and use
B) Properly managing a diverse workforce
C) Reducing packaging, reusing material, and recycling when possible
D) Earning a profit while being socially responsible
Some cities develop ________ in cooperation with private industry for the benefit of
manufacturers.
A) incubators
B) central business districts
C) industrial parks
D) high visibility locations
Evaluates the firm’s overall performance and show how effectively it is putting its
resources to work. This is called:
A) operating ratios.
B) debt to equity ratio.
C) accounts receivable turnover ratio.
D) All of the above
A glass manufacturer that requires an extremely pure, very fine type of sand in its
production process would be most concerned with which location criteria?
A) Business climate
B) Proximity to raw materials
C) Proximity to markets
D) Wage rates
When it comes to trade credit, the small business owner:
A) should avoid it as it generally leads to overextension of his/her credit line.
B) should almost always take advantage of it.
C) should only consider it if they have a strong accounts receivables situation.
D) should know that its use makes little difference in the company cash flow and
therefore should be avoided.
When evaluating a franchise, the potential franchisee should:
A) interview both current and former franchisees.
B) only interview franchise employees as franchisees vary greatly in their opinions.
C) ask about what oral promises the franchiser will give regarding future earnings.
D) look at the local labor market to see if there is a pool of appropriate candidates for
employment.
Kyoto has started an interior decoration business. Everything about the business, from
its name to the color schemes used in the corporate letterhead, is an expression of her
personality. She sees this business as her greatest personal achievement. Kyoto is
experiencing the opportunity ________ of small business ownership.
A) to reap unlimited profits
B) to contribute to society
C) to make a difference
D) to reach her full potential
List and explain the questions a small business owner needs to answer when choosing a
media vehicle for the advertising message.
Outline the steps in conducting an interview, explaining the important aspects of each
step.
Review the process for planning an effective interview.
Discuss government regulation in the area of consumer credit, identifying key
legislation and what rights it grants consumers.
Describe the key trends that will affect franchising over the next decade.
Offer several suggestions on how to trim overhead expenses in order to avoid a cash
crunch. Explain how each technique can reduce the cash requirements for a small
business.
Define or describe the terms: revenue, cash, profit, cash budget, cash flow, and cash
flow cycle. Why is it important to understand the differences among them?
What is social networking?
What are the objectives of a bootstrap marketing plan?
What is time compression management and what does it involve?
Discuss the roles that job analysis, job descriptions, and job specifications play in the
human resource planning process.
Who are the people who shoplift and what can the small business owner do to deter
shoplifting?
What is market research?
What are for-profit social ventures? What is meant by their “double bottom line focus?
What is the value of a physical inventory count? In what ways can it be done?
Why should the small business owner have a succession plan? Identify the five stages
the owner needs to take his/her successor through in preparation for the succession.
When using team-based management style, what errors does the manager have to be
careful to avoid? How can he/she ensure the teams’ success?
What is the cardinal rule that an entrepreneur should follow when borrowing venture
money from friends and relatives?
What are a business’s responsibilities to its employees? Briefly outline and explain
each.