Many incidents of employee theft go undetected, and only a small percentage of those
employees who are caught stealing are prosecuted.
Most of the start-up businesses that attract venture capital are technology companies.
One element of the location decision common to all businesses is the need to locate
where customers wish to do business.
The price floor of a product or service is set by the company’s cost structure.
Although it is a lower risk way to start, very few entrepreneurs start part-time. Most
prefer to cut all ties and “dive” into their business full-time, right from the start.
When launching an e-commerce, the most important part of any e-commerce effort is
technology.
SBICs are an example of a public-private partnership.
Conformity is important to creativity.
Usually, the first step a small business takes when getting its products into international
markets is setting up permanent offices in foreign countries.
Commercial finance companies offer many of the same types of loans as commercial
banks, but they are willing to tolerate more risk in their loan portfolios.
The SBA’s Section 504 program is designed to encourage small businesses to expand
their facilities and to create jobs.
To make a successful franchise operation, an entrepreneur’s business model must be
replicable.
Businesses have a responsibility to the communities in which they operate, according to
your authors.
Two factors that determine the effects of competitors’ prices on a small business owner’s
pricing decisions are the location of the competitors and the nature of the competing
goods.
Innovators succeed by thinking and doing new things or old things in new ways.
Most franchisers provide extensive financial help like loans and low-rate financing for
their franchises.
Small businesses have some competitive advantages over larger companiesbeing able to
respond quickly, having greater flexibility, being able to build and defend niches, etc.
Proper financial management requires more than gathering financial data and
organizing it into financial statements; the small business manager must analyze those
statements and use that information to make better business decisions.
Unlike a limited partnership, which prohibits limited partners from participating in
day-to-day management of the business, an LLC does not restrict its members’ ability to
become involved in managing the company.
One advantage of installment loans for a small business is that the business owner
retains a security interest in the item sold as collateral on the loan.
Buying a franchise prevents an entrepreneur from making many mistakes and avoids
the most inefficient type of learningtrial and error.
One highly effective cash management strategy is to schedule inventory deliveries as
early as possible to speed your payment of accounts payable.
Cash budget is the same as”cash map.”
Effective performance appraisals link the employee’s performance to his/her specific
job description.
Franchisees generally sell only those products or services that the franchiser has
approved but may sell complementary products as long as they aren’t a second
competing franchise.
Three lenders play a role in every 504 loan: a bank, the SBA, and a certified
development company (CDC).
Part of risk-reducing strategies is taking steps to build some safety into a situation.
Employees are at the heart of increases in productivity and they add the personal touch
that puts the passion in customer service.
Commercial finance companies are willing to take more risks in making loans, but they
also charge a higher interest rate.
A small business establishing a self-insurance fund is following a risk transferring
strategy.
To be of any real value to the small business owner, strategic plans must be broken
down beyond operational plan level into projects with assigned responsibilities.
In the creative process, transformation requires both convergent and divergent thinking.
McDonald’s relies almost exclusively on the trade name type of franchising.
One of the strategic management processes is to establish accurate control.
Small businesses need not worry about public relations since their impact on the local
community is small.
To get the best results, an entrepreneur should track as many ratios as possible.
Most small business managers follow the manufacturer’s suggested retail price when it
is available.
The purchasing plan is developed independently from other functional areas of a
business.
To improve communication, leaders should use written means, e-mail, memos, notes,
etc., to ensure clarity and to be able to track that instructions were given.
Ideally, a small firm’s cash balance should be two times its average weekly sales.
________ is (are) one of the elements of the total inventory costs.
A) Demand
B) Set-up costs
C) Standing costs
D) Safety stock
Convertible bonds:
A) can’t be converted to equity.
B) typically pay a lower interest rate.
C) typically pay a higher interest rate.
D) None of the above
Other cost saving suggestions for advertising expenditures include:
A) repeat ads that have been successful.
B) hire independent copywriters, graphic designers, photographers, and other media
specialists.
C) use of identical ads in different media.
D) All of the above
The purpose of the ________ is to promote interest among potential underwriters in the
IPO.
A) road show
B) registration
C) best efforts agreement
D) filing Regulation A
When storage space or the type of item does not suit the two-bin system, the owner can
use the ________.
A) sales system
B) inventory system
C) tag system
D) weighted average system
The bargaining zone is:
A) the area within the bargaining process in which an agreement can be reached.
B) where the buyer gets the best deal.
C) where the seller gets the best deal.
D) None of the above
Which of the following factors influences the size of a retail store’s trading area?
A) The location of competitors
B) The physical layout of the store
C) Zoning regulations
D) The nature of competing businesses
The average conversion rate is:
A) 10 percent.
B) 3.2 percent.
C) less than 1 percent.
D) 5.8 percent.
________ involves the moral values and behavioral standards that businesspeople draw
on as they make decisions and solve problems.
A) Business ethics
B) Social responsibility
C) Moral responsibility
D) Law
Bill is studying those expenses that contribute directly to manufacturing and
distribution of goods. He’s reviewing:
A) cost of goods.
B) general expenses.
C) operating expenses.
D) current liabilities.
The employees of Martin’s Cleaners, a small retail chain of dry cleaner stores and
laundromats, are buying the business from the owner, who is retiring. They are offering
the owner a percentage of the asking price in cash plus quarterly payments on the
balance, with payoff complete in three years. This is an example of:
A) a sale for cash plus a note.
B) a leveraged buyout.
C) a straight sale.
D) an ESOP.
The North American Free Trade Agreement:
A) brought Chile, Mexico, the United States, and Canada together as one market.
B) eliminated all tariffs among member nations, effective immediately, and raised them
to nonmembers.
C) benefits the trading relationship between Canada and the United States most.
D) created a unified market of 478.5 million people and $19.2 trillion in goods and
services.
Which type of ownership is not subject to federal taxation?
A) Sole proprietorship
B) Corporations
C) Partnership
D) Limited liability corporation
To conduct an effective interview, the manager or small business owner should:
A) only make minimal preparations to permit spontaneity in the interview.
B) use close-ended questions in order to maintain control of the interview.
C) not allow employees to spend time with the candidate to avoid them asking illegal
questions.
D) ask candidates for examples of both successes and failures.
Proving that a profitable market exists involves:
A) proving that customers in the marketplace have a need for the good or service and
are willing to pay for it.
B) honestly comparing your firm’s products with a competitor’s products, showing your
advantages.
C) explaining how you will achieve your business objectives and market share goals.
D) showing the linkage between your plan of operation and your financial profitability.
Which of the following statement is correct?
A) Items in the A classification should be controlled under a perpetual inventory system
with as much detail as necessary.
B) Control of B items should rely more on periodic control systems and basic analytical
tools such as EOQ and reorder point analysis.
C) C items typically constitute a minor proportion of the small firm’s inventory value
and, as a result, require the least effort and expense to control.
D) All of the above
The terms of the ________ must be defined and reasonably certain.
A) offer
B) consideration
C) payment
D) None of the above
Political barriers that entrepreneurs face are:
A) government takeovers of private property.
B) attempts at coups to overthrow ruling parties.
C) violent acts against businesses and their employees such as kidnappings and
bombings.
D) All of the above
Establishing a Mrs. Fields Cookies franchise inside a Hardees fast-food franchise is an
example of ________ franchising.
A) multi-unit
B) master
C) cobranding
D) conversion
According to research, creativity among both children and adults in the United States
has declined markedly since:
A) 1990.
B) 1995.
C) 2000.
D) 2005.
The ________ matches population demographics with lifestyle interests.
A) Rand McNally Commercial Atlas & Marketing Guide
B) Source Book of County Demographics
C) Lifestyle Market Analyst
D) Nielsen Media Guide
The success of franchising is largely due to:
A) the economic growth of the United States and other developed nations, economies.
B) more college students choosing to go to work for themselves rather than for
corporations.
C) the mutual benefits it provides to the franchiser and franchisee.
D) All of these factors
A master franchise is also called:
A) sub-franchise.
B) cobrander.
C) Both A and B
D) None of the above
For an IPO, most investment bankers look for:
A) consistently high growth rates & strong record of earnings.
B) three to five years of audited financial statements & a solid position in rapidly
growing markets.
C) a sound management team and a strong board of directors.
D) All of the above
A common killer of creativity is ________ thinking.
A) flexible
B) intuitive
C) equivocal
D) myopic
The Audi 5000 sedan was reported to have sudden, violent acceleration when the
transmission was put into drive. Audi first blamed the condition on drivers who didn’t
know how to operate the transmission, but later was forced to recall the sedan and
correct the transmission problem. Audi violated which area of responsibility businesses
have to their customers?
A) Dependable packaging
B) Product safety and quality
C) Truthful advertising
D) Investor confidence
________ dilemmas lurk in even the most mundane decisions that entrepreneurs make
every day.
A) Legal
B) Ethical
C) Spiritual
D) Global
________ system(s) enable(s) business owners to track their inventories and to place
orders with vendors quickly and with few errors by linking them to their vendors
electronically.
A) Electronic Data Processing (EDP)
B) Electronic Fund Processing (EFP)
C) Cloud-based systems
D) Enterprise Resource Planning (ERP)
The boutique layout is commonly used in:
A) supermarkets.
B) self-service stores.
C) small department stores.
D) stores with a high number of impulse goods.
When it comes to hiring in the small business:
A) each hire is very important because bad hires are very expensive.
B) it is only moderately expensive because bad hires can be quickly fixed due to the
small business’s flexibility.
C) they tend to be in full compliance of EEOC and HRM laws, more so than large
companies because the hiring process is done by very few individuals.
D) the small business owner is almost always in violation of some federal regulation
due to the lack of an HRM professional on staff.
________ corporations have shares that are controlled by a relatively small number of
peoplefamily members, relatives, or friends.
A) Closely held
B) Domestic
C) Foreign
D) Alien
Baseball cards usually sell for 10 cents each. The Card Shop advertises them at “12 for
$1.00.” This is:
A) price lining.
B) leader pricing.
C) odd pricing.
D) multiple unit pricing.
What is an asset-based lender? What are the most common types of asset-based
financing?
Briefly explain the concept of breach of contract and the type of damages that can be
collected for breach of contract.
How is the target market important to the small business? What does this concept
signify about changes in marketing?
What are debit cards?
What questions should the buyer ask in determining the value of the seller’s assets?
Do angels finance start-ups or established firms?
Why would a small business owner use direct mail in his/her advertising strategy? Why
wouldn’t he/she?
Explain the nature and purpose of insurance in relationship to the small business.
Explain the three basic financial reports that a business uses in building a financial
statement: the balance sheet, the income statement, and the statement of cash flows.
What information is contained in each, what is their value to the small business owner,
and how are they used to build financial statements?
Differentiate among the three risk management strategies: risk avoidance, risk
anticipation, and risk transfer. Offer an example of each.
What is “revenue at risk?”
What is meant by “conversion rate”?
Explain the market approach to valuing a business.
Identify and explain the essential qualities to a successful family business.
Outline and briefly explain the concepts of sales and sales contracts, breach of sales
contract, sales warranties, and product liability as described in the Uniform Commercial
Code.
Explain how vision and mission work together, providing direction for the small
business. In your discussion, identify at least five key questions a mission statement
should answer.