Unique selling proposition (USP) refers to akey customer benefit or a product or service
that sets it apart from its competition.
Profits generally are low and marketing cost high in the introductory stage of the
product life cycle.
Their narrower product lines, smaller customer bases and more limited geographic
areas give small companies a natural advantage over large businesses when preparing a
strategic plan.
Simon counts a few items of his inventory every week, working his way through the
entire inventory during the year. Simon is using cycle counting to control his inventory.
Most magazines printed today are broad, general interest publications, printed as
national editions.
General requests for funds e.g., “working capital” are sufficient for most loan offices.
The primary advantage of equity capital is that it does not have to be repaid with
interest.
If an employment test measures what it is intended to measure, then the test is reliable.
Small businesses can lower their insurance premiums by banding together to purchase
coverage.
It is important to remember that the succession planning process inevitably creates
tension and distrust as family members envy the “chosen one.”
The single most important ingredient in making a successful IPO is selecting a capable
underwriter.
A benefit is a descriptive fact about a product or service (e.g., “an ergonomically
designed, more comfortable handle”).
A job description sets forth duties; a job specification translates these duties into
qualifications for that job.
Building a successful e-business is no different than building a successful
brick-and-mortar business, and that requires a well-thought-out strategy.
The net profit on sales ratio (also called the profit margin on sales) measures the firm’s
profit per dollar of sales.
Fortunately, for businesses, it only takes a short time to build a reputation and it takes a
long time to destroy it.
A new business owner must operate for at least six months in order to collect sufficient
information to calculate net sales from a profit target.
Entrepreneurs forgoing their paychecks during the start-up phase is known as sweat
equity.
Recent consumer protection laws have reduced the required information on product
labels to relieve the financial burden on small business.
A contract is simply a promise or set of promises regarding a duty and for which there
is a remedy if the agreement is breached.
Partial inventory systems are designed to maintain a running count of the items in
inventory.
Goodwill is the difference between an established, successful business and one that has
yet to prove itself.
The key to the success of a direct mailing campaign is the accuracy of the customer list.
The dollar usage volume of an item is how the importance of the item to inventory is
measured in an ABC inventory system.
The ideal business plan should be at least 100 pages long and somewhat hard to read in
order to demonstrate your thoroughness and to capture the venture capitalist’s attention.
Both unreasonable rules and un-enforced rules are equally harmful to small business
security.
A manufacturer of power saws who fails to place a safety guard on products would
likely be liable for negligence if a customer is injured.
“A” items should be controlled under a perpetual inventory system with as much detail
as necessary.
Penetration pricing is a short-term pricing strategy and achieves tremendous profit.
The need for growth capital is created by the uneven flow of cash into and out of the
business due to normal seasonal fluctuations.
Commercial banks are primarily lenders of short-term capital to small businesses.
In the 1950s, a group of legal scholars compiled the Uniform Commercial Code to
replace the hodge-podge collection of confusing, often conflicting state laws that
government basic commercial transactions with a document designed to provide
uniformity and consistency.
The goals of one-to-one marketing are to attract, retain and increase the purchases by
the target customer.
Choosing the most appropriate system of inventory control eliminates the need for the
small business owner to conduct a periodic physical inventory count.
To justify the cost of investigating the offers they receive, venture capitalists typically
seek investments in the $200,000 to $500,000 range.
Risk of loss always passes with title to the goods.
Developing core competencies does not necessarily requirea company to spend a great
deal of money.
Small business owners seldom feel the pressure to violate ethical standards or to take
shortcuts in their careers.
Factoring:
A) is a more expensive method of financing than borrowing from a bank.
B) places the risk of uncollected accounts receivable on the small business owner.
C) is best used as a long-term source of capital.
D) is a type of trade credit.
The concept of shared power in the family business means that family members allow
those with the greatest expertise in a particular area of the business to make decisions
for that area.
Perhaps the best way to evaluate the reputation of a franchiser is to ________ several
franchise owners.
A) meet
B) interview
C) write
D) Both A and B
Ethical lapses caused by a chance to “get ahead” by taking some unethical action come
about because of:
A) a “bad apple.”
B) a “bad barrel.”
C) opportunity pressures.
D) competitive pressures.
Discussion of profitability and anticipated profitability of firms in the market segment,
along with the entry, exit, and merger of those firms, is all part of the ________ section
of the business plan.
A) business strategy
B) company history
C) business and industry profile
D) marketing strategy
Money driven and wild risk takers are both:
A) common characteristics of entrepreneurs.
B) entrepreneur’s techniques to success.
C) common misconceptions of entrepreneurs.
D) None of the above
What is a violation of Title VII of the Civil Rights Act of 1964?
A) Sex discrimination
B) Sexual harassment
C) AIDS discrimination
D) None of the above
The three factors that influence the size of the retail trading area are: type and price of
products, type of the business, and the demographics of the area.
In asset-based borrowing, the ________ is the percentage of an asset’s value that a
lender will lend.
A) prime rate
B) margin rate
C) advance rate
D) discounted rate
Unfortunately, many entrepreneurs tackle e-commerce by focusing on technology first
and then determine how that technology fits their business idea.
The various groups who affect and are affected by the decisions and actions of a small
business are called:
A) suppliers.
B) stakeholders.
C) minorities.
D) intermediaries.
One disadvantage of the proprietorship is:
A) it is the least regulated form of business ownership.
B) limited personal liability.
C) excessive access to capital.
D) limited skills and abilities.
When comparing a company’s ratios to industry standards, entrepreneurs should ask
questions such as:
A) Are the differences significant?
B) Do I need to conduct ratio analysis?
C) How do these ratios benefit me?
D) All of the above
Transit advertising’s advantages include:
A) its flexibility.
B) the high quality color reproduction.
C) its wide coverage.
D) the prominence of display.
Which of the following statements concerning the financing of a business purchase is
true?
A) Often, the business seller is a poor source of financing.
B) The buyer should be able to make the payments on the loans out of the company’s
cash flow.
C) The buyer should begin arranging financing late in the purchasing process, to avoid
the processing expenses if the deal falls through.
D) Traditional lenders tend to be more eager to lend on an existing business than they
are with a start-up.
The use of a formal family council with an open discussion of all ideas is a way to
demonstrate the essential quality of:
A) shared power.
B) a willingness to learn and grow.
C) shared values.
D) family behavior.
What advertising media attract a large percentage of the advertising dollars nationwide?
A) Newspaper
B) Radio
C) Internet
D) Television
The most important ingredient in the recipe for a successful joint venture is:
A) choosing the right country or region.
B) generating sufficient capital to pursue the venture.
C) choosing the right partner.
D) hiring efficient employees to carry out the venture.
To build an effective customer service program, it is important to:
A) offer low prices.
B) train key employees to watch for and intervene when there are problems.
C) swiftly discipline employees who mistreat customers.
D) let managers wait on customers occasionally.
A________ is nothing more than a “cash map,” showing the amount and timing of the
cash receipts and the cash disbursements day by day, week by week, or month by
month.
A) cash budget
B) cash on hand
C) cash disbursement
D) Both A and C
Which of the following best expresses the relationship of a company vision to its
mission?
A) The company vision comes from the company mission.
B) The mission statement is the written expression of the company vision.
C) The company mission statement is the verbal expression of the written vision.
D) There is no relationship between the two.
When structuring a deal with an “angel,” an entrepreneur should remember that:
A) “angels” tend to prefer a controlling interest in the business.
B) the deal needs an annual return of 60″75%.
C) “angel” money is patient, often waiting seven or more years to cash out.
D) they prefer to earn their returns through dividends and interest.
________ involves a transaction in which a company selling goods in a foreign country
agrees to promote investment and trade in that country.
A) Countertrade
B) Export
C) Import
D) Bartering
Sam’s Appliance Shop turns a past due account over to Jake’s Collection Agency. Jake
calls the customer at 4 a.m. every day and threatens him. This is illegal behavior on the
part of Jake.
One technique involves ________, in which entrepreneurs test their business models on
a small scale before committing serious resources to a business that might not work.
A) a test run
B) business prototyping
C) duplicate business models
D) model prototyping
In ________ of the management succession process, the successor’s real
decision-making power grows rapidly. The final assessment of the individual’s abilities
is determined.
A) Stage I
B) Stage II
C) Stage III
D) Stage IV
When selecting the advertising vehicle the small business owner should ask
him/herself:
A) What are the characteristics of my product?
B) Who are my target customers?
C) What medium will best support my sales force?
D) What can I legally say in my advertisements?
Marian works in an office where the male employees constantly tell sexually oriented
jokes, some keep suggestive pictures on the walls of the cubicles, and several men
whistle at and make lurid comments to women employees in the lunch room. This is an
example of what type of sexual harassment?
A) Quid pro quo
B) Hostile environment
C) Harassment by a third party
D) None of these
The iPod is an example of a ________ innovation.
A) revolutionary
B) evolutionary
C) proactive
D) perfunctory
A small business owner could accelerate accounts receivable by:
A) having customers mail printed orders to you.
B) sending or faxing invoices the day of shipment.
C) slowing their own accounts payable.
D) depositing customer checks and credit card receipts weekly.
Accounts receivable in an existing business:
A) are rarely worth their face value.
B) unlike inventory, are often worth their face value.
C) appreciate over time due to interest and penalties.
D) are not a significant consideration when buying an existing business.
Briefly explain each of the three primary inventory systems.
What pricing strategies are available to manufacturers? Explain each, why it is used,
and what it does for the manufacturer.
What is showrooming and why is it a threat to traditional retailing?
What is left-brain thinking and how is it different from right-brain thinking?
How does one value a company using the balance sheet method? Why would an
entrepreneur choose this method of valuation?
How does the EOQ with usage differ from the standard EOQ? Why is this difference
important to the small business owner?
What is contractual capacity and who cannot legally enter into a contract?
Franchising is an important part of the U.S. economy. Briefly explain its importance,
define franchising, and identify the three basic types of franchises.
Describe the earnings approach for valuing a company, outlining the calculation and the
strengths and weaknesses of this technique.
Why would an entrepreneur choose a sole proprietorship? What drawbacks should be
considered?
What are the small business owner’s responsibilities to his/her investors and
community?
Identify what items are included in a standard partnership agreement.
What is motivation?
How can a small business owner turn slow-moving inventory items into cash?
What is trade credit? How is it different from or the same as loans from equipment
suppliers?
What are the steps in the creative process?
Describe the exit strategies available to the founder of the small business; if he/she
wants to sell the company to insiders, and if he/she is willing to sell it to outsiders.
What are the components of a successful business plan?
Outline the elements of the feasibility plan with a one to two sentence explanation of
each element.