To begin an offering, the entrepreneur and the underwriter must negotiate a letter of
intent.
An “incubator” is a facility with low rent that permits start-up small businesses to share
resources.
Employers can be held responsible for third-party sexual harassment if managers knew
about it or should have known about it.
When in doubt, shopping centers are always a wise location for a small business to
choose.
To establish and maintain the highest level of ethical standards, the company’s owner
should hand down the company’s ethical standards and require managers to enforce
them.
An express warranty can be created by words or by actions.
Sometimes personal defense mechanisms and confusing verbal and nonverbal messages
interfere with leader/follower communication.
Progressive companies are taking their environmental policies a step further, creating
redesigned, “clean” manufacturing systems that focus on avoiding waste and pollution.
A quick ratio greater than 1:1 indicates that a small firm is overly dependent on
inventory and on future sales to satisfy short-term debt.
The longer a debt is outstanding, the lower its probability of collection.
In a cash budget, credit sales to customers are recorded as soon as the sale is made.
The three-digit number above the signature panel on the back of the credit card is
referred to as CCV or CCV2.
To minimize ordering costs, the small business should place as few and as large orders
as possible.
The ultimate goal of TQM is to avoid quality problems.
One of the “rules” of successful negotiations is “not everything is negotiable.”
Entrepreneurs implement a marketing communications plan by ensuring that all
elements of the plan (advertising, publicity, public relations, sponsorships, and personal
selling) deliver an inconsistent message that is based on their firm’s unique selling
proposition.
A lockbox arrangement is very inexpensive to operate and is economical even for small
businesses with a low volume of payments on account.
Some of the most common reasons small or mid-sized companies take their business to
the Web are to keep up with the customers and to reach global markets.
Many skilled interviewers use the job analysis to explain the nature of the job and the
company’s culture to the applicant.
The balance sheet takes a “snapshot” of a business, providing owners with an estimate
of the firm’s worth on a given date.
Fortunately for U.S. business owners, American customs and habits have become the
standard for proper business behavior around the world.
A firm commitment agreement guarantees that the company will receive the required
funds.
Most stores use a standard markup across all products due to the heavy labor costs
involved in individual pricing.
Traditional lenders of capital often shy away from deals involving the purchase of an
existing business.
One of the surest ways to kill high performance is simply to fail to recognize it and the
employees responsible for it.
Service companies tend to use the manufacturer-to-customer distribution channel more
than any other.
Contemporary society places great value on monopolies in the marketplace, and
antitrust laws reflect this.
The most effective way of diminishing moral blindness is through training.
When doing a traffic count, the total number of shoppers passing by is the critical factor
in evaluating the site.
One barrier to management succession planning is that the founder often becomes so
identified with the business it is difficult for him/her to let go.
Business prototyping recognizes that every business idea is a hypothesis that needs to
be tested before an entrepreneur takes it to full scale.
If a manager says things like, “Everyone does it” or “I don’t get paid to be ethical, I get
paid to produce results,” he/she is suffering from moral blindness.
When evaluating existing buildings, retailers:
A) need to find the lowest cost per-square-foot possible due to the need for maximum
display space.
B) should locate in store space previously occupied by a similar type of business.
C) should recognize that the store’s appearance and layout create an image for the
customer of the business.
D) can discount the interior appearance of the building if it has a strong exterior appeal.
When comparing a company’s ratios to industry standards, entrepreneurs should ask the
which of the following questions:
A) Is there a significant difference in my company’s ratio and the industry average?
B) Is the difference good or bad?
C) What are the possible causes of this difference? What is the most likely cause?
D) All of the above
Which of the following factors do banks focus on when lending money to a company?
A) Personal guarantee
B) Positive cash flow
C) Successful track record
D) All of the above
Typically, ________ is needed to purchase the business’s permanent or fixed assets.
A) working capital
B) growth capital
C) fixed capital
D) None of the above
The FTC’s philosophy focuses on:
A) catching and prosecuting abusers of franchise laws.
B) verifying the accuracy of FDD information.
C) providing information to prospective franchisees and helping them make good
decisions.
D) licensing prospective franchisers.
The most basic type of trust is the ________ trust, which allows a business owner to put
assets into a trust naming his spouse as the beneficiary upon his death.
A) irrevocable
B) grantor
C) bypass
D) ESOP
Companies started by women differ from companies started by men in that:
A) men’s start-ups tend to be smaller and less well-financed than women’s.
B) women’s companies tend to be labor-intense businesses and therefore employ more
people, even though they have smaller revenues.
C) women’s companies start smaller.
D) men tend to start their businesses with their own capital, women with others’ capital.
The science of adapting work and working conditions to complement employees and to
suit customers is called:
A) physiology.
B) ergonomics.
C) layout design.
D) kinesiology.
Jack started his business in the year 2000. Due to lack of planning and bad cash flow,
Jack files for bankruptcy and the business ceases to exist. This is a form of:
A) liquidation.
B) reorganization.
C) repayment plan.
D) temporary repayment plan.
________ is any form of wealth used to produce more wealth.
A) Debt
B) Equity
C) Capital
D) Capacity
A small business owner needs to remember that when it comes to employee
involvement in the strategic planning process:
A) involvement is a prerequisite for the achievement of total employee commitment.
B) his/her employees look to him/her for leadership and do not want to be involved.
C) the delegation of authority is not as important as communicating a clear vision.
D) employees do not need to be involved in the strategic process but do need to be
involved in the operational process.
The primary advantage of buying a franchise over starting your own company is:
A) in the purchase of the franchiser’s experience, expertise, and products.
B) the fact it is much less expensive than doing your own business start-up.
C) the extensive assistance offered in finding start-up capital.
D) the absolute territory protection offered by all franchisers.
One of the most important tasks facing an entrepreneur is:
A) establishing a large enough reserve of capital.
B) earning enough the first year to provide an adequate return on investment.
C) the deferment of taxes.
D) determining the funds needed for a company start-up.
The essential quality for a family business that shows a recognition that decisions
should be left to the person with the greatest talent in that area is the quality of:
A) shared power.
B) shared values.
C) tradition.
D) strong family ties.
One of the objectives of a bootstrap marketing plan is to find the ________ in the
market.
A) “pain points”
B) “entry point”
C) “skimming point”
D) “unique point”
Which one of the following is not a basic Web analytic?
A) Time spent on site
B) Sales revenue generated
C) Number of items sold
D) Which products are selling best (and which are not)
In an IPO, who signs the best efforts agreement?
A) Management
B) Angel
C) Underwriter
D) Board of directors
Insurance companies are able to assume so much risk because:
A) they are stock-based companies with deep pockets.
B) they are “gamblers” who bet they are going to make money before they have to pay
off any claims.
C) they share the risk among numerous policy holders.
D) they are backed by the government and will be “bailed out” if they get into trouble.
________ is a pricing strategy under which local customers “subsidize” the shipping
charges the firm incurs when transporting merchandise to distant customers.
A) FOB factory pricing
B) Uniform delivered pricing
C) Zone pricing
D) Opportunistic pricing
________ publishes key business ratios for over 800 business categories.
A) Robert Morris Associates
B) Boston Consulting Group
C) Bank of America
D) Dun and Bradstreet, Inc.
________ is (are) a valuable part of the creative process, especially when evaluating
ideas and implementing them.
A) Rules
B) Unequivocality
C) Logic
D) All of the above
A quota is:
A) a duty, or tax, that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a prohibition or suspension of foreign trade of specific imports or exports.
D) a law that a government uses to regulate products that are imported into the country.
When analyzing the labor supply, a small service business is only concerned with the
level of education and training of the labor force in the area.
________ is the right to ownership of property and, for a small business owner,
determines who has responsibility for ownership.
A) Identification
B) Risk of loss
C) Concept of title
D) F.O.B.
The duration of a ________ is indefinite but can be lost if it loses its unique character.
A) patent
B) copyright
C) trademark
D) warranty
Typically, the franchiser controls are very tight on what the franchisee:
A) does in terms of who they hire as employees.
B) sets in terms of retail pricing and hours of operation.
C) does with his/her net profits after fees and taxes are paid.
D) sells in terms of the product or service they offer.
Companies can avoid drug and other related problems by including several key
elements in the company drug program, such as:
A) drug testing all employees periodically regardless of need.
B) having a written substance abuse policy.
C) turning supervisors into “drug police” by having them watch employees for signs of
substance abuse.
D) including all of these in the drug program.
While a sole proprietorship gives the owner maximum flexibility in running the
business, it also:
A) makes the company a prime target for an acquisition or merger.
B) creates a sense of isolation.
C) makes it difficult to hire management talent to help grow the business.
D) makes it difficult to sell.
The money Bert uses to build inventory for the upcoming Christmas season would be
classified as ________ capital.
A) growth
B) working
C) fixed
D) efficiency
The primary market for U.S. franchisers is:
A) Europe.
B) Pacific Rim.
C) Canada.
D) Asia.
If a business owner goes to self-directed work teams, he/she is most likely using the
________ style of management.
A) team-based
B) big-team venture
C) entrepreneur-plus-employee team
D) small partnership