Chapter 5– Entrepreneurship and Starting a Business

Which employment statistic about small businesses is true?

A great majority of American workers find their first jobs within a small business

Management includes attention toward financing the business, hiring employees, marketing, and record keeping

True

To be successful, entrepreneurs are dependent on the support of others for encouragement

False

The SBA may guarantee loans made by a financial institution and repay them if the borrowers stop making payments

True

The small business sector that has the best chance of significant growth is legal services.

False

Entrepreneurial teams combine the creative marketing and production ideas of a group of experienced people.

True

As their firms grow and prosper, busy entrepreneurs take pleasure in delegating authority to others.

False

The business plan will include

an analysis of competition

Conversations with people who start their own business often reveal that

many small business owners got their entrepreneurial idea from a previous job

One of the hurdles small businesses face when deciding to export is

financing is often difficult to find

The SBA’s _______ program provides export-financing opportunities for small businesses 

Export Express loan

Small businesses lack the resources to compete directly with big businesses

False

Exporting offers small businesses opportunities to reduce their dependence on domestic sales and extend product lives.

True

The easiest businesses to start also have the least growth potential and the greatest failure rates.

True

In order to secure financing for Bitty Bytes, a mobile bakery business that services several large Silicon Valley firms, Betty demonstrated her unwavering aspiration to get her business started by visiting several bankers with

her business plan

When comparing small businesses to their larger competitors, it is clear that

small firms often can offer more personalized customer services than big firms

Manuel is focusing his attention on finding full-time employment now that he has graduated. He has decided to narrow his job search to jobs with a major corporation and ignore the possibility of working for a small business. His job search strategy

will likely limit his job prospects since most new jobs are with small businesses

Which statement accurately depicts an advantage that small business has over big business?

A small business can maneuver and change quicker than most large businesses can. It can react to market conditions and customer concerns much faster

Because of the stress of being in business for yourself, it’s important that entrepreneurs have people around them to help replenish their enthusiasm.

False

Entrepreneurs seeking financial support from bankers and potential investors should

create a detailed business plan to help the bankers and investors understand why this business plan will succeed

Luxe Labels, LLC, exports specialty printing equipment for the custom labeling, flexible packaging, and carton industry. Thanks to increased support from ____, this company's sales to Brazilian companies and other global opportunities have significantly increased.

Department of Commerce’s Bureau of Industry and Security

Successful entrepreneurial teams

bring a variety of talent to the business venture

Large organizations encourage intrapreneurship as a strategy to improve their profitability through new products.

True

Entrepreneurs learn that there are many legal and financial issues involved in starting their business. The best way for the small business owner to resolve these issues and protect the firm's resources is

seek and pay for expert guidance and assistance

Skylar is an angel investor. That means he

invests his money in new businesses with potential for growth, hoping for a good return on his investment if they go public

The business opportunities with the greatest growth potential tend to be in the high technology industries

True

Which statement best describes the difference between an intrapreneur and an entrepreneur?

Intrapreneurs work within existing corporations while entrepreneurs assume the risks of starting their own business.

One way to get into business is to buy an existing company. The value of the business used to determine a fair purchase price is based on

the value of what the business owns, what it earns, and what makes it unique

Mohamed's four employees have been with him since he opened Employment Experts, Inc., nearly a decade ago. As he anticipates staffing his new branch office, he decides none of these four long-time employees are ready to manage the office. Faced with this difficult situation, what should Mohamed do?

He should hire a new qualified employee to manage the office since utilizing his unready employees could be detrimental to the business

Using the analogy of boulders vs. sand for filling a hole, the textbook points out that

small businesses can serve niche markets that larger firms do not serve well

Successful small business owners are

valuable sources for information since you can learn from their experience

Micropreneurs is a term used to describe entrepreneurs who focus on the continued growth of their businesses.

False

Many micropreneurs are home-based business owners.

True

Creative people working as entrepreneurs within a large organization are called intrapreneurs.

True

In the business world, a market consists of those people who have a willingness to buy a particular product.

False

For several years, Addison has volunteered to play the piano and sing at a local nursing home. Now, Addison has decided the time was right to get into the growing eldercare market. She created Music and Memories, a nonprofit corporation that would hire local talent to perform her own music productions directed toward this market. In order to write and produce several productions each year, Addison needed start-up funds. An instructor at the local community college suggested that she begin by ________ because this effort would help introduce her idea to interested investors as well as suggest government grant applications that Addison might pursue.

preparing her business plan

Eddie is an inventive engineering new graduate who just started working for a large company that makes medical products for both hospital and patient use. One of his primary responsibilities is to initiate and develop new products to complement the firm's current product line. Eddie's position is

intrepreneurial

A good business plan describes the nature of the proposed business, the target market, the competitive advantages, and the qualifications of the owners.

True

Two key management functions that need particular attention when starting a business are

planning and financing

Small Business Administration loans help firms finance their domestic operations. These funds, however, cannot be used to finance exports since the money is provided by U.S. taxpayers.

False

Advancements in computer technology put home-based businesses at a disadvantage

False

Antonio works for a textbook publisher. However, his dream is to establish a home-based business providing his services to a variety of publishers. Antonio's primary goal is to escape the 9 to 5 world of corporate publishing and to enjoy the opportunity of working for himself. Antonio is an example of a micropreneur.

True

Historically entrepreneurs in the United States.

started many small firms that later became major corporations employing thousands of workers

Identifying poor management as the cause of a small business failure likely covers a variety of problems.

True