Chapter 6--Managing Small Business Start-Ups

Student: ___________________________________________________________________________

1.

Approximately 600,000 new businesses are laun he! in the U.S. ea h year by entrepreneurs. "rue #alse

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"he pro ess o% initiating a business &enture, gathering an! organi'ing the appropriate resour es, an! assuming the asso iate! ris(s an! rewar!s re%ers to entrepreneurship. "rue #alse

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Sole proprietorships are one o% the %astest growing segment o% small business. "rue #alse

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+ntrepreneurs in the sustainer ategory are rewar!e! by the personal satis%a tion o% being business owners. "rue #alse

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+ntrepreneurs in the sustainer ategory ali(e the han e to balan e wor( an! personal li%e an! o%ten !on-t want the business to grow too large. "rue #alse

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+ntrepreneurs in the optimi'er ategory are rewar!e! by the personal satis%a tion o% being business owners. "rue #alse

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/ptimi'ers are rewar!e! by han e to wor( on something new an! reati&e. "rue #alse

0.

1uring turbulent times, small business %ormation is the primary pro ess by whi h an e onomy re reates an! rein&ents itsel%. "rue #alse

2.

China is the most entrepreneurial ountry, with $* per ent o% in!i&i!uals age 10 to 6* starting a new business. "rue #alse

10 Small businesses, a or!ing to the Small Business A!ministration, employ more than 20 per ent o% the . pri&ate wor(%or e in the Unite! States. "rue #alse 1

11 +ntrepreneurship an! small business in the Unite! States is an engine %or 3ob reation an! inno&ation. . "rue #alse 1$ 4omen an! minorities who ha&e %oun! their opportunities limite! in the orporate worl! are seeing . intrapreneurship as the only way to go. "rue #alse 1) 5mmigrants are more li(ely to start small businesses than nati&e-born Ameri ans. . "rue #alse 1* Minorities show a high rate o% entrepreneurship in the Unite! States, owning ,.0 million %irms in $00. . that generate! 61 trillion in re&enues. "rue #alse 1, 7arti ularly in a turbulent en&ironment, the three most important traits o% su ess%ul entrepreneurs are . realism, %lexibility, an! passion. "rue #alse 16 "he psy hologi al hara teristi that allows a person to be untrouble! by !isor!er an! un ertainty is . alle! toleran e %or ambiguity. "rue #alse 1. A nee! to a hie&e is a psy hologi al hara teristi that means people are moti&ate! to ex ell an! pi ( . situations in whi h su ess is li(ely. "rue #alse 10 +ntrepreneurs are able to !eal easily with !elays an! exhibit high le&els o% patien e, (nowing that the . results will be worth the wait. "rue #alse 12 So ial entrepreneurs ha&e a primary goal o% impro&ing so iety rather than maximi'ing pro%its. . "rue #alse $0 So ial entrepreneurs are lea!ers who are ommitte! to both goo! business an! ensuring high . pro%itability. "rue #alse $1 So ial entrepreneurship ombines the reati&ity, business smarts, passion, an! har! wor( o% the . tra!itional entrepreneur with a mission to hange the worl! %or the better. "rue #alse

$$ "he %irst step in pursuing an entrepreneurial !ream is to ome up with a &iable i!ea. . "rue #alse $) "he most ommon sour e o% new business i!eas omes %rom in-!epth un!erstan!ing o% an in!ustry or . pro%ession. "rue #alse $* A !o ument spe i%ying the business !etails prepare! by an entrepreneur prior to opening a new . business is (nown as a business plan. "rue #alse $, A business plan %or a small business shoul! be !etaile!, en ompassing at least 100 pages. . "rue #alse $6 Sin e a orporation is a legal stru ture reser&e! %or large %irms, small businesses ha&e two basi . hoi es %or legal stru ture o% their ompany8 proprietorship an! partnership. "rue #alse $. A sole proprietorship an unin orporate! business owne! by two or more people. . "rue #alse $0 "he !rawba (s o% proprietorship in lu!e unlimite! liability an! !i%%i ulty in obtaining %inan ing. . "rue #alse $2 "wo prin iple a!&antages o% %orming a orporation are ontinuity an! limits on the owners- liability. . "rue #alse )0 Setting stan!ar!s too high is a ommon pit%all %or (eeping a small business running su ess%ully. . "rue #alse )1 "he %ailure rate %or high-te h business is lower than the %ailure rate %or on&entional businesses. . "rue #alse )$ Borrowing %rom %amily an! %rien!s is a ommon sour e o% !ebt %inan ing %or a start-up business. . "rue #alse )) "he Small Business A!ministration 9SBA: an pro&i!e loan %inan ing %or small business start-up. . "rue #alse )* +;uity %inan ing is when %un!s are in&este! in ex hange %or ownership in the ompany. . "rue #alse )

), A &enture apital %irm is a group o% ompanies or in!i&i!uals that in&ests money in new or expan!ing . businesses %or ownership an! potential pro%its. "rue #alse )6 "he a!&antage o% buying an existing business is the ability to !e&elop an! !esign the business in the . entrepreneur-s own way. "rue #alse ). An attra ti&e inno&ation %or entrepreneurs who want to start a business %rom s rat h is to 3oin a . business in ubator. "rue #alse )0 "o su ee! in the ompetiti&e online mar(et, aspiring entrepreneurs nee! to i!enti%y a mar(et ni he . that isn-t being ser&e! by other ompanies. "rue #alse )2 +ntrepreneurs see themsel&es as being less in ontrol o% their en&ironment, generally spea(ing, an! an . be expe te! to ha&e an external lo us o% ontrol. "rue #alse *0 "he %irst stage o% growth %or an entrepreneurial ompany is the in&estment stage. . "rue #alse *1 At the su ess stage, the ompany-s substantial %inan ial gains may ome at the ost o% losing its . a!&antages o% small si'e. "rue #alse *$ At the su ess stage o% growth, a ompany<s substantial %inan ial gains may ome at the ost o% losing . its a!&antages o% small si'e, in lu!ing %lexibility an! the entrepreneurial spirit. "rue #alse *) At Stage ) o% growth %or an entrepreneurial %irm, managers o%ten are hire! to ta(e o&er !uties . per%orme! by the owner. "rue #alse ** "he ta(eo%% stage is the last o% the %i&e stages o% growth %or an entrepreneurial ompany. . "rue #alse *, 5n the start-up stage o% an entrepreneurial business, %ormal planning ten!s to be nonexistent ex ept %or . the business plan. "rue #alse *

*6 "he owner shoul! start implementing more stru ture! ontrol systems by Stage ) o% growth %or an . entrepreneurial %irm. "rue #alse *. A !omain name gi&es a ompany an a!!ress on the 4eb an! a uni;ue i!entity. . "rue #alse *0. 4hi h o% the %ollowing is the pro ess o% starting a business &enture, organi'ing the resour es, an! ta(ing the ris(s= A. 5ntrapre neurshi p B +ntrepreneurs . hip C Small business a!ministration 1 >enture . apital + +;uity . %inan ing *2. A9n: ????? is someone who re ogni'es a &iable i!ea %or a business pro!u t or ser&i e an! arries it out. A. intr apr ene ur B entrepr . eneur C . 1 . + . manag er lea!e r intro& ert

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Being intereste! in omputers, @ose Cohata ame up with an i!ea o% personali'ing the s reen sa&er programs with %amily pi tures. A%ter trying a ouple o% programs, @ose starte! mar(eting this ser&i e to neighbors an! area businesses. @ose-s a ti&ities an be !es ribe! as a9n: ?????. A. entre pren eurs hip B intraprene . urship C . 1 . + . useless i!ea large business partnersh ip

,1.

An entrepreneur8 A. assu mes the ris(s o% the busin ess. Breaps the rewar!s o% the business. assumes the %inan ial an! legal ris(s o% ownership. re ogni'es a &iable i!ea %or a business pro!u t or ser&i e an! arries it out. + all o% . these. 6

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"ra y-s "ri(es belie&es that ea h employee shoul! en3oy the i!ea o% wor(ing on something that is new, reati&e, or personally meaning%ul. "ra y-s "ri(es exempli%ies whi h o% the ategories o% small business owners= A. /pt imi 'er s B 5!eali . sts C Aar! . wor(er s 1 Sustai . ners + @uggl . ers

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Connie, a single mother an! home-business entrepreneur, en3oys running her own business. Aowe&er, be ause she is busy balan ing wor( an! %amily, she !oes not %oresee her home business growing signi%i antly in the near %uture. Connie an best be !es ribe! as what type o% entrepreneur= A. B . C . 1. + . 5!eali st Sustainer /ptimi'e r @uggler Aar! wor(er

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5% a small business owner en3oys the han e to balan e wor( an! personal li%e, he woul! be onsi!ere! a9n: ?????. A. B . C . 1 . + . i!e alis t optimi 'er har! wor(er 3uggle r sustain er

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4hi h o% the %ollowing are high-energy people who en3oy han!ling e&ery !etail o% their own businesses= A. @uggl ers B. 5!ealists C Sustainers . 1 /ptimi'ers . + Aar! . wor(ers

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4hi h o% the %ollowing is the type o% business that most entrepreneurs start= A. Betail B. Manu%a turing C. Ser&i e 1. All o% these + Betail an! manu%a turing . only

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"o!ay, inspire! by the growth o% ompanies su h as Ama'on. om, entrepreneurs are %lo (ing to the ????? to start new businesses. A. Small Business A!ministrat ion 5nternet boo(store mall 5nternal Be&enue Ser&i e

B. C. 1. + . ,0.

5n $01$, whi h ountry ha! the largest per entage o% in!i&i!uals age 10 to 6* that were a ti&e in starting or managing a business= A. China B. 7eru C. Columbia 1. Angola + 1omini an . Bepubli

,2.

"he Small Business Asso iation 9SBA: reports that small businesses reate at least ????? per ent o% Ameri a<s new 3obs. A . B . C . 1 . + . ) 0 ) $ * 6 6 * 0 $

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Small businesses represent ????? per ent o% all %irms an! employ about hal% o% all pri&ate se tor employees. A . B . C . 1 . + . 0 . $ $ 2 0 , * . $

61.

Small %irms that %ile %or patents typi ally pro!u e ????? more patents per employee than large patenting %irms. A. B . C . 1 . + . twi e ) to * times 6 to . times 2 to 10 times 1) to 1* times

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4hat per entage o% women entrepreneurs ha&e employees= A. B. C . 1 . + . #i &e "e n "we nty #i%t y +igh ty

10

6).

4hi h o% the %ollowing !emographi %a tors !istinguish entrepreneurs %rom others= A. "hey are li(ely the youn gest hil! in their %amil y.

Most entrepreneur s laun h their businesses between the ages o% ), an! ,,. "heir parents li(ely wor(e! %or large ompanies. 1 "hey are li(ely the hil!ren o% immigrants. + All o% . these. 6*. 5n the Unite! States, minorities own ????? %irms. A. B . C . 1 . + . ,.0 milli on 1.) billion 0.$,000 0.2 million $.2 million

11

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Celine has an unwa&ering belie% in her new start-up ompany. She possesses intense %o us an! ta(es un on&entional ris(s to ma(e her new ompany su ess%ul. "hese examples most losely relate to whi h personality trait o% entrepreneurs= A. Cee! to a hie& e B. 7atien e C "oleran e %or . ambiguity 1 Aigh energy . le&el + Sel%. on%i!en e

66.

An!rew, a young entrepreneur, %eels sure about his ability to win ustomers through his people s(ills. Ae is om%ortable with his ability to han!le te hni al !etails an! %eels that he is able to (eep his business mo&ing. "his most losely relates to whi h personality trait o% entrepreneurs= A. Cee! to a hie& e B. 5mpatien e C "oleran e %or . ambiguity 1 Aigh energy . le&el + Sel%. on%i!en e

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4hi h o% these means that people are moti&ate! to ex el an! pi ( situations in whi h su ess is li(ely= A. +xtern al lo us o% ontrol B "oleran e %or . Ambiguity C Awareness o% . passing time 1 5nternal lo us . o% ontrol + Cee! to . a hie&e

60.

Dinger li(es to set her own goals, whi h ha&e an interme!iate le&el o% !i%%i ulty. 4hi h o% the entrepreneurial hara teristi s !oes she probably possess= A. A high nee! %or a hie&emen t B A high nee! %or power . C An external lo us o% . ontrol 1 An inability to !eal with . un ertainty + 5ntoleran e %or . ambiguity

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Melissa is a &ery goo! mi!!le manager. Aowe&er, she has long wante! to open her own business. 4hi h o% Melissa-s hara teristi s is not onsistent with entrepreneurship= A. Melissa has high sel%on%i!en e. B Melissa ten!s to put things . o%% till later. C . 1 . + . She is untrouble! by un ertainty. She has a high energy le&el. She has high nee! to a hie&e.

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4hi h o% the %ollowing is the psy hologi al hara teristi that allows a person to be untrouble! by !isor!er an! un ertainty= A. B . C. 1 . + . "oleran e %or ambiguity +xternal lo us o% ontrol Cee! to a hie&e Awareness o% passing time 5nternal lo us o% ontrol

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So ial entrepreneurs are ommitte! to both goo! business an!8 A. sway ing polit i al opini on o% ons umer s. Bimpro&ing the natural en&ironme nt. C positi&e so ial hange. 1 non. pro%it goals. + big . pro%its.

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4hat is the primary goal o% the so ial entrepreneur= A. Maxi mi'in g pro%its B 5mpro&ing . so iety C Bea hing . so ial ir les 1 . + . #in!ing %un!ing 4riting grants

1,

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????? ombines reati&ity, business smarts, passion, an! har! wor( o% the tra!itional entrepreneur with a mission to hange the worl! %or better. A. Contemporary entrepreneursh ip B "ra!itional entrepreneurship . C Mo!ern-!ay . entrepreneurship 1 So ial entrepreneurship . + Con&entional . entrepreneurship

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/ne o% the %irst hara teristi s or points o% a su ess%ul business plan is8 A. a pro%ile o% potential ustomers an! mar(et nee!s. B !emonstrate a lear, ompelling &ision that reates . an air o% ex itement. C the (ey ingre!ient o% the business that will attra t . million o% ustomers. 1 the entrepreneur-s ba (groun! an! role in the . ompany. + essential in%ormation about %un!ing re ei&e! so . %ar.

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4hi h o% the %ollowing is the most ite! sour e o% new business i!eas= A. Brains tormi ng B5n-!epth un!erstan!ing o% in!ustryEpro%e ssion C. A hobby 1 Copying . someone else + Cone o% . these 16

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Be%ore opening his own business, Fareem was writing a report that !etails the spe i%i s o% his i!eas an! %uture business operations. "his !o ument is (nown as a8 A. S4/" analysis. B business . port%olio. C business plan. . 1 ompetiti&e . analysis. + mission . statement.

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"he most ommon reason %or be oming an entrepreneur is8 A. 3oining the %amily business. B to ontrol one<s %uture. . C to be one<s own boss. . 1. to %ul%ill a !ream. + the result o% being lai! . o%%.

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4hi h o% these re%ers to an unin orporate! business owne! by an in!i&i!ual %or pro%it= A. 7artne rship

B Sole . proprietorshi p C Corporatio . n 1 Asso iation . + "ra!e . allian e

1.

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4hi h o% the %ollowing is C/" an appropriate legal stru ture %or an entrepreneurial ompany=

A. 7roprietorship B. Corporation C. 7artnership 1. "ra!e allian e + All o% these are appropriate legal stru tures %or an entrepreneu . ompany. 00. 4hi h o% the %ollowing is a popular small business %orm be ause it is easy to start an! has %ew legal re;uirements= A. A partner ship

B A . proprietorshi p C A . orporation 1 An . asso iation + A tra!e . allian e 01. >aughn Aager starte! his one-man onsulting business un!er the name Aager Asso iates. "he legal stru ture %or the ompany an best be !es ribe! as a9n:8 A. proprieto rship. B. partnership. C tra!e allian e. . 1. orporation. + one man . operation.

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A9n: ????? has a legal li%e o% its own. A. B . C . 1 . + . partne rship proprietors hip orporatio n asso iatio n tra!e allian e

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"he !rawba (9s: o% proprietorship in lu!e8 A. the unlimite! liability o% the partners. B on%li ts with . partners. Cexisten e regar!less o% whether the owners li&e or !ies. 1 !i%%i ulty in . obtaining %inan ing. + omplexity an! . ost.

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Bla(e, Ma!ison an! Sean starte! selling omputer so%tware on ollege ampuses un!er the name Stu!ent So%tware Company. +a h person ontribute! 61,00 towar! start-up osts an! agree! on !i&i!ing osts an! pro%its e;ually. "he legal stru ture %or the ompany an best be !es ribe! as8 A. a propri etorsh ip.

B . C . 1 .

a partnership. a tra!e allian e. a orporation . + none o% . these. 12

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4hi h o% the %ollowing is an unin orporate! business owne! by two or more= A. A partner ship

B A . proprietorshi p C A . orporation 1 An . asso iation + A tra!e . allian e 06. An arti%i ial entity reate! by the state an! existing apart %rom its owners is (nown as8 A. a partner ship.

B a . proprietorshi p. C a . orporation. 1 an . asso iation. + a tra!e . allian e. 0.. 4hat are the two prin ipal a!&antages o% %orming a orporation= A. Unlimite! liability an! potential on%li ts with partners B #ree!om %rom !ebt an! . relati&ely simple stru ture C Continuity an! limits on . owner-s liability 1 Unlimite! liability an! . ontinuity + Continuity an! non-tax . stru ture $0

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All o% the %ollowing are ommon reasons why small business &entures %ail ex ept8 A. B . C . 1 . + . sloppy a ount ing. nai&e hiring. la ( o% ontrols. long-term %o us. unrealisti %o us.

02.

4hat is the most ommon way that entrepreneurs %inan e the start-up o% a new business= A. Sel%%inan i ng %rom sa&ing s or re!it ar!s BGoans %rom %rien!s, %amily, or business asso iates C Ban( loans . 1 Gines o% . re!it + >enture . apital

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????? re%ers to borrowing money that has to be repai! in or!er to start a business. A. >ent ure api tal B 1ebt . %inan in g C +;uity . %inan in g 1 #ran hi . sing + Gi ensi . ng

21.

A group o% ompanies or in!i&i!uals that in&ests money in new or expan!ing businesses %or ownership an! potential pro%its is (nown as8 A. an e;uity %inan i ng %irm. %ran hising.

B . C a &enture . apital %irm.

1 a . orporation. + a tra!e . allian e. 2$. A &enture apital %irm wants to in&est in businesses with a high rate o% return. 5n return, they will8

A. in&est large B. pro&i!e ne essary assistan e an! a!&i e. C. pro&i!e in%ormation to help the entrepreneur prosper. 1. all o% these. + pro&i!e ne essary assistan e an! a!&i e an! pro&i!e in%ormat . only.

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4hi h o% these re%ers to the %inan ing that onsists o% %un!s that are in&este! in ex hange %or ownership in the ompany= A. >ent ure!ebt B 1ebt . %inan in g C +;uity . %inan in g 1 #ran hi . sing + Gi ensi . ng

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4en!y en3oys ma(ing ra%ts an! gi&ing these away as gi%ts to %rien!s an! %amily. /ne !ay, she !e i!e! to ;uit her 3ob an! ma(e ra%ts %ull-time, selling them on her new ompany 4eb site. 4hi h ta ti o% be oming a business owner !i! 4en!y use= A. +;uity %inan ing Cew business startup Buying an existing business Buying a %ran hise

B . C . 1 . + Merger an! . a ;uisition

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4hi h o% these o%%ers the a!&antage that the entrepreneur has the ability to !e&elop an! !esign the business in the entrepreneur-s own way= A. 7arti ipat e in a busin ess in u bator B Start a new business C Buy a . %ran hise 1Buy an existing business + All o% . these

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An a!&antage o% whi h o% these ta ti s is that there is a shorter start-up time an! an existing tra ( re or!= A. 7arti i pate in a busine ss in uba tor B Start a new . business C Buy a . %ran hise 1 Buy an . existing business + 1ebt . %inan ing

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????? re%ers to an arrangement by whi h the owner o% a pro!u t or ser&i e allows others to pur hase the right to !istribute the pro!u t or ser&i e with help %rom the owner. A. #ran h ising B Business . in ubation C . 1 . + . Spinningo%% Dlobali'atio n Bight o%%erings

20.

????? was one o% the top 10 %astest-growing %ran hises in $011. A. Arbys B Frispy . Freme C. Subway 1 4en!y-s . + 1airy . Hueen

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4hi h o% these is true about the business in ubator= A. 5t gi&es up ontr ol sin e e&ery busin ess is run the same way. 5t pro&i!es share! o%%i e spa e, management support ser&i es, an! management a!&i e. C5t !e&elops an internationa l business. 5t pro&i!es an establishe! name an! a!&ertising. + All o% . these.

100.

"he ma3ority o% the in ubators are operate! by8 A. large orporat ions. B non-pro%it . organi'ations. C . 1 . small businesses. international businesses.

+ ollege !rop. outs. $6

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+ntrepreneurs who aspire to start online businesses implement all the %ollowing steps ex ept8 A. reate a pro%essional 4eb site. B. hoose a !omain name. C. buil! online relationships 1 !etermine physi al lo ation. . + i!enti%y a pro%itable mar(et . ni he.

10$.

Max is the 4eb site manager %or a lo al %lorist. "he ompany<s owner woul! li(e Max to re!esign the 4eb site so that ustomers an onne t !ire tly with %lorist employees on a !aily basis about pro!u ts an! spe ials. "his relates to whi h step in establishing an online business= A. #in!ing a ni he mar(et B Creating a pro%essional . 4eb site C Choosing a target mar(et . 1 Choosing a !omain name . + Buil!ing online . relationships

10).

Managers must tailor their planning, organi'ing, lea!ing, an! ontrolling to %it8 A. the urrent stage o% growth. B %inan ial nee!s. . C in&entory le&els. . 1 the number o% or!ers to be %ille!. + their om%ort . le&el.

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10*.

Marion is an entrepreneur. At this stage o% his ompany-s growth, his main on erns are !o we ha&e enough ustomers an! money. 4hat stage o% growth is Marion-s ompany in= A. Sta rtup B Sur&i . &al C "a(e . o%% 1Besour e maturit y + Su e . ss

10,.

All o% these are entrepreneurial hara teristi s ex ept8 A. sel%on%i!en e. B toleran e %or ambiguity. . C external lo us o% . ontrol. 1. high energy le&el. + awareness o% passing . time.

106.

Samuel Bohrer is pro&i!ing onsumers with a new, uni;ue business. "he stage o% the growth where his business has !emonstrate! that it is a wor(able business entity is onsi!ere! the8 A. B. C. 1. + . start-up stage. sur&i&al stage. su ess stage. ta(eo%% stage. resour e maturity stage.

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10..

At whi h stage o% growth is the ompany i% it is soli!ly base! an! pro%itable= A. Bes our e mat urit y "a(eo% % Sur&i& al Su es s +xisten e

B . C . 1 . + . 100.

@anelle is &ery inno&ati&e an! attenti&e to !etail. As she starts her own ompany, she lea!s her employees an! ensures that e&ery !etail is atten!e! to. As her ompany grows, she %in!s it more !i%%i ult to !eal with an! moti&ate her employees. She is more intereste! in the pro!u t. 4hat stage o% growth is @anelle-s ompany going through= A. Bes our e mat urit y "a(eo% % Sur&i& al Su es s +xisten e

B . C . 1 . + . 102.

#ormal planning, su h as a strategi plan, is usually institute! !uring whi h stage= A. Start-up B. Sur&i&al C. "a(eo%% 1. Su ess + Besour e . maturity $2

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1uring the ????? stage, the ompany will nee! to ma(e greater use o% bu!gets, stan!ar! ost systems, an! statisti al reports. A. B . C . 1 . + . exi ste n e sur&i& al ta(eo %% su e ss maturi ty

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"he (ey problem, at the ????? stage o% growth, is how to grow rapi!ly an! %inan e that growth. A. exi ste n e B sur&i . &al C ta(e . o%% 1resour e maturi ty + su e . ss

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ABC ompany has ma!e substantial %inan ial gains, but may start to lose the a!&antages o% small si'e. 4hi h stage o% growth is this ompany experien ing= A. Bes our e mat urit y "a(eo% % Sur&i& al Su es s +xisten e

B . C . 1 . + . 11).

"he Swingset Company is at the stage where i% %inan ing is a&ailable an! it is properly manage!, rapi! growth an o ur. 4hat stage is the Swingset Company experien ing= A. Be sou r e ma turi ty "a(eo %% Sur&i &al Su e ss Startup

B . C . 1 . + .

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11*.

1uring the latter stages o% entrepreneurial growth, the manager8 A. must learn to !elega te an! !e ent rali'e author ity. Bmust institute greater use o% rules an! pro e!ures. must hire su%%i ient management to han!le the growth. 1 all o% . these. + none o% . these.

11,.

1awn, the %inan e manager o% a sporting goo!s manu%a turing ompany, uses a ounting re or!s to tra ( monthly operational bu!gets to ensure that the ompany<s %inan ial targets are being met. "his is an important tas( in whi h stage o% the managerial pro ess= A. 1ele gatin g B 7lannin . g C Controlli . ng 1 Gea!ing . + /rgani'i . ng

)$

116.

@amila is a su ess%ul artist an! entrepreneur who ma(es all o% her wor( out o% re y le! goo!s be ause she belie&es in sustainability. She an be !es ribe! as a so ial entrepreneur that is ommitte! to8 A. intern ationa l huma n rights. B en&ironment al prote tion. C hil!ren<s . rights. 1 in!ustrial prote tionis m. + onsumeris . m.

11..

Scenario - Holly and Trent 4hile many others !reame! about owning their own business, Aolly Dabrel !e i!e! to !o something about it. Aolly (new that being sel%-employe! re;uire! long hours an! har! wor(, but with the help o% her husban!, "rent, Aolly was positi&e that the hours an! the wor( woul! be rewar!e!. #irst, she an! "rent !e&elope! a new on ept in sunglasses that oul! be use! by athletes better than the sunglasses now on the mar(et. Aolly an! "rent obtaine! a patent on their in&ention, an! began pro!u tion an! mar(eting. 4ith the entrepreneurial personality, Aolly an be expe te! to ha&e all o% the %ollowing traits ex ept8
a. b. . !. e. toleran e %or ambiguity. high nee! to a hie&e. patien e. all o% these.

internal lo us o%

))

110.

Scenario - Holly and Trent 4hile many others !reame! about owning their own business, Aolly Dabrel !e i!e! to !o something about it. Aolly (new that being sel%-employe! re;uire! long hours an! har! wor(, but with the help o% her husban!, "rent, Aolly was positi&e that the hours an! the wor( woul! be rewar!e!. #irst, she an! "rent !e&elope! a new on ept in sunglasses that oul! be use! by athletes better than the sunglasses now on the mar(et. Aolly an! "rent obtaine! a patent on their in&ention, an! began pro!u tion an! mar(eting. A%ter %ully !e&eloping their new business i!ea, Aolly an! "rent re ogni'e the nee! to !e&elop a business plan. "ypi al business plans will in lu!e all o% the %ollowing, ex ept8
a. b. . !. e. in%ormation about the suppliers. poli y %or exten!ing re!it to ustomers. analysis o% riti al ris(s that threaten su ess. all o% these shoul! be in lu!e!.

mission or &isio

)*

112.

Scenario - Holly and Trent 4hile many others !reame! about owning their own business, Aolly Dabrel !e i!e! to !o something about it. Aolly (new that being sel%-employe! re;uire! long hours an! har! wor(, but with the help o% her husban!, "rent, Aolly was positi&e that the hours an! the wor( woul! be rewar!e!. #irst, she an! "rent !e&elope! a new on ept in sunglasses that oul! be use! by athletes better than the sunglasses now on the mar(et. Aolly an! "rent obtaine! a patent on their in&ention, an! began pro!u tion an! mar(eting. 5% the business is legally Aolly-s, then the business %orm woul! be8
a. b. . !. e. proprietorship. partnership. orporation. hapter S*$.,. none o% these.

1$ +ntrepreneurs in the ????? ategory li(e the i!ea o% wor(ing on something that is new, reati&e, or 0. personally meaning%ul. ???????????????????????????????????????? 1$ "he pro ess o% initiating a business &enture, organi'ing it, an! assuming its ris(s is (nown as ?????. 1. ???????????????????????????????????????? 1$ A9n: ????? re ogni'es a &iable i!ea %or a business pro!u t or ser&i e an! arries it out. $. ???????????????????????????????????????? 1$ +ntrepreneurship an! small business in the Unite! States is an engine %or ????? an! ?????. ). ???????????????????????????????????????? 1$ 5n the next !e a!e, ????? an! ????? businesses oul! en! up being the emerging growth ompanies. *. ???????????????????????????????????????? ),

1$ A human ;uality lin(e! to entrepreneurship in whi h people are moti&ate! to ex el an! pi ( situations ,. in whi h su ess is li(ely is alle! the ?????. ???????????????????????????????????????? 1$ ????? is the psy hologi al hara teristi that allows a person to be untrouble! by !isor!er an! 6. un ertainty. ???????????????????????????????????????? 1$ ????? entrepreneurs are ommitte! to both goo! business an! hanging the worl! %or the better. .. ???????????????????????????????????????? 1$ A9n:????? is a !o ument spe i%ying the business !etails prepare! by an entrepreneur in preparation %or 0. opening a new business. ???????????????????????????????????????? 1$ An unin orporate! business owne! by an in!i&i!ual %or pro%it is (nown as a9n: ?????. 2. ???????????????????????????????????????? 1) A9n: ????? is an unin orporate! business owne! by two or more people. 0. ???????????????????????????????????????? 1) A9n: ????? is an arti%i ial entity reate! by the state an! existing apart %rom its owners. 1. ???????????????????????????????????????? 1) Borrowing money that has to be repai! at a later !ate in or!er to start a business is ?????. $. ???????????????????????????????????????? 1) ????? %inan ing onsists o% %un!s that are in&este! in ex hange %or ownership in the ompany. ). ???????????????????????????????????????? 1) A9n: ????? is a group o% ompanies or in!i&i!uals that in&ests money in new or expan!ing businesses *. %or ownership an! potential pro%its. ???????????????????????????????????????? 1) ????? %irms are groups o% ompanies or in!i&i!uals that in&est money in ex hange %or a sta(e in the ,. ompany. ???????????????????????????????????????? 1) By ?????, an entrepreneur has the a!&antage to !e&elop an! !esign the business in hisEher own way. 6. ???????????????????????????????????????? )6

1) ????? is an arrangement by whi h the owner o% a pro!u t or ser&i e allows others to pur hase the right .. to !istribute the pro!u t or ser&i e with help %rom the owner. ???????????????????????????????????????? 1) "he ????? pro&i!es share! o%%i e spa e, management support ser&i es, an! management a!&i e to 0. entrepreneurs. ???????????????????????????????????????? 1) "he ma3ority o% the in ubators are operate! by ?????. 2. ???????????????????????????????????????? 1* 5n the ????? stage, the main problems %or entrepreneurial %irms are pro!u ing the pro!u t or ser&i e 0. an! obtaining ustomers. ???????????????????????????????????????? 1* "he (ey problem, at the ????? stage o% growth, is how to grow rapi!ly an! %inan e that growth. 1. ???????????????????????????????????????? 1* Gist %i&e o% the six hara teristi s o% entrepreneurs. $.

1* Came three o% the %our ways entrepreneurs an be ome business owners. ).

).

1* Gist the %i&e stages o% growth %or an entrepreneurial ompany. *.

1* Came an! !es ribe the %i&e !i%%erent ategories o% small business owners. ,.

1* 4hat is toleran e %or ambiguity= 4hy is it an important trait= 6.

1* Came %i&e o% the ten hara teristi s o% a su ess%ul business plan. ..

1* 1e%ine a orporation an! brie%ly !is uss the primary a!&antages an! !isa!&antages o% %orming a 0. orporation.

)0

1* 4hat is the %un!amental !i%%eren e between the suppliers o% !ebt an! e;uity %inan ing= 2.

1, 4hat is a business in ubator= Aow an it help a business= 0.

1, Gist an! brie%ly !es ribe the stages o% growth %or an entrepreneurial ompany. 1.

)2

Chapter 6--Managing Small Business Start-Ups Fey

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6,. 1 66. + 6.. + 60. A 62. B .0. A .1. C .$. B .). 1 .*. B .,. B .6. C ... A .0. B .2. 1 00. B 01. A 0$. C 0). 1 0*. B 0,. A 06. C 0.. C 00. 1 02. A 20. B 21. C 2$. 1 2). C 2*. B 2,. B 26. 1 2.. A 20. C

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22. B 100. B 101. 1 10$. + 10). A 10*. A 10,. C 106. B 10.. 1 100. 1 102. 1 110. C 111. C 11$. A 11). B 11*. 1 11,. C 116. B 11.. ! 110. e 112. a 1$0. i!ealist 1$1. entrepreneurship 1$$. entrepreneur 1$). 3ob reationI inno&ation 1$*. women-owne!I minority-owne! 1$,. nee! to a hie&e 1$6. "oleran e %or ambiguity 1$.. So ial 1$0. business plan 1$2. sole proprietorship 1)0. partnership 1)1. orporation 1)$. !ebt %inan ing

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1)). +;uity 1)*. &enture apital %irm 1),. >enture apitalist 1)6. starting a business 1).. #ran hising 1)0. business in ubator 1)2. non-pro%it organi'ations 1*0. start-up 1*1. ta(eo%% 1*$. Autonomy, high energy le&el, nee! to a hie&e, toleran e %or ambiguity, power an! in%luen e, an! sel%- on%i!en e. 1*). 91: Start %rom s rat h, 9$: buy an existing business, 9): start a %ran hise, an! 9*: parti ipate in a business in ubator. 1**. Start-up, sur&i&al, su ess, ta(eo%%, an! resour e maturity. 1*,. "he %i&e ategories are i!ealists, optimi'ers, sustainers, har! wor(ers, an! 3ugglers. 5!ealists li(e the i!ea o% wor(ing on something that is new, reati&e, or personally meaning%ul, while optimi'ers are rewar!e! by the personal satis%a tion o% being a business owner. Balan ing wor( an! personal li%e an! o%ten not wanting the business to expan! !es ribes a sustainer. A har! wor(er is 3ust the opposite o% a sustainer. Aar! wor(ers en3oy putting in long hours an! !e!i ation to buil! a larger business with more pro%its. "he last ategory, 3ugglers, in lu!es high-energy people who thri&e on the pressure o% paying bills, meeting !ea!lines, an! ma(ing payroll. 1*6. "oleran e %or ambiguity is the psy hologi al hara teristi that allows a person to be untrouble! by !isor!er an! un ertainty. 5t is important %or a small business owner be ause %ew situations present more un ertainty than starting a new business. Also, many !e isions that new business starters ha&e to ma(e are ma!e without lear un!erstan!ing o% options or ertainty about whi h option will su ee!. 1*.. Stu!ents an name any %i&e o% the %ollowing hara teristi s8 91: !emonstrate a lear, ompelling &ision that reates an air o% ex itement, 9$: pro&i!e lear an! realisti %inan ial pro3e tions, 9): gi&e !etaile! in%ormation about the target mar(et, 9*: in lu!e !etaile! in%ormation about the in!ustry an! ompetitors, 9,: pro&i!e e&i!en e o% an e%%e ti&e entrepreneurial management team, 96: pay attention to goo! %ormatting an! lear writing, 9.: (eep the plan short-no more than ,0 pages, 90: highlight riti al ris(s that may threaten business su ess, 92: spell out the sour es an! uses o% start-up %un!s an! operating %un!s, an! 910: apture the rea!er-s interest with a (iller summary. 1*0. A orporation is a business %orm that is an arti%i ial entity reate! by the state an! existing apart %rom its owners. "wo prin ipal a!&antages are 91: the ontinuity o% the business be ause it has a legal li%e o% its own, an! 9$: the limits on the owners- liability. "he ma3or !isa!&antages o% the orporation are 91: the ost an! omplexity o% the paperwor( re;uire! to in orporate the business, an! 9$: the ost an! omplexity o% the re or!s re;uire! by the law. 1*2. Suppliers o% !ebt %inan ing will ha&e their money repai! to them, with interest a!!e! %or the use o% the money. Suppliers o% e;uity %inan ing pro&i!e %un!s that are in&este! into the ompany in ex hange %or ownership in the ompany. 1ebt %inan ing reates a loan while e;uity %inan ing reates ownership. 1,0. A business in ubator is an inno&ation that pro&i!es share! o%%i e spa e, management support ser&i es, an! management a!&i e to entrepreneurs. 5t an help a business be ause by sharing o%%i e spa e with other entrepreneurs, managers share in%ormation about lo al business, %inan ial ai!, an! mar(et opportunities. 1,1. "he %irst stage is the start-up stage. 1uring this stage, the main problems are pro!u ing the pro!u t or ser&i e an! obtaining ustomers. "he sur&i&al stage is the se on! stage. "he organi'ation is pro!u ing the pro!u tEser&i e an! has ustomers. "he (ey issue is %inan ing the operation an! its growth. 1uring the su ess stage 9stage ):, the ompany is soli! an! pro%itable. At this point, the entrepreneur an !e i!e to !e rease his or her in&ol&ement. "he %ourth stage is the ta(eo%% stage. 5t is a pi&otal perio! %or the organi'ation. "he (ey issue is how to grow rapi!ly an! %inan e that growth. A!!itionally, !uring this stage, the entrepreneur must learn to !elegate. "he %inal stage is the resour e maturity stage. 1uring this stage, the ompany has ma!e signi%i ant %inan ial gains, but is in the pro ess o% transitioning to a large organi'ation.

**