(p. 146) Entrepreneurship is:

A. managing businesses for others.
B. a controlling interest in the ownership of a corporation.
C. managing businesses that operate in multiple countries.
D. accepting the risk of starting and running a business.

(p. 146) Which of the following U.S. issues does entrepreneurship most directly affect? 
A. The political process
B. The ability to create jobs for others
C. Contributions of money to organizations that help people in need
D. The ability to influence national macroeconomics polices

 (p. 148) Which of the following explains why individuals accept the risks of business ownership? 
A. The potential for learning how to be self-disciplined
B. The sense of self-satisfaction and independence
C. The challenge of seeking power
D. The desire to work fewer hours

 (p. 148) Which of the following is a characteristic of successful entrepreneurs? 
A. Power-seeking
B. Relies heavily on others who believe in the business
C. Willingness and desire to follow others
D. Action-oriented

 (p. 148) Which of the following best describes entrepreneurial personality traits? 
A. Tolerant of uncertainty and highly energetic.
B. Risk averse and self-nurturing.
C. Appreciate direction from others and risk averse.
D. Prefer to work less hours and prefer to give directions and let others do the foot work

 (p. 150) A(n) ________________ is a group of experienced professionals from different areas of business who join together to develop, make, and market a new product. 
A. entrepreneurial team
B. joint venture
C. self-directed functional team
D. managerial task force

(p. 150) An entrepreneurial team consists of: 
A. managers with similar skills, abilities, and interests.
B. experienced professionals from different areas of business.
C. a group of wealthy investors who share a vision for a product.
D. representatives from management, labor, and the government who work together to solve a company's problems in a creative way.

(p. 150) Business owners who prefer to maintain their businesses at a manageable size are called: 
A. macropreneurs
B. intrapreneurs
C. micropreneurs
D. home workers

(p. 151) One of the challenges of running a home-based business is: 
A. an increase in business risk.
B. managing the extra time on your hands.
C. keeping work and family tasks separate.
D. burdensome tax laws.

(p. 155) A successful web-based strategy that helps a business spread the word about its web site and products is called ______________. 
A. wildfire marketing
B. "its all about the buzz"
C. social marketing
D. affiliate marketing

(p. 155) Shopping widgets allow Internet users to become ____________ for e-retailers. 
A. peer to peer affiliates
B. buyers
C. sellers
D. personal shoppers

(p. 155) A creative person working within a corporation to launch new products and generate new profits is known as a(n): 
A. arbitrator.
B. micropreneur.
C. macropreneur.
D. intrapreneur.

(p. 155) The goal of an intrapreneur is: 
A. to improve quality control in a corporation's production process.
B. to develop new products and generate new profits for the corporation.
C. to implement cost control policies for existing products.
D. to create smaller companies within larger companies.

 (p. 156) The U.S. government's Immigration Act of 1990: 
A. encouraged entrepreneurs to come to the U.S. through "investor visas".
B. established a government program to teach American workers displaced by immigration how to start their own businesses.
C. established guidelines to help entrepreneurs recruit legal aliens as a source of low cost labor.
D. proposed an exchange program for American and European entrepreneurs to temporarily live internationally in order to open up foreign branches for their businesses.

(p. 156) Enterprise zones are specific geographic areas that: 
A. the government has set aside for major corporations that promise to spend at least $10 million to create new jobs.
B. attract business investment by offering lower taxes and government support for development.
C. the government has recognized as having the fastest growth rates in the country.
D. are characterized by government ownership of small businesses.

(p. 156) Business incubators are usually government-funded facilities intended to: 
A. provide health care benefits for small business owners and their families.
B. offer startup firms low-cost office space and basic business services.
C. help rebuild the nation's infrastructure.
D. assist foreign investors in identifying business opportunities in the U.S.

 (p. 148) Historically entrepreneurs in the U.S. 
A. created wealth for themselves, but have had a minor impact on the economy as a whole.
B. started many small firms that later became major corporations employing thousands of workers.
C. experienced success only when they worked in partnership with the federal government.
D. played an important role, but are less important now in creating jobs and wealth.

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

 (p. 148) Which of the following statements explains one of the reasons that people in the U.S. take the entrepreneurial challenge? 
A. It's all about profits, and the chance to make a lot of money
B. It's about independence and the opportunity to share in the American dream
C. It's about power and fame
D. It is about a lot of things, but it does not include personal achievement

B. It's about independence and the opportunity to share in the American dream

(p. 148) Successful entrepreneurs are self-nurturing. This means they: 
A. look to others for strength and encouragement.
B. self-finance their business with no assistance from others.
C. perform all business operations by themselves.
D. believe in themselves and their ideas.

D. believe in themselves and their ideas.

 (p. 149) Which of the following statements is characteristic of entrepreneurs? 
A. They like certainty
B. They have the ability to visualize a clear path
C. They look at problems and see opportunities
D. They prefer to be inventive rather than worry about whether the invention solves a customer need

C. They look at problems and see opportunities

(p. 149) Although successful entrepreneurs are more tolerant of uncertainty, 
A. they seldom start another business after a failure.
B. they develop mental games to see themselves through the risk game, especially.
C. they always protect themselves from failure by taking-out lots of insurance.
D. they strive to take calculated risks.

D. they strive to take calculated risks.

(p. 150) Effective entrepreneurial teams combine: 
A. creativity with marketing and production experience.
B. venture financing, tax benefits, and production economies.
C. scientific abilities, capital investment, and marketing skills.
D. risk tolerance, debt financing, and international experience.

A. creativity with marketing and production experience.

 (p. 150) Successful entrepreneurial teams: 
A. quickly organize themselves like large corporations.
B. assign only one person to new product innovation.
C. bring a variety of talent to the business venture.
D. outsource most of the details of innovation.

C. bring a variety of talent to the business venture.

 (p. 152) One reason we have seen continued growth in home-based businesses is: 
A. the location offers a more secure operational environment.
B. affordable computer and information technology makes it easier to compete.
C. people need something to do while they wait to return to work for a large corporation.
D. it is less risky to start a home-based business than other types of entrepreneurial ventures

B. affordable computer and information technology makes it easier to compete.

(p. 152-153) Which of the following statements is not a challenge for home-based businesses? 
A. Affordable technology such as the Internet
B. Staying focused on the business and leaving home chores for after-business hours
C. Using your time wisely
D. Promoting your services

A. Affordable technology such as the Internet

(p. 155) Affiliate marketing is a web-based business strategy that: 
A. relies on customers that enter the sites of large companies such as GAP™ and Nike™.
B. asks you to offer the names and emails of ten of your friends who may be interested in the products or services the web-site is selling.
C. currently illegal, but difficult to stop.
D. rewards individuals who are willing to link a company's website to their blog or social network.

D. rewards individuals who are willing to link a company's website to their blog or social network.

(p. 146; 155) Which of the following best describes the difference between an intrapreneur and an entrepreneur? 
A. Intrapreneurs start nonprofit organizations while entrepreneurs start profit-seeking businesses
B. Intraprenuers are practical while entrepreneurs are creative
C. Intrapreneurs work within existing corporations while entrepreneurs assume the risks of starting their own business
D. Intrapreneurs limit their efforts to financial investments, while entrepreneurs are involved in the management of all areas of a business

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

(p. 155) Intrapreneurs make use of __________ to develop and launch new products and generate new profits. 
A. their employer's existing human, financial, and physical resources
B. their own personal financial resources
C. government-supplied physical and financial resources
D. old ideas abandoned by entrepreneurs

A. their employer's existing human, financial, and physical resources

(p. 156) Enterprise zones are: 
A. government owned properties that are available for entrepreneurial ventures at a reduced cost
B. similar to incubator facilities but strictly run by city and state governments
C. blighted areas that contained toxic materials making them unsuitable for business operations
D. specific locations across the U.S. where entrepreneurs can set-up shop and receive tax breaks for operating in these areas

D. specific locations across the U.S. where entrepreneurs can set-up shop and receive tax breaks for operating in these areas

(p. 156) Enterprise zones and investor visas are examples of: 
A. government policies that favor large corporations rather than small businesses.
B. government programs that encourage economic growth through entrepreneurship.
C. government policies designed to encourage intrapreneurs.
D. examples of private initiatives to reduce the government's role in the economy.

B. government programs that encourage economic growth through entrepreneurship.

 (p. 156) For the past twenty-five years, state and city governments have promoted facilities where new businesses can open-up shop and share common services such as secretarial, accounting, and legal services. Due to their remarkable success rate, _______________ continue to grow in popularity. 
A. enterprise zones
B. incubators
C. intrapreneurial development centers
D. venture farms

B. incubators

(p. 147) The Spotlight on Small Business box "You're Never Too Young to be an Entrepreneur", features young people who 
A. directed inheritance money they received into profitable business ventures.
B. turned a social passion into a business opportunity.
C. realized the American dream at a very young age, and now run multi-million dollar companies.
D. convinced banks to fund their business ideas.

B. turned a social passion into a business opportunity.

(p. 149) In the Thinking Green box, "Socially Responsible Entrepreneurship",: 
A. Gary Hirshberg explains how he turned Kraft Foods into an eco-friendly company.
B. Gary Hirshberg explains the difficulties that companies experience in their attempts to be socially responsible, and talks about what he learned from his business failures.
C. Gary Hirshberg explains that environmentalism and business still don't mix due to the high investment costs in re-tolling manufacturing sites to be more eco-friendly.
D. Gary Hirshberg proves that environmentalism and business can cohabitate and even turn a profit.

D. Gary Hirshberg proves that environmentalism and business can cohabitate and even turn a profit.

 (p. 153) According to the Reaching Beyond our Borders box, how do small business owners use technology to keep their labor costs down? 
A. They have purchased accounting and bookkeeping software like, Quickbooks™
B. Most have gone in debt to retrofit their manufacturing facilities to include robots on the production lines
C. They only do business with sweat shops
D. They solicit the services of Elance.com and other online services to contractually hire graphic designers and other virtual assistants from around the globe

D. They solicit the services of Elance.com and other online services to contractually hire graphic designers and other virtual assistants from around the globe

(p. 146) Kenya recently quit a job with a large corporation to start her own business. While she realizes that her decision comes with risk, she is excited for the chance to be independent and by the challenges of running her own firm. Kenya is an example of a(n): 
A. intrapreneur.
B. entrepreneur.
C. venture capitalist.
D. raconteur.

B. entrepreneur.

(p. 148) Erin developed a new type of exercise equipment she calls the Tush N' Tone. After unsuccessfully searching for potential investors, she arranged a personal loan and borrowed additional money from her parents. Her willingness to continue believing in her idea and remain enthusiastic shows that Erin is: 
A. characteristically self-nurturing.
B. better suited to managing a nonprofit organization.
C. unaware of the risks she was taking.
D. not a true entrepreneur.

A. characteristically self-nurturing.

(p. 150) Apple Computer's "smart team" is an example of a firm that succeeded by: 
A. encouraging each manager to focus on a well defined area of the business and build his own specialized department.
B. bringing together a group of talented and experienced managers to conceive, develop, and market products.
C. emphasizing a low price and low cost strategy right from the beginning.
D. assembling a group of employees whose inexperience was a plus, because they did not come with the baggage and institutional ideas of larger companies.

B. bringing together a group of talented and experienced managers to conceive, develop, and market products.

(p. 152) Anna recently left a large insurance firm and opened a home-based business preparing medical transcriptions for doctors. Based on recent statistics, she can expect: 
A. a negative reaction from friends and family who wonder when she will get a "real" job.
B. the emergence of affordable technology will make it less challenging for her to compete with larger firms offering the same service.
C. the government will discourage her attempts to create a home-based business in the hopes that she will opt for locating in an enterprise zone.
D. to find security, routine and a paycheck from her new enterprise.

B. the emergence of affordable technology will make it less challenging for her to compete with larger firms offering the same service.

(p. 155) Jake is an innovative engineering graduate who works for a large company that makes adhesive products for commercial and consumer use. One of his primary responsibilities is to initiate and develop new products to complement the firm's current product line. Jake's company is ___________. 
A. intrapreneurial
B. entrepreneurial
C. an outside consultant for other firms
D. at a disadvantage because it is trying to operate like a small business

A. intrapreneurial

(p. 156) SouthwestCollege received a government grant to establish a business incubator. This facility will offer: 
A. local government agencies assistance in obtaining funds for urban renewal.
B. area businesses advice on employee benefits and ways to reduce taxes.
C. venture capitalists an opportunity to identify new entrepreneurs.
D. new businesses low-cost office space with basic business services.

D. new businesses low-cost office space with basic business services.

(p. 155) Ketan is an intrapreneur for a multinational electronics company. As an intrapreneur Ketan: 
A. is expected to recruit new managerial talent for his firm.
B. will use the firm's existing resources to develop new products.
C. is concerned mainly with improving the firm's public image.
D. will concentrate on creating new ventures that can be spun off to become independent firms.

B. will use the firm's existing resources to develop new products.

(p. 150-152) Pete inherited a thriving dry cleaning business from his father and mother. He continued the tradition of offering quality service to the customers he served. As the surrounding towns expanded, several people suggested that Pete expand the business to offer service in new locations. He chose to maintain only one operation, so as not to lose control and to keep his work life and home life balanced. Pete is a good example of a(n) ______________. 
A. small business affiliate
B. intrapreneur
C. micropreneur
D. enterprise zone participant

C. micropreneur

 (p. 156) Located on Monsanto's world headquarters campus, the NidusCenter is a unique ___________ facility. The tenants are biotechnology companies who are at various stages of product development. The agricultural giant, Monsanto, the Danforth Foundation, Washington University St. Louis, St. LouisUniversity, and several venture capital firms contribute seed money for these small start-up ventures that receive approval to further develop their ideas at the NidusCenter. 
A. incubator
B. intrapreneurial
C. enterprise zone
D. micropreneurial

A. incubator

(p. 157) Small businesses: 
A. deal with similar management issues that large companies face.
B. deal with very different management issues due to the very different management challenges experienced by small businesses.
C. do not seek government funding due to the fact that the federal government has made it very clear that it must support large operations before small operations.
D. concern themselves with state-of-the-art information and accounting technology but not employee relations due to their challenge to financially support employee benefits programs.

A. deal with similar management issues that large companies face.

 (p. 157) The Small Business Administration defines a small business as a firm that: 
A. has fewer than 100 partners.
B. is independently owned but not dominant in its industry.
C. is dominant in its industry, but small in the number of workers it employs.
D. has annual receipts of more than a specified amount depending upon the industry.

B. is independently owned but not dominant in its industry.

(p. 158) Small businesses create about __________ percent of the new jobs in the United States. 
A. 5-10
B. 25-35
C. 60-80
D. 100

(p. 157) A business's size is measured: 
A. in relation to the number of competitors in its industry.
B. in relation to other firms in its industry.
C. in relation to the number of dominant competitors in its sector.
D. as small, if it participates in the services sector.

B. in relation to other firms in its industry.

(p. 158) According to economist Bruce Kirchhoff, small business failures are: 
A. lower than traditionally reported.
B. understated to keep small business creation enthusiasm.
C. accurate and alarming.
D. inconclusive.

A. lower than traditionally reported.

(p. 158) When comparing small businesses to their larger competitors, it is clear that: 
A. bigger is always better.
B. small firms can always outperform big firms on a level playing field.
C. small firms often can offer more personalized customer services than big firms.
D. small firms are slower to respond to opportunities than are large firms.

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

 (p. 159) Which of the following is not a reason stated for small business failure? 
A. Managerial incompetence
B. Inadequate financial planning
C. Buying too little on credit and not being lenient enough with your credit paying customers
D. Borrowing money without a plan of how and when you will repay the debt

C. Buying too little on credit and not being lenient enough with your credit paying customers

(p. 159) Which of the following will not help your small business succeed? 
A. Services you perform are easily replicated by larger companies, such as online banking
B. You provide a unique service that requires a significant amount of personal attention such as a service that provides in-home care for seniors
C. Investing in a franchise
D. Your product is not easily mass produced, like professional photography

A. Services you perform are easily replicated by larger companies, such as online banking

(p. 158) Small businesses are important to the U.S. economy because: 
A. they fill-in the gaps when large businesses want to let workers go on vacation; or when large businesses want to temporarily cease production
B. banks and other financial services companies would not have borrowing customers, because small businesses borrow more than large businesses
C. they pay most of the tax revenue collected by the U.S. government
D. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP

D. they create over 60% of new jobs each year and generate over 50% of the U.S. GDP

(p. 158) Using the analogy of boulders vs. sand for filling a hole, the textbook points out that: 
A. small businesses are employing a record number of employees because they have to work twice as hard at producing the same amount of output as a large competitor.
B. small businesses can serve niche markets that larger firms do not serve well.
C. the sand represents the small businesses that start and fail each year, while the boulders represent the large companies whose resources permit them to stay the course.
D. large companies serve market niches so much better than small companies.

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

(p. 158) Which of the following employment statistics about small businesses is true? 
A. Small businesses create about 15% of all new jobs in the U.S.
B. The number of women owning small businesses has remained constant
C. A great majority of American workers find their first jobs with a small business
D. Growth of minority-owned businesses in the U.S. is declining

C. A great majority of American workers find their first jobs with a small business

 (p. 157) According to SBA guidelines, a manufacturing firm with 1,000 employees: 
A. would be classified as a large firm in the industrial sector.
B. may be classified as a small business depending upon the size of other firms in the industry.
C. is too small to achieve the efficiencies of large scale production.
D. is classified as an S corporation.

B. may be classified as a small business depending upon the size of other firms in the industry.

(p. 159) Entrepreneurs looking for a business that gives them the best opportunity to get rich should consider starting a business in: 
A. the manufacturing sector.
B. the food service industry.
C. a low risk industry.
D. the agriculture sector.

A. the manufacturing sector.

(p. 159) A review of small business successes and failures indicates that the: 
A. businesses that are easiest to start offer the greatest potential for long term growth and profits.
B. restaurant industry offers the least risk for entrepreneurs.
C. businesses with potential of high profit levels tend to be difficult to start and hard to keep going.
D. reason the service sector is rapidly growing is that these firms are easy to start and keep going, and offer high levels of security and growth potential.

C. businesses with potential of high profit levels tend to be difficult to start and hard to keep going.

(p. 157-158) After graduation, Manny focused his attention on finding full time employment. He has decided to narrow his job search to jobs with a major corporation. His job search strategy: 
A. makes sense because managerial skills are best developed by working for big firms.
B. is smart because major corporations represent the most important source of employment growth in the United States.
C. indicates that Manny's passion is to fulfill his dream of owning his own business.
D. will likely limit his job prospects since most new jobs are with small businesses.

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

(p. 157) After several years of working as a regional manager for a nationally known nonprofit, Janelle landed a management position with an innovative small business. If she accepts the job offer, she is likely to find that: 
A. due to the significant differences in large and small firms, her previous experience will be of little value in her new position.
B. the principles of management are much the same at large and small firms.
C. nonprofit organizations are motivated by their desire to help people and so financial management is of little concern.
D. planning is more important to a nonprofit organization and less important to a small business so she will need to adjust the time she spends on the planning function.

B. the principles of management are much the same at large and small firms.

(p. 159) As a result of corporate downsizing, Alex lost his job as an information systems manager for a large telecommunications company. A bonafide computer geek in his own right, Alex knew that several of his past company contacts often outsourced their computer problems. He decided it was a good time to test the waters and see if he could secure enough computer clients to be in business for himself. His success demonstrated that: 
A. starting your own business can quickly provide security and profits.
B. people always tend to hire people they know from past associations.
C. the service sector is not an area of significant growth.
D. successful big businesses often create profitable opportunities for small businesses.

D. successful big businesses often create profitable opportunities for small businesses.

(p. 158) After selling his software business for a sizeable profit, software engineer Gus Greene decided to try something different. He would become a general contractor on a large condo development in an upcoming area of Atlanta, Georgia. He invested several million and then borrowed another $30 million (or 75% of the project cost) from a lending institution. He based his borrowing risk on the assumption that the housing market would continue to appreciate for several years to come. As the housing market began a free-fall in early 2008 and continued into 2009, Gus saw his business crashing around him. Sales were very meager and the bank wanted its money back. Which of the following statements might best describe the reason Gus' business failed? 
A. Although Gus took some risk, it wasn't enough. In business, it is "more risk, more expected reward!"
B. The bank let Gus down. It should not have lent him that much money.
C. He should have designated himself as a passive investor. Therefore, his investment would not be in jeopardy
D. Gus went into the business with very little knowledge about the industry or the market.

D. Gus went into the business with very little knowledge about the industry or the market.

(p. 159) Jennifer, a talented photography major started a corporate photography business. She planned to solicit jobs from large corporations who needed pictures for their annual reports and websites. Although filling a unique niche, Jennifer needed the security that the business would thrive and that she would earn enough to support herself and her child. She also hoped that she would spend less time each day calling on potential clients and more time doing the actual shoots. As her small business consultant, which of the following suggestions would you have for Jennifer? 
A. Jennifer should either take the risk necessary to develop a small business, or go to work for someone else.
B. In the beginning, it's doubtful that Jennifer will realize ease of entry, security, and good profits. She needs to make plans in the event that one or more of these does not materialize quickly.
C. Photographers can take pictures of a multitude of things. It's probably not good strategy to limit her business to only photographing the needs of large corporations.
D. Jennifer should definitely make time for herself each day so that she does not experience burn-out. If she plans well, leaping into her own business will provide with her several hours of unstructured time each day where she can perfect her craft even more.

B. In the beginning, it's doubtful that Jennifer will realize ease of entry, security, and good profits. She needs to make plans in the event that one or more of these does not materialize quickly.

(p. 158) Dr. Smiley White just graduated from dental school. He is hoping to acquire the necessary funding to start his own dental practice. One advantage of this type of business is: 
A. above average opportunity to borrow funds at a high interest rate
B. nearly unlimited growth potential
C. the service is individualized and not easily mass-produced
D. very low startup costs

C. the service is individualized and not easily mass-produced

(p. 159) When Krystal Ginger graduates from culinary school she dreams of opening her own Asian fusion restaurant. Her other passion is skiing in Colorado, where she schedules four or five trips each year. As her small business advisor, you believe it necessary to provide her with information that will help her make good business decisions. Which of the following would be helpful for Krystal to know? 
A. Restaurants are relatively easy businesses to start, but are labor intensive and also have the greatest failure rate.
B. Restaurants are not the easiest type of business to start, but once you get it going, you will have plenty of time for skiing.
C. Most restaurant owners get rich if they open their own, independent restaurant as opposed to starting a franchised operation.
D. Franchised operations will take less time on the part of the owner than a regular independently owned operation. If she opens a franchise, she will have more time for creativity in the business, and more time for skiing too.

A. Restaurants are relatively easy businesses to start, but are labor intensive and also have the greatest failure rate.

(p. 160) A small business management course at a community college may offer entrepreneurs an opportunity to: 
A. meet with experienced entrepreneurs and learn from their advice.
B. try out ideas on a computer simulation before risking real time and money.
C. listen to a qualified instructor solve all of the problems of small business owners.
D. be part of a group that will include angel investors.

A. meet with experienced entrepreneurs and learn from their advice.

(p. 161) 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: 
A. the prospects for business competition.
B. the current owner's retirement plan.
C. the amount of government contracts the company has.
D. the value of what the business owns, what it earns, and what makes it unique.

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

(p. 160) Conversations with people who start their own business often reveal that: 
A. many small business owners got their entrepreneurial idea from a previous job.
B. it is unusual for experienced corporate managers to start their own businesses.
C. the most successful entrepreneurs often start their business ventures right after high school.
D. most small business owners begin with significant personal wealth.

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

(p. 160) For prospective entrepreneurs, enrolling in an introduction to business or small business management course offered through their community college: 
A. is likely to be wasted time since college courses tend to be too theoretical.
B. can be helpful by offering them an opportunity to meet experienced small business owners.
C. serves as supplementary information, only after starting their business venture.
D. seldom provides you with information to help make small business decisions.

B. can be helpful by offering them an opportunity to meet experienced small business owners.

(p. 160) Which of the following suggestions would an experienced business owner offer to help someone who is thinking about starting a business venture? 
A. Avoid the temptation of buying an existing firm. Build your own reputation and make your own mistakes.
B. Gain experience by working for a successful businessperson.
C. Postpone consulting with an accountant or lawyer until you can afford their services.
D. Jump in quickly, before the market conditions change and opportunities are lost.

B. Gain experience by working for a successful businessperson.

(p. 160) Successful small business owners are: 
A. not good sources for information on starting your own business because they generally do not understand failure.
B. valuable sources for information since you can learn from their experiences.
C. good but risky since their keen sense of sniffing-out something with potential will tempt them to steal your ideas.
D. valuable sources of information, but you should proceed with caution because talking with someone who could eventually be your competitor may cross the line due to federal trade commission laws.

 (p. 160) When starting a small business, it's important to remember: 
A. an affinity for taking large amounts of risk is the critical factor in achieving small business success.
B. doing things differently from previous entrepreneurs is the real key to success.
C. learning from others and gaining relevant business experience improves the odds for success.
D. to avoid burnout, limit the number of hours you work each week as you adapt to the rigors of self-employment.

C. learning from others and gaining relevant business experience improves the odds for success.

(p. 161) The Making Ethical Decisions box, "Going Down with the Ship" addresses a dilemma worthy of consideration. It describes: 
A. an unethical situation where the business owner's need for capital causes him/her to delay all payments to suppliers for 120 days, forcing several of his close business relationships, out-of-business.
B. the slow death of a business and how important it is to delay payments, sell-off assets and do everything possible to save a failing business except dismissing employees who need their jobs for survival.
C. ethical decisions that need to be considered when employees leave a faltering business to start their own, eventually competing against their previous employer.
D. the unethical and disloyal decision to leave your family business and start your own, taking with you all the family business's trade secrets.

C. ethical decisions that need to be considered when employees leave a faltering business to start their own, eventually competing against their previous employer.

(p. 161) Motivated by his desire to operate his own business, Nick considers purchasing an existing business. As he carefully weighs this option, he is likely to find that: 
A. very few owners of small businesses have any interest in selling.
B. his potential for success would greatly improve if he started his own new firm.
C. the value of an existing business is determined by what the business owns, what it earns, and what makes it unique.
D. any entrepreneur willing to sell his/her business is experiencing serious financial problems.

C. the value of an existing business is determined by what the business owns, what it earns, and what makes it unique.

 (p. 160) Carrie, a student at MetropolitanCommunity College, dreams of starting her own business. In an effort to learn as much as she can about small business management, she talked to four friends who each offered their advice. Which of these suggestions is likely to help Carrie the most? 
A. The best way to learn about running a business is by getting hands-on experience. You should quit school and put your dream into action.
B. Take courses related to small business management and look for a job with a successful businessperson, preferably in your field of interest.
C. Since every business is unique, don't worry about advice from others. Go to a bank, get a business loan, and live your dream.
D. Starting and managing a small business requires little more than common sense. If your idea is unique, hard work will guarantee your success.

B. Take courses related to small business management and look for a job with a successful businessperson, preferably in your field of interest.

(p. 161) Greg benefited from his experience working for an established private company that provided innovative lighting for large music venues. Although confident that he could start his own lighting business, he had limited capital to buy the necessary equipment needed to successfully compete with established companies. Which of the following strategies would best help Greg achieve his goal of business ownership? 
A. Begin by offering to take over management of his employer's business, allowing the owner to enjoy some leisure time
B. Consider working for a major corporation, live modestly, and save until he has sufficient funds to start his business
C. Enroll in the closest university and apply for student loans
D. Open his business and trust that his work experience will bring him success even with insufficient capital

A. Begin by offering to take over management of his employer's business, allowing the owner to enjoy some leisure time

 (p. 161) As a young boy, Drew remembers his grandfather telling him, "Son, if you can find something you like to do, and somebody is willing to pay you to do it, well, that's the secret to a great life." The way Drew saw it, this was his big break. For the past five years, he split his time between school and working for a local tree farm/nursery business. The owner recently announced he was ready to retire. As Drew began creating a business plan, he contemplated what the business might be worth and how much will he need to buy this business. For starters, Drew 
A. needs to find a government data base that outlines what nursery businesses are worth, on average, across the country.
B. should speak with the current owner and determine the total value of assets (what the business owns), its earning potential, and its unique advantage.
C. will want to determine the assessed value of the acreage that the business owns, and then bid competitively.
D. needs to understand that it's difficult to buy an existing business, rather than start your own. The key will be to meet with the company's accountant, and explain your interest. The accountant will have all the answers.

B. should speak with the current owner and determine the total value of assets (what the business owns), its earning potential, and its unique advantage

(p. 162) Two key management functions that need particular attention when starting a business are: 
A. human relations and accounting
B. planning and financing
C. marketing and public relations
D. staffing and controlling

B. planning and financing

(p. 162) A __________ is a written document that details the business idea, the target market and the business's competitive advantage, financial resources available for the business, and the qualification of the management. 
A. feasibility product
B. marketing plan
C. business plan
D. statement of intent

C. business plan

(p. 162) The business plan will include ______________. 
A. an analysis of the competition
B. names of banks the owner plans to visit
C. import/export information
D. names of employees

A. an analysis of the competition

(p. 162) A detailed written statement that describes the nature of the business, the target market, the firm's competitive advantages, as well as the owner's resources and qualifications is a: 
A. business plan.
B. entrepreneurial mission statement.
C. profit and loss statement.
D. professional action plan.

A. business plan.

 (p. 162) Entrepreneurs seeking financial support from bankers and potential investors should: 
A. be vague regarding their creative business plan to avoid having their idea stolen.
B. seek the bankers' and investors' assistance in developing their business plan.
C. create a detailed business plan to help the bankers and investors understand why this business will succeed.
D. ask for a relatively small amount of capital initially, postponing a full funding request until the investors better understand the business concept.

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

(p. 162) Bankers and potential investors are likely to read ___________ first. 
A. the executive summary
B. the marketing plan
C. the qualifications of the management team
D. the analysis of the competition

A. the executive summary

(p. 164) After personal savings, the next largest source of capital for entrepreneurs is from: 
A. large multinational banks.
B. the Small Business Administration.
C. state and local governments.
D. friends and family.

D. friends and family.

(p. 164) ________ are private individuals who invest their own money in potentially hot new companies before these firms become larger, publicly traded companies. 
A. Leveraged buyout specialists
B. Angel investors
C. Venture investors
D. Corporate raider investors

B. Angel investors

(p. 165) Due to the credit crunch during the recession of 2008, many small businesses found that _____________ were more willing to lend money to smaller operations. 
A. large corporations
B. credit card companies
C. international banks
D. smaller, community banks

D. smaller, community banks

(p. 165) A firm or individual providing financial capital to small businesses in exchange for an ownership stake in the company is called a(n): 
A. corporate raider.
B. takeover specialist.
C. financial capitalist.
D. venture capitalist.

D. venture capitalist.

(p. 165) Which of the following government agencies is responsible for encouraging the development of small business? 
A. Small Business Administration
B. Federal Trade Commission
C. Entrepreneur Assistance Center
D. Federal Microloan Authority

A. Small Business Administration

(p. 165) Which of the following sources of investment is the least likely type available to entrepreneurs? 
A. Angel investors
B. Small Business Administration loans
C. Venture capitalists
D. Family and friends

C. Venture capitalists

(p. 165) The Small Business Administration's microloan program awards loans to entrepreneurs based primarily on their: 
A. collateral.
B. credit history.
C. previous business success.
D. integrity and sound business idea.

D. integrity and sound business idea.

(p. 165) A Small Business Investment Company (SBIC) is a(n): 
A. agency of the federal government that loans money to high tech firms.
B. private investment company that is licensed by the SBA to make loans to small businesses.
C. private firm that offers loans to small businesses in return for a share of ownership in the firm.
D. agency set up by state governments to provide managerial advice and support to small businesses.

B. private investment company that is licensed by the SBA to make loans to small businesses.

(p. 165) One of the best places for young entrepreneurs to start shopping for a SBA loan is a(n): 
A. SmallBusinessDevelopmentCenter.
B. financial institution specializing in business loans.
C. college or university financial aid office.
D. the Internet web Page: of the Venture Capitalists Association.

A. SmallBusinessDevelopmentCenter.

(p. 166) A ________ refers to people with unsatisfied wants and needs who are willing and able to buy a product or service. 
A. market
B. consumer cooperative
C. consumer collective
D. buyer's cooperative

A. market

(p. 167) To be considered part of a market, an individual must: 
A. be a registered buyer.
B. have made a purchase within the past 30 days.
C. know the names and addresses of two or more sellers.
D. have both a willingness to buy and the financial resources needed to buy.

D. have both a willingness to buy and the financial resources needed to buy.

 (p. 167) Small business owners often struggle in attracting qualified workers. Which of the following contributes to this problem? 
A. Bosses in small firms tend to be disrespectful to the workers
B. Owners will not often listen to ideas suggested by the workers
C. Employee relations are especially poor in small firms
D. Many jobs in small firms have low pay and few benefits

D. Many jobs in small firms have low pay and few benefits

(p. 167) Employees of small businesses often have greater job satisfaction than do employees of larger firms. One reason for this difference in job satisfaction is that employees of small businesses often: 
A. earn higher wages.
B. receive more vacation time.
C. get more respect from their bosses.
D. have more job security and better fringe benefits.

C. get more respect from their bosses.

(p. 167) A new business that sets up a(n) _____________ from the start is saving itself time and grief later. 
A. angel investment network
B. good accounting system
C. detailed supplier network
D. vertical marketing system

B. good accounting system

(p. 167-168) Small businesses must seek advice from outside experts. In order to put together official documents such as leases, contracts, and partnership agreements, it is important to seek the advice of __________. 
A. a friend who has already started a business
B. a competitor in a similar business
C. an attorney
D. a marketing expert

C. an attorney

(p. 168) A(n) ____________ is a valuable source of information regarding techniques to reduce a firm's exposure to risk. 
A. insurance agent
B. accountant
C. liability assessor
D. union business agent

A. insurance agent

(p. 168) Similar to how large businesses proceed, small businesses make marketing decisions ______________. 
A. after the product or service is developed
B. before the business is funded
C. at the same time that they hire employees, research for an accountant, and prepare the business plan
D. before a product is developed or store is opened

D. before a product is developed or store is opened

(p. 168) Most entrepreneurs and small business owners agree that a small business' marketing effort should include: 
A. a web presence
B. a list of competitor products
C. a pro forma income statement
D. a complete product lifecycle

A. a web presence

(p. 168) The Small Business Administration sponsors volunteers from industry, trade associations, and education who offer advice to small business owners. These volunteers are called: 
A. the Small Business Council of Volunteers.
B. Partners in Service and Economic Progress.
C. Small Business Counselors Incorporated.
D. the Service Corps of Retired Executives.

D. the Service Corps of Retired Executives.

(p. 162) Entrepreneurs applying for a bank loan should realize that bankers will: 
A. expect to receive a share of ownership in the business in exchange for their loan.
B. expect the entrepreneur to provide a business plan.
C. generally make loans only to small businesses in dot.com related industries.
D. offer only short-term financing.

B. expect the entrepreneur to provide a business plan.

(p. 162) A good business plan will: 
A. focus on the big picture and omit the small details of operating the business.
B. describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner's qualifications.
C. be purposefully vague, since specifics can restrict creativity and flexibility.
D. focus on the nature of the business and the target market, omitting personal information about the owner in order to avoid personality issues.

B. describe all aspects of the business, including product, the target market, the nature of the competition, any financial resources, and the owner's qualifications.

(p. 162) The executive summary section of the business plan contains: 
A. computerized information that readers can access interactively.
B. information that will capture the attention of bankers and other investors who receive many business plans every day.
C. qualifications, experience, and education of the entrepreneur and prospective employees.
D. a financial summary prepared by the business' accountant.

B. information that will capture the attention of bankers and other investors who receive many business plans every day.

(p. 165) When seeking financial backing from a venture capitalist, a small business owner should realize that the venture capitalist will: 
A. charge an interest rate that is much higher than any other lender.
B. not be interested in the management of the business.
C. expect an ownership stake in the company in exchange for financial backing.
D. demand that the money be repaid within 90 days or less.

C. expect an ownership stake in the company in exchange for financial backing.

 (p. 166) A market consists of potential buyers of a good or service. However, for a market to exist: 
A. the business requires wholesalers and retailers.
B. one firm must dominate in sales and product development.
C. people must have unsatisfied wants and needs as well as a willingness and ability to buy.
D. the product must be laboratory tested and approved by the Food and Drug Administration (FDA).

C. people must have unsatisfied wants and needs as well as a willingness and ability to buy.

(p. 167) Small business employees: 
A. usually dislike their jobs and look forward to finding employment with major corporations.
B. find their jobs less challenging than a similar job in a large corporation.
C. usually get paid higher wages than workers in large corporations.
D. often find more job satisfaction than their counterparts in big business.

D. often find more job satisfaction than their counterparts in big business.

(p. 167-168) 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: 
A. for the owner(s) to trust his/her common sense.
B. to hire a full-time lawyer and accountant who work exclusively for the small business.
C. defer making decisions regarding these issues until the company is bigger.
D. seek and pay for expert guidance and assistance.

D. seek and pay for expert guidance and assistance.

(p. 168) Which of the following is not a recommended source of small business advice for persons contemplating a new business? 
A. Successful small business owners
B. University internship programs
C. Other prospective small business owners
D. SCORE [Service Corps of Retired Executives]

C. Other prospective small business owners

 (p. 162) In order to finance The Shortbread Shack, a mobile bakery business that services several large Silicon Valley companies, Marcy demonstrated her steadfast desire to get her bakery off the ground by visiting several bankers with _____________. 
A. her insurance agent
B. her business plan
C. her venture capitalist
D. her idea

B. her business plan

(p. 162) In order to improve his chances of small business success, Demitri prepared a business plan. Most often, a positive outcome of this exercise is: 
A. the plan will meet federal reporting requirements of the Internal Revenue Service.
B. the plan ensures financing will be available from the Small Business Administration.
C. the plan enables Demitri to think carefully about all aspects of his business idea.
D. the plan will protect Demitri from failure.

C. the plan enables Demitri to think carefully about all aspects of his business idea.

(p. 168) Justin's favorite part of Introduction to Business class was marketing. As he brainstorms about starting a car detailing business, he recalls that it is important to: 
A. open for business and start collecting information about what customers want.
B. find the most affordable location for the business.
C. only agree to serve a high-end market.
D. analyze the market before making the service available.

D. analyze the market before making the service available.

(p. 164) As a high net worth individual, Allison searches for growth firms in need of additional funding to achieve their goals. In return for this ____________, Allison expects to assume ownership in the business. 
A. analysis
B. venture capital
C. corporate loan
D. securities investment

B. venture capital

 (p. 164) Chris is an angel investor. This means that he: 
A. invests his money in new businesses with potential for growth, hoping for a good return on his investment if they go public.
B. creates business incubators for startup Web-based firms.
C. invests in non-profits that plan to change their status when they double in size.
D. he comes to the rescue of firms who default on their bank loans.

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

(p. 165) Samantha recently applied for a microloan from the SBA. Although several criteria are important, the Small Business Administration's decision to grant or deny the loan will largely depend upon 
A. her credit history and the collateral she can offer.
B. her age, since microloans are only available to senior citizens.
C. her previous record of business success.
D. the soundness of her business plan, and her integrity.

D. the soundness of her business plan, and her integrity.

(p. 168) Bing came to the U.S. on a swimming scholarship. After a few months of frustration with trying to find swim goggles like he used in his native country, he started a web site that offered specialty goggles for swimming, skiing, and snowboarding. Before launching the web site and filling orders, Bing spent a few months going to swim meets and gathering preferences about goggles from other swimmers. Bing's actions: 
A. showed that he had a ready market for this product.
B. demonstrated that he had little experience with this product.
C. showed that he was promoting the web site before it launched.
D. demonstrated his need to better understand the market.

D. demonstrated his need to better understand the market.

(p. 166) Ben got a phone call from one of his regular customers asking if he had time to repair a couple of broken sprinkler heads on the customer's underground sprinkling system. Although it was already 6:00 p.m. and Ben had put in a full day of work, he turned his car around and headed for the customer's house. As a small business owner, Ben demonstrates: 
A. his need for additional cash flow.
B. his ability to easily adapt and respond to his customer's needs.
C. the fact that it is difficult to find employees willing to go the extra mile for a small business because benefits are non-existent.
D. that considering the fact that sprinkler heads are constantly breaking and need repair, his service is overpriced.

B. his ability to easily adapt and respond to his customer's needs.

(p. 167) Ming's three employees have been with her since she started Employment Recruiters, Inc., nearly 10 years ago. As she contemplates the staffing for her new branch office, she senses that none of these three are ready to manage the office. Faced with this difficult situation, she should: 
A. appoint one of the three anyway to show that she appreciates their loyalty and commitment.
B. run the new branch herself and appoint one of the three to take over the original office.
C. hire a new employee to manage the office since this could be detrimental to the business.
D. appoint all three to the new branch and let them run it using a "team" approach.

C. hire a new employee to manage the office since this could be detrimental to the business.

(p. 167) After Kate graduated from college, her grandfather created a bookkeeping position for her in his furniture retail business. Her older brother is in charge of purchasing inventory for the stores, yet often the store runs out of popular furniture or become overstocked with pieces that must be marked down to be sold. Kate is confident that her brother is more suited for handling accounting and finance, and she has a pulse on what sells and how much sells. Although she has spoken with her grandfather about it a couple of times, he seems reluctant to change. As the founder of the business, he may: 
A. find it difficult to remove family members from positions, even if it is not good for the business.
B. find it difficult to retrain Kate for the job, and even though his business is losing opportunities, he will stay the course.
C. he knows that profit margins have declined, and he doesn't care.
D. have a bigger picture of things, and not feel the need to respond to a family member's request.

A. find it difficult to remove family members from positions, even if it is not good for the business.

(p. 167) As a small business owner, Tanika can't afford to provide her employees with the high wages and benefits offered by big corporations. One way to retain her employees and create a high level of motivation would be to: 
A. constantly communicate with them that "at least they have a job."
B. adopt a policy of promoting workers who have been employed the longest.
C. empower her employees to develop their own ideas.
D. hire only family members, since they are more loyal.

C. empower her employees to develop their own ideas.

(p. 168) After retiring as a telecommunications executive, Chad joined SCORE. As a SCORE counselor Chad will: 
A. provide venture capital funds for aspiring small businesspeople.
B. visit high schools to advise students who are thinking about starting their own business.
C. help in the research and development of new products for entrepreneurs to market.
D. provide consulting services to small businesses for free.

D. provide consulting services to small businesses for free.

(p. 169) The size of the world market is: 
A. 500 million
B. 6.7 billion
C. 5 million
D. 10 trillion

B. 6.7 billion

(p. 169) According to the U.S. Department of Commerce, a ________ of small businesses export their goods. 
A. small percentage
B. large percentage
C. decreasing number
D. decreasing percentage

A. small percentage

(p. 169) Increased participation in small business exporting owes credit to _________. 
A. political constituents who have made in-roads abroad
B. large events such as the Olympics that have brought attention to the potential in world markets
C. technological advances such as the Internet and PayPal for safely fulfilling orders
D. partnerships that small businesses have formed with large businesses

C. technological advances such as the Internet and PayPal for safely fulfilling orders

(p. 169) One of the hurdles small businesses face when deciding to export is: 
A. financing is often difficult to find.
B. overseas buyers prefer dealing with large corporations.
C. smaller companies must wait in line after large companies to qualify for tariffs.
D. American products are perceived as inferior.

A. financing is often difficult to find.

 (p. 169) One reason why many U.S. small businesses are not involved in exporting is: 
A. there is a limited market for their products.
B. the government's new homeland security programs limit opportunities for small businesses.
C. many of these firms do not know how to get started.
D. U.S. products are perceived as inferior.

C. many of these firms do not know how to get started.

 (p. 170) The SBA's ________ program provides export financing opportunities for small businesses. 
A. global trade funding
B. Homeland security funding
C. Export Express loan
D. International Monetary Funding

C. Export Express loan

(p. 170) Small business owners interested in finding out more about exporting will find that: 
A. there is very little information on exporting relevant to small businesses.
B. the single best resource is the International Monetary Fund.
C. the most valuable information costs more than it is worth.
D. there is an abundance of inexpensive information from a variety of sources.

D. there is an abundance of inexpensive information from a variety of sources.

(p. 169) Which of the following best describes the outlook for small businesses in international markets? 
A. the world is a larger, and potentially a more lucrative market than the U.S. domestic market
B. the threat of terrorist activities prevents small businesses from competing internationally
C. most foreign buyers prefer to deal with large, well-known corporations rather than small businesses
D. higher business costs eliminate the profit opportunities in global markets

A. the world is a larger, and potentially a more lucrative market than the U.S. domestic market

(p. 170) Small businesses often have advantages in international markets. One advantage is: 
A. a greater expertise in managing the paperwork required to sell goods in international markets.
B. a better understanding of the cultural differences involved.
C. individualized customer service as opposed to impersonal corporate bureaucracies.
D. the ability to obtain financing through the International Monetary Fund.

C. individualized customer service as opposed to impersonal corporate bureaucracies.

(p. 170) Labels Plus, LLC, exports specialty printing equipment for the labeling, flexible packaging, and carton industry. Due to increased support from ________, this company's sales to Brazilian companies and other global opportunities have significantly increased. 
A. its newly revised web site
B. Department of Commerce's Bureau of Industry and Security
C. the FDA
D. local politicians

B. Department of Commerce's Bureau of Industry and Security

(p. 169) Jake wants to sell his workout DVDs in European, Asian, and Latin American countries. _______________ will help him reach vendors abroad, without the expense of traveling to meet them face-to-face. 
A. A web site and other technological advances
B. Partnering with a large U.S. recording studio
C. The SBA (Small Business Administration)
D. An incubator facility

A. A web site and other technological advances

(p. 169) Luis is a partner in a firm that specializes in producing vitamins and health food products. While the business is considered small by U.S. standards, he is attempting to persuade his partner to expand internationally. Luis would list which of the following as an advantage of going international? 
A. Exporting can help sell excess inventory
B. Marketing programs benefit from the cultural similarities in prospective markets
C. Financing can easily be obtained to expand internationally
D. Selling your products in other markets reduces their life cycle, making them more attractive

A. Exporting can help sell excess inventory

 (p. 170) Antoine is considering marketing his bicycles in Brazil. If he enters the Brazilian market, he is likely to learn that ____________. 
A. some cultures like dealing with individuals from smaller companies rather than large companies
B. he will not be able to keep up with demand
C. most foreign cultures prefer large company relationships to small company relationships
D. there is strong resistance of Brazilian firms with respect to American products

A. some cultures like dealing with individuals from smaller companies rather than large companies