Entrepreneurs start businesses for a number of reasons including Custom Essay

1) The nation is rapidly moving from:
a. industrial to knowledge-based
b. industrial to capitalism
c. capitalism to industrial
d. none of the above
2) Entrepreneurs start businesses for a number of reasons including:
a. the opportunity to get rich much quicker than if they work for a large company
b. having to deal with less government regulation than as an executive of a large
company
c. an opportunity to make a difference
d. a much lower risk of career failure due to layoff or acquisition than working for a
large company
3) Surveys show that owners of small businesses believe that:
a. they work harder on their own than if they worked for someone else
b. they earn less than if they worked for someone else
c. venture capital is relatively easy to raise
d. they are less satisfied than if they worked for someone else
4) Which of the following is true about home-based businesses?
a. The average home-based business earns over $50,000 a year.
b. The growth of technology has significantly slowed the growth of home-based busi-
nesses.
c. Over 2/3 of all home-based businesses are owned by minority males.
d. Home-based businesses tend to focus on blue-collar, lower skill industries.
5) “Copreneurs” are marked by:
a. a decline in the number of businesses
b. their similarity to the traditional mom and pop operation
c. a greater success at raising venture capital than sole proprietorship-type busi-
nesses
d. a division of labor by expertise
6) The location of the business is especially important for what type of start-up business?
a. manufacturing
b. service
c. retail
d. computer-based service
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Final Examination
BAM 418 – Small Business Management
7) The key ingredient-the crucial element-to avoiding the failure of a new business is:
a. the business plan
b. differentiating the business and product from the competition
c. technical expertise regarding the product
d. knowing the business
8) “Copreneurs” are:
a. personality traits of entrepreneurs
b. business magazines targeted towards entrepreneurs
c. entrepreneurial couples who work together as co-owners of their business
d. none of the above
9) Forces driving the entrepreneurial trend in our economy include which of the follow-
ing?
a. Technological advancement
b. World Wide Web
c. Shift to a service economy
d. all of the above
10) Management incompetence includes all but:
a. insufficient capital
b. the owner lacks the leadership ability necessary to operate it successfully
c. lack of capacity to make the business work
d. inexperience
11) Which of the following best expresses the relationship of a company vision to its mis-
sion?
a. There is no relationship between the two.
b. The company vision comes from the company mission.
c. The mission statement is the written expression of the company vision.
d. The company mission statement is the verbal expression of the written vision.
12) ________ are negative internal factors that inhibit the accomplishment of a firm’s
objectives.
a. Threats
b. Opportunities
c. Weaknesses
d. Strengths
Final Examination
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BAM 418 – Small Business Management
13) ________ are relationships between a controllable variable–plant size, quality, packag-
ing–and a critical factor influencing the firm’s ability to compete in the marketplace.
a. The competitive advantages
b. Key success factors
c. Core competencies
d. Goals and objectives
14) The information-gathering process in competitive analysis:
a. is an expensive process that only established small companies can afford
b. is closely regulated by various federal laws
c. can be relatively inexpensive and easy for the small business owner to conduct
d. is a process that requires expert help but is relatively inexpensive
15) ________ are the broad, long-range attributes the small business seeks to accomplish;
________ are the specific, measurable milestones the company wants to achieve.
a. Strategies; goals
b. Objectives; goals
c. Goals; objectives
d. Goals; strategies
16) A differentiation strategy:
a. must create the perception of value in the customer’s eyes through the lowest
possible price
b. seeks to find and defend an identifiable market niche
c. focuses solely on making the physical characteristics of the product as unique as
possible
d. is built on a company’s competence
17) The final step of the strategic planning process is:
a. translating the strategic plan into operational plans
b. choosing a marketing strategy to pursue
c. evaluating the competitive environment
d. establishing accurate controls
18) The ________ is a set of measures unique to the company that gives managers a
quick and comprehensive view of how the business is doing and includes both finan-
cial and operational factors.
a. balanced scorecard
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Final Examination
BAM 418 – Small Business Management
b. core competencies
c. key success factors
d. action plan
19) It is important for the small business owner to remember that the strategic planning
process is:
a. a top management process completed only once every two years
b. an ongoing process that must be repeated
c. one that should produce a detailed, elaborate plan for running the business over
the next 3—5 years
d. a process which involves all the employees once every five years
20) The key to choosing the “right” form of ownership is:
a. the fact you cannot change the form of ownership once your company is estab-
lished
b. understanding how each form affects both business and personal circumstances
c. having an experienced attorney and accountant to advise you in the choice
d. knowing the cost factor in time and money
21) Sole proprietorships characteristically are:
a. easy to discontinue
b. subject to special legal restrictions
c. fairly complex to create
d. expensive to create
22) The most critical disadvantage of the sole proprietorship is:
a. unlimited personal liability
b. limited skills and capacities of the owner
c. limited access to capital
d. lack of continuity
23) Which form of ownership generally has the least ability to accumulate capital?
a. Partnership
b. S-corporation
c. Sole proprietorship
d. Corporation
Final Examination
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BAM 418 – Small Business Management
24) While a sole proprietorship gives the owner maximum flexibility in running the busi-
ness, it also:
a. creates a sense of isolation
b. makes it difficult to sell
c. makes the company a prime target for an acquisition or merger
d. makes it difficult to hire management talent to help grow the business
25) Probably the most important feature of a partnership agreement is:
a. that it resolves potential sources of conflict
b. that it states the purpose and location of the business
c. that determines how the partnership will pay taxes and fees
d. that it identifies the name of the partnership
26) In a limited partnership, the limited partners are treated like ________ by the law.
a. honorary partners
b. general partners
c. investors
d. sole proprietors
27) The ________ is a document that states in writing all of the terms of operating the
partnership for the protection of each partner involved.
a. Partnership document
b. Certificate of Incorporation
c. Certificate for Conducting Business as Partners
d. Partnership agreement
28) Shares the corporation itself owns are called:
a. preferred stock
b. bonds
c. common stock
d. treasury stock
29) In franchising, the reputation of the franchiser is dependent on:
a. the rate of growth and the number of national outlets
b. the quality of the goods and services provided
c. the brand name recognition and appeal
d. their locations and popularity with the local customer
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Final Examination
BAM 418 – Small Business Management
30) The primary advantage of buying a franchise over starting your own company is:
a. the fact it is much less expensive than doing your own business start-up
b. in the purchase of the franchiser’s experience, expertise, and products
c. the absolute territory protection offered by all franchisers
d. the extensive assistance offered in finding start-up capital
31) Based on the principle of ________, the idea is to put a franchise’s products or ser-
vices directly in the paths of potential customers, wherever that may be.
a. franchise marketing
b. path marketing
c. guerilla marketing
d. intercept marketing
32) To protect investors from unscrupulous franchisers, the Trade Regulation Rule:
a. FTC
b. Justice Department
c. FDA
d. FCC
33) The Uniform Franchise Offering Circular:
a. is only necessary in the 33 states that do not have their own franchise disclosure
laws
b. includes 23 major topics in its disclosure statement
c. was developed in 1946 in the State of California
d. requires the release of a detailed earnings projection
34) Which of the following should make a potential franchisee suspicious about a fran-
chiser’s honesty?
a. Not providing detailed operational information until 10 days before signing the
contract.
b. An offer of direct financing of a specific element of the franchise package.
c. Requiring franchisees to spend a certain percentage of profits on advertising.
d. Claims that the franchise contract is a standard one and that there’s no need to
read it.
35) The franchiser has the right to cancel a contract if a franchisee:
a. fails to maintain quality standards
b. declares a bankruptcy
c. fails to make required payments on time
d. all of the above
Final Examination
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BAM 418 – Small Business Management
36) The most efficient method of franchising, from the franchiser’s point-of-view, which
has become popular in the 1990s and permits one franchisee to hold several fran-
chises from the same franchise company, is called:
a. multi-unit franchising
b. piggybacking
c. conversion franchising
d. master franchising
37) ________ is when owners of independent businesses become franchisees to gain the
advantage of name recognition.
a. Combination franchising
b. Master franchising
c. Multiple-unit franchising
d. Conversion franchising
38) When conducting a self-evaluation, it is important to consider:
a. what kind of people you like to work with
b. what kind of business you want to have and want to avoid
c. how much money you have to invest
d. how good your sales and negotiating skills are
39) The valuation approach that considers the value of goodwill is the:
a. excess-earnings method
b. balance sheet technique
c. market approach
d. discounted future earnings approach
40) The capitalized earnings approach determines the value of a business by capitalizing
its expected profits using:
a. the prime interest rate
b. the normal rate of return
c. the prevailing rate of inflation
d. the rate of return reflecting the risk level
41) In a business sale, the buyer seeks to:
a. negotiate favorable payment terms, preferably over time
b. minimize the amount of cash paid up front
c. get the business at the lowest price possible
d. all of the above
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Final Examination
BAM 418 – Small Business Management
42) To avoid a bumpy transition, a business buyer should do the following:
a. concentrate on communicating with employees
b. listen to employees restructure the company & devote time to selling your vision
for the company to its key stakeholders
c. be honest with employees
d. all of the above
43) A purchase agreement draft should include which of the following?
a. Whether the purchaser assumes any liabilities, and, if so- which ones.
b. Allocation of purchase price to specific assets.
c. Special conditions that the parties must satisfy to close the deal.
d. all of the above
44) Sometimes, business owners sell the majority interest in their companies to investors,
competitors, suppliers, or large companies with an agreement that they will stay on
after the sale. This is called:
a. restructuring the company
b. sale of controlling interest
c. use a two-step sale
d. none of the above
45) A well-developed business plan provides the entrepreneur with a number of benefits,
such as:
a. a valuable tool for recruiting management to help in running the business
b. assisting the entrepreneur in going public with his/her new venture on the stock
market
c. a way to identify probable financial backers
d. determining the principle risks confronting the business
46) An explanation of how the product will be distributed is contained within the:
a. description of the product line
b. business strategy section of the business plan
c. marketing strategy portion of the business plan
d. competitive analysis
47) The most common reason cited by banks for rejecting small business loans is:
a. lack of collateral
b. poor credit history
c. undercapitalization or too much debt
d. insufficient cash flow or poor profitability
Final Examination
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BAM 418 – Small Business Management
48) Any assets pledged to the bank as security for repayment of the loan are the ________
of the five Cs.
a. capacity
b. collateral
c. capital
d. conditions
49) A ________ is what a customer gains from the product or service feature
a. benefit
b. feature
c. discount
d. bonus
50) Proving that a profitable market exists involves:
a. showing customer interest
b. documenting market claims
c. both A and B
d. neither A nor B

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