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Exam 6: Entrepreneurship and Starting a Small Business

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Question 121

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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 2010,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.

E) B) and C)
F) A) and D)

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Question 122

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If you go through the exercise of preparing a business plan,only to determine that you need twice the amount of money to start the business than you have,the SBA and other expert organizations encourage you to go ahead with your plans because if you understand the market,you can use the revenues you accrue to make-up the short-fall. A major cause of small business failure is lacking the necessary capital to start the business.Creating a business plan is a good exercise for determining capital needs.

A) True
B) False

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Question 123

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

After personal savings,the next largest source of capital for entrepreneurs is from:

The size of the world market is:

Shopping widgets allow Internet users to become ____________ for e-retailers.

Small businesses create 60 - 80% of the new jobs in the United States each year.

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 __________.

Enterprise zones and investor visas are examples of:

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

Getting a business plan into the hands of the right people is nearly as important as getting the right information in the plan.

Small business owners often struggle in attracting qualified workers.Which of the following contributes to this problem?

A creative person working within a corporation to launch new products and generate new profits is known as a(n) :

Attracting qualified workers presents a problem for small businesses since they usually offer less money,fewer benefits,and less room for advancement than larger firms offer.

Aside from personal savings,the only other viable source of financing for an entrepreneur would be funds available from friends and family.

Discuss several ways the Small Business Administration assists entrepreneurs.

Small businesses can provide more personalized service than a large corporation to overseas customers.

Most entrepreneurs are more interested in personal achievement than in power.

Jason,Robin,and Ian currently work in the marketing department of a large corporation.They have similar backgrounds and training and are thinking about leaving their company to start their own business.Successful entrepreneurial teams are comprised of these types of people because similarities in knowledge and skill ensure harmony and consistency in their new business. Entrepreneurial teams should include people with different skills and backgrounds.The idea behind an entrepreneurial team is to bring together the creative,production and marketing skills necessary to ensure success.

Potential entrepreneurs would be well advised to surround themselves with people who are smarter than they are.