Small business is the foundation for all business.
Fifty percent of businesses fail within the first four years.
A small business start up is designed to take advantage of the skills of the founder or founders.
One major aspect of a small business plan, it allows the owner to put information down in writing allowing for evaluation and honest analysis.
Small-business growth is important in the United States and the world.
The Fortune 500 companies employ ___________________ employees than ten years ago.
more
same
fewer
younger
A customer of a small business could be considered an important stakeholder to the success of a company.
A small business' harvest plan is to put the profits back in the company.
Individuals or other organizations that impact the success of a business are called
corporate managers
Capitalists
Stakeholders
Owners
The largest group of new business owners is
Hispanics
retired men
women
Asians
Small business resources are more _________________________ than large firms.
plentiful
constrained
restrained
inverse ration
A small business owner's relationships with key suppliers and customers are of relatively little importance in a business' success.
The most important person in a small business is the founder.
One advantage that a large firm has over a small firm is economies of scale.
The owner must be aware of his own tolerance of risk and establish a business that is consistent with that tolerance.
Starting a new business could result from a particular event or condition within an individual's environment.
Established businesses may be hesitant about buying from a start-up small business.
Family members are in a unique position to keep an individual focused on pursuing the wrong approach to an issue.
All of these are advantages for a small business except:
Respond quickly to changes
Owned and run by the same person
Economies of scale
Greater flexibility
____________________ states that individuals act to maximize their own individual benefit.
Individual benefit theory
Organizational benefit theory
Self fulfilling prophecy
Agency theory
The potential entrepreneur needs to consider ____________ when starting a new business.
risk tolerance
prior experience
personality orientation
all of the above
The term for when a new business has reached a level where revenue coming into the firm is sufficient to cover expenses:
Equal financial ratio
No risk level
Risk tolerance
Break-even point
When should an owner ensure there are sufficient financial resources to operate the business?
Prior to the start
Opening day
First payroll
Six month review
The small business owner must have the necessary skills and must understand the marketplace.
Large firms can respond more quickly to changes around them and fill niches better than small businesses.
Many new businesses are formed as a result of an entrepreneur's previous work experience.
New businesses are more likely to be successful when an entrepreneur creates a product or service before there is a need in the marketplace.
A potential owner must be realistic about its competitors in products and the volume of sales.
One of the greatest risks to a new business is fast growth.
An example of an idea for a new startup from a hobby is _________________.
A sports card collector who bought and sold cards for a year to build a personal collection, deciding to become a sports card dealer.
A computer salesperson seeing the possibility of opening a new electronics store in a different part of the city.
A purposeful exploration to find a new idea.
A baker, who tosses ingredients together to see what they taste like.
In forming a new business, the first thing a founder should do is:
Analyze the market
List their personal skill set
Obtain financial support
Hire a lawyer
A small business owner must possess all of the following except:
Necessary skills
In depth understanding of the market
Passion for starting a business
Follow a sequential formula
Potential owners should examine all of these specific areas except:
Work experience
Financial history
Education
Family history
The process of generating new business ideas is something that occurs automatically.
Potential generation of new business ideas occur:
When dismissing a promising idea.
When copying an existing business.
Automatically.
Because of the process of identifying skills and opportunities in the market.
Mark brings his friends together to generate ideas on his new business. This is called ________.
business meeting
gap analysis
brainstorming
focus group
_________ is the threat to the success of a new business related to its ability to establish and maintain a high margin product or service.
Profit margin
Sales generation scheme
Operational financing
Deficit gap
A small business owner must understand when an opportunity for a new business is truly an opportunity.
An owner, when researching a new business, needs to be aware of all potential customers.
New business owners do not need to identify customer needs because the competitors already have.
A major cause for failure of a new business is lack of focus on the competitive advantage.
A small business can compete on a cost basis with a larger firm.
An owner, when researching a new business, needs to be aware of, and be able to describe, all potential customers.
The first section of an external analysis is to:
research potential substitutes.
develop a competitive edge.
identify potential customers.
determine in which industry the new business will compete.
Companies will ___________ their knowledge if your business is not a potential competitor.
share
not share
hide
distort
__________ is the edge a business has over competing businesses.
Competitive advantage
Benchmarking
Criteria related advantage
Competitive map
______________ is an area of business that uses standards that are necessary for the business.
Unorthodox practices
Orthodox practices
___________ describes those areas of a business that are unique or unusual as compared to standard practices of the industry.
A competitive advantage in a business could be ____________________.
location
product selection
activity of the firm
A(n) ___________ exists if the service or product performs a similar function.
trade-in
substitute
elasticity of demand
product/service flexibility
An entrepreneur cannot leave his or her business due to the amount of money that was invested. This is called a(n) ______________.
harvest plan
exit strategy
benchmarking
exit barrier
______________ demonstrates how easy it is for a customer to switch to substitutes.
Elasticity of demand
Trade-ins
The mission of a business needs to be actionable, which means assist employees to make decisions.
The mission statement and strategies can be developed after identifying potential customers.
A business owner should never change its mission statement or strategy.
A sustainable competitive advantage is an advantage that other firms cannot immediately copy.
Michael Porter describes a low cost strategy as a company seeking to be the lowest cost firm in the industry.
An overall strategy assists the business by targeting its effort in specific areas.
It is critical for a new business to conserve its resources and focus on areas that have potential to maximize the firms' resources.
____________ is (are) a brief statement that summarizes how and where the firm will compete in the industry.
Core values
Mission statement
Strategies
Goal statements
An owner should establish the mission statement and strategies ____________.
prior to its inception
at the first day of business
at the 30 day review
at the 90 day review
_____________ provides you with the opportunity to make money when other businesses cannot easily copy your advantages.
Sustainable competitive advantage
Tangible assets
All of these are tangible assets except:
industry experience
computer systems
business license
What are the two measures used to evaluate whether a person or firm is meeting its goals?
Orthodox and Unorthodox
Quantitative and Qualitative
Actionable and Non-actionable
Tangible and Intangible
According to the book, the greatest source of sustainable advantage is:
personal relationships with customers.
location.
staffing.
relationship with vendors.
In a proposed new business, the financial analysis focuses exclusively upon its ability to generate positive cash flow.
When there is a difference between managers and owners, profits are a useful measure as a means to evaluate performance.
Cash is "king" in small business.
A pro forma is a term describing estimates of what the balance sheets and income statements will look like in the future.
Break-even analysis is the estimation of when a business's income exceeds its expenses.
Cash flow is the positive movement of money into the firm to pay the bills.
An investment in the firm by the owner is called ______________.
equity
profit
receivables
margin
According to the book, the most dangerous situation for a new business is _______.
uneven growth
no growth
rapid growth
slow growth
____________ is the analysis of the differences between the predicted and the actual performance of the business.
Deviation analysis
Gap analysis
Margin analysis
Profit analysis
The cash flow statement is used to describe _________ percent of the activities that provide and use cash during a specified period of time.
25
50
75
100
