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Exam 5: Small Business, Entrepreneurship, and Franchises

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Question 1

Multiple Choice

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What is the main advantage of small business that helps retain effective employees who could earn more at a larger firm?

A) Better pay and employee benefits
B) Ability to adapt to change
C) Simplified record keeping
D) Limited ability to raise capital
E) Personal relationships with employees

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Question 2

Multiple Choice

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What is the primary reason that so many new businesses fail?

A) Owner does not work hard enough
B) Mismanagement resulting from lack of business know-how
C) Low employee quality for new businesses
D) Lack of brand-name recognition
E) Inability to compete with well-established brand names

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B

Question 3

Multiple Choice

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New ways to do a job with less effort and at lower cost is the basic principle characterizing the

Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business that sells sporting goods equipment. When she started to work there, she noticed several things that were possibly the cause of the business not doing as well as it hoped. Angela has been thinking of starting her own small business because she feels she has learned much through working for Personal Wellness. Angela's manager asked her to create a business plan for Personal Wellness. The manager hoped that this plan would put things into perspective to help the company do better. After creating the plan, Angela suggested that Personal Wellness contact a group of senior and graduate students to provide management counseling for the company. Angela wants to make sure that her leaving does not become the cause of the company going under. -Refer to Personal Wellness. A business plan should answer all of the following questions except

How does the SBA define a small business? Approximately what percentage of all businesses in the United States are considered "small"?

Evan Dean owns a Wendy's franchise. Evan feels that the franchisor is hurting his business by forcing him to use certain high-priced suppliers. The franchisor says that this power is implied in the franchise agreement. Who is likely to arbitrate this dispute?

Which of the following was established to arbitrate disputes between franchisors and franchisees?

The business plan should deceive neither investors nor loan officers and should convey accurate and realistic expectations of business potential.

Which of the following is the most likely example of a production industry?

Of the small businesses in the distribution industry, nearly three-quarters of them are involved in

Professors at most universities are highly encouraged to participate in community service. What organization that provides low-cost courses and workshops would welcome management professors with an interest in small companies?

Many small firms seek to establish a particular niche in the market, realizing that they cannot afford to operate on a larger scale without exposing themselves to considerable risk of retaliation from larger companies. When a number of small businesses are operating in this manner, they are forcing the larger businesses to recognize and account for their influence on the market. In this way, small businesses are primarily

What do small businesses as a group contribute to the U.S. economy?

A friend of yours has recently received his MBA. He wants to open his own business but feels that it might be too risky at this point in his career. As an SBA counselor, you are able to advise him and explain more clearly to him some of the advantages and disadvantages of starting a small business. Which of the following statements best represents something you might tell him?

Cindy compiles a business plan for a business she hopes to start. This plan should answer all of the following questions except

The average length of an SBA loan is about twenty-five years.

About one-third of franchised businesses fail during the first two years of operation.

The Hamptons enjoy owning and operating their own restaurant. They enjoy being the masters of their own destinies and closing down the restaurant for one week a year so that they can take a vacation. The Hamptons seem to enjoy which advantage of a small business?

Money invested in small firms with the potential to become very successful is known as venture capital.

Most Small Business Administration loans are actually made by