Title: Entrepreneurship
Course: Demo 1

Q: Small businesses:
- generate about 50% of the nation’s GDP
- spark innovation
- have little impact on the U.S. economy
A: generate about 50% of the nation’s GDP; spark innovation

Q: According to the Small Business Administration, a small business is one that:
- has less than 500 employees
- is independently owned and operated
- exerts a large influence in its industry
A: has less than 500 employees; is independently owned and operated

Q: Entrepreneurs who have created technology, new industries and jobs while changing the way business operates today include:
- Henry Ford
- Sergey Brin
- Maria Contreras-Sweet
A: Henry Ford; Sergey Brin

Q: Why are small businesses so innovative?
- compensation structures typically reward top performers
- environment appeals to individuals with the talent to invent new products or improve the way things are done
- research programs tend to be unfocused
A: compensation structures typically reward top performers; environment appeals to individuals with the talent to invent new products or improve the way things are done

Q: ABC Inc. company, founded by three women who met in college, has recruited talented people since its inception. It now employs approximately 350 people. Once a month a meeting is held where anyone can present new ideas to management. Coming out of these meetings, presenters have 30 days to work on a proof of concept or prototype, after which management makes a decision to pursue an idea company-wide or drop it. If an idea is selected, the individual(s) who presented the ideas receive a cash bonus. Based on this information, what kind of company is ABC Inc.?
- small business
- entrepreneurial
- traditional
A: small business; entrepreneurial

Q: A large firm is finding that it is having a hard time keeping up with demand because of its rapid growth. The firm decides that hiring a small firm to handle its accounting activities makes the most financial sense. This is called:
- insourcing
- in housing
- outsourcing
A: outsourcing

Q: The definition of an entrepreneur is someone who:
- assumes the risk of creating a business
- identifies a business opportunity
- starts a business to take advantage of an identified opportunity
A: assumes the risk of creating a business; identifies a business opportunity; starts a business to take advantage of an identified opportunity

Q: What questions should you ask yourself if you are considering becoming an entrepreneur?
- How do I come up with a business idea?
- How do I go about planning a business?
- How would I use my wealth if my business succeeds?
A: How do I come up with a business idea?; How do I go about planning a business?

Q: Identify the main characteristics of entrepreneurial activity besides starting a business:
- risk taking
- innovation
- design skills
A: risk taking; innovation

Q: An entrepreneur is an innovator. Which of the following are examples of the type of innovation undertaken by entrepreneurs?
- offering new products
- opening new markets
- replicating existing technology
A: offering new products; opening new markets

Q: What of the following is a benefit of running your own business?
- creative freedom
- being your own boss
- extremely long working hours
A: creative freedom; being your own boss

Q: The right person to run their own business, according to the SBA, embodies the following qualities and characteristics:
- self starter
- has physical and emotional stamina
- has difficulty making decisions
A: self starter; has physical and emotional stamina

Q: To run your own business you need the following qualities and characteristics:
- have a strong drive to succeed
- get along with different personalities
- ability to plan and organize
A: have a strong drive to succeed; get along with different personalities; ability to plan and organize

Q: What prevents some people from starting their own business?
- need for security
- lack of an idea that would distinguish them in the market
- having too much startup money
A: need for security; lack of an idea that would distinguish them in the market

Q: When an individual starts their own business, a potential change in their standard of living and possible financial difficulties should be discussed with their ________.
- social media friends
- sports teams
- family
A: family

Q: Advantage(s) of starting a successful business include:
- financial rewards
- lifestyle
- time commitment
A: financial rewards; lifestyle

Q: Compared to working for an employer, an entrepreneur who starts a small business is likely to spend:
- significantly less time working because she is her own boss
- about the same amount of time working but she enjoys her work more
- significantly more time working because so much depends on her
A: significantly more time working because so much depends on her

Q: Disadvantages of starting a business include:
- undesirable duties
- financial risk
- independence
A: undesirable duties; financial risk

Q: Rajesh decided to open a custom T-shirt shop in his hometown of Fairfield, IA. He has spent 100 hours getting everything ready for the grand opening. In order to pay for inventory, marketing, flyers, and advertising, he used all of the money in his savings account. In order to help ensure his business will succeed, Rajesh is ________.
- making a time commitment
- taking a financial risk
- relying on word of mouth
A: making a time commitment; taking a financial risk

Q: Rajesh decided to open a custom T-shirt shop in his hometown of Fairfield, IA. He has spent 100 hours getting everything ready for the grand opening. His two main suppliers, a T-shirt supplier and an ink supplier, have taken many hours of skillful conversations to come to agreed upon business terms. Rajesh has become better at negotiating and has used many other skills to set up his business. Rajesh feels a sense of satisfaction because by opening this business he is gaining ________.
- personal satisfaction
- no potential opportunities for success
- learning opportunities
A: learning opportunities

Q: Fred decided he liked the idea of being a business owner and is now considering starting a business. Fred enjoys the security of his job and likes working for someone else. He takes the same vacation to Hawaii every year. When he bought his current car he did not negotiate with the car salesman. Five years ago, Fred presented an idea to his boss, but when his idea was rejected he decided not to pursue it further. Based on the qualities of an entrepreneur, Fred is a(n) ________ candidate for entrepreneurship.
- favorable
- excellent
- poor
A: poor

Q: The first step in starting a business is to ________.
- finance your business
- decide on the legal structure
- write a business plan
A: write a business plan

Q: Business may be required to acquire licenses and permits from the ________ level.
- state
- local
- federal
A: state; local; federal

Q: Starting a business requires numerous steps or activities. In order to start a successful business, you should ________.
- Determine the legal structure of the business
- Choose a business location
- Run an advertisement on the local radio station
A: Determine the legal structure of the business; Choose a business location

Q: In order to run your business with greater success you need to ________.
- evaluate your finances
- get business assistance and training
- decide on the appropriate location
A: evaluate your finances; get business assistance and training; decide on the appropriate location

Q: Which government entity insures loans for small businesses?
- the Federal Reserve
- the IRS
- the SBA (Small Business Administration)
A: the SBA (Small Business Administration)

Q: Forms of business entities include: sole proprietorship, partnership, limited liability company (LLC), corporation, S corporation, nonprofit or cooperative. The type of entity you select for your business will determine ________.
- which income tax form you have to file
- what types of taxes your business will have to pay
- how many products or services you can produce
A: which income tax form you have to file; what types of taxes your business will have to pay

Q: William Sliwoski has been making furniture for two years. Sales have been picking up steadily and William has decided to conduct his furniture business as "Crafted Creations" from here on out. William will need to register Crafted Creations with state government as a ________ .
- Debt and Business Assets
- Direct Business Association
- Doing Business As
A: Doing Business As

Q: An Employer Identification Number (EIN) used to identify a business entity is also known as a ________:
- Business Identification Number
- Local Tax Number
- Federal Tax Identification Number
A: Federal Tax Identification Number

Q: The purposes for registering your business in your state include:
- receiving a tax identification number
- paying unemployment insurance taxes
- paying state employment taxes
A: receiving a tax identification number; paying unemployment insurance taxes; paying state employment taxes

Q: The most common types of tax requirements for small businesses include:
- income tax
- employment tax
- sales tax
A: income tax; employment tax; sales tax

Q: To begin hiring and ensure you are compliant with key federal and state regulations you must ________.
- verify an employee’s eligibility to work in the United States
- set up records for withholding taxes
- post required notices
A: verify an employee’s eligibility to work in the United States; set up records for withholding taxes; post required notices

Q: A business plan is like a map of how you will run your business successfully. It will include:
- where you will be located
- what you will sell and to whom
- how you will run your business
A: where you will be located; what you will sell and to whom; how you will run your business

Q: To make your business plan stand out you must:
- learn to strategize
- be clear about what you have to offer
- be broad and unspecific about what you have to offer
A: learn to strategize; be clear about what you have to offer

Q: After you have analyzed the market and set clear objectives, you should include the following information in the “Financial Projections” section of your business plan.
- historical financial data
- prospective financial data
- service or product line data
A: historical financial data; prospective financial data

Q: Often considered the most important part of a business plan, this section is the first opportunity to grab a potential investor’s interest.
- service or product line
- marketing and sales
- executive summary
A: executive summary

Q: The executive summary should ________.
- be the last section you write
- highlight the strength of your overall plan
- be kept to three pages or less
A: be the last section you write; highlight the strength of your overall plan

Q: XYZ is an established business and has written a business plan in order to request additional funding from a local bank. Unlike a plan for a new business, their business plan will include which information?
- Marketing strategy
- Mission Statement
- Growth highlights
A: Growth highlights

Q: What is the first section of your business plan that you should write?
- executive summary
- funding request
- company description
A: company description

Q: The goal of writing your company description is to ________?
- help readers and potential investors quickly understand your business’s unique proposition
- help readers and potential investors quickly understand the goal of your business
- help readers and potential investors quickly understand the amount of investment sought
A: help readers and potential investors quickly understand your business’s unique proposition; help readers and potential investors quickly understand the goal of your business

Q: The business plan market analysis section should indicate that the business owner has knowledge of the market, has conducted research into the market and has ________?
- estimated future funding requirements
- mapped out the company’s organizational structure
- narrowed the target market to a reasonable size
A: narrowed the target market to a reasonable size

Q: A market analysis section includes an industry description and outlook, information about your target market, distinguishing characteristics, pricing and gross margin targets, competitive analysis, regulatory restrictions and ________.
- size of the primary target market
- how much market share your company can gain
- research and development activities
A: size of the primary target market; how much market share your company can gain

Q: XYZ Inc. identified their main competitors products, services and market segments. This is an example of a ________ ?
- gross margin target
- target market
- competitive analysis
A: competitive analysis

Q: What questions should you ask yourself when composing the organization and management section of your business plan?
- What is their background and why are you bringing them on as board members or employees?
- What are they responsible for?
- Who does what in your business?
A: What is their background and why are you bringing them on as board members or employees?; What are they responsible for?; Who does what in your business?

Q: The simplest and most effective way to lay out your business structure is to include a(n)________ in your business plan.
- list of all executives in your organization
- flow chart of previous management changes in your company
- organizational chart with narrative description
A: organizational chart with narrative description

Q: Including a section on the ownership of the business in your business plan identifies ________.
- business legal structure
- subsequent ownership information related to the legal structure
- financial projections
A: business legal structure; subsequent ownership information related to the legal structure

Q: The service or product line section goal is to ________.
- emphasize the benefits to potential and current customers
- focus on why your particular product will fill a need for your target customers
- describe competitors’ products and services
A: emphasize the benefits to potential and current customers; focus on why your particular product will fill a need for your target customers

Q: The purpose of the service or product line section of your business plan is to
- emphasize the benefits to potential and current customers
- focus on why your particular product will fill a need for your target customers
- describe competitors’ products and services
A: emphasize the benefits to potential and current customers; focus on why your particular product will fill a need for your target customers

Q: The marketing and sales plan section will ________.
- outline your company sales strategies
- describe how your will create customers and sustain customer loyalty
- describe company product patents or copyrights
A: outline your company sales strategies; describe how your will create customers and sustain customer loyalty

Q: If you are seeking funding for your business, the funding section will include ________.
- how the company intends to use available funds
- any strategic financial plans for the future
- no disclosure of your company’s current funding requirement
A: how the company intends to use available funds; any strategic financial plans for the future

Q: The funding section of your business plan should include:
- how the company intends to use available funds
- any strategic financial plans for the future
- no disclosure of your company’s current funding requirement
A: how the company intends to use available funds; any strategic financial plans for the future

Q: In the Financial Projections section, creditors will want to see ________.
- any collateral you may have that could secure the loan
- your expected financial performance during the next five years
- consistency between your projections and your funding request
A: any collateral you may have that could secure the loan; your expected financial performance during the next five years; consistency between your projections and your funding request

Q: What should not be included in the main body of your business plan and should be provided to readers on an as-needed basis?
- prospective financial data
- marketing and sales plan
- the appendix
A: the appendix

Q: Many small business startups fail due to a lack of planning. In order to avoid this, the business owner needs to ________.
- set clear goals of where he/she wants the business to be in the future
- establish a workable plan for how the business can achieve goals
- wait until the end of the 2nd year to set goals for the business
A: set clear goals of where he/she wants the business to be in the future; establish a workable plan for how the business can achieve goals

Q: According to the SBA’s new small business survival statistics, if 100 new businesses started a year ago only ________ are still operating.
- 50
- 80
- 20
A: 20

Q: As the owner you are responsible for everything that goes on in your business, but you still need to stay focused on the bigger picture. In order to be more effective and efficient, you need to ________.
- delegate responsibility for routine tasks
- work longer hours
- prohibit your employees from making decisions on their own
A: delegate responsibility for routine tasks; work longer hours; prohibit your employees from making decisions on their own

Q: In 1972, Atari Inc. became a pioneer in home video game industry. There was nothing like it in the market. As time moved on however, by the mid 1980’s more companies had entered the market with fresher graphics and catchier games. Atari was slow to change and lost market share rapidly which began a swift decline. This is a good example of ________.
- failure to delegate tasks and focus on the bigger picture
- forgetting that cash is king and losing liquidity
- unwillingness to change in response to competition
A: unwillingness to change in response to competition

Q: Radio Shack was founded in 1921 as a specialty retailer of electronic parts and components. Starting in the mid-1990s, the company attempted to move out of small components and into more mainstream consumer markets, focusing on marketing wireless phones. This placed the chain, long accustomed to charging wide margins on specialized products not readily available from other local retailers, into direct competition with larger vendors such as Best Buy and Walmart. By 2015, Radio Shack filed bankruptcy and closed its remaining US stores. The failure of Radio Shack is an example of a business that
- failed to delegate tasks and focus on the bigger picture
- forgot that cash is king and lost liquidity
- was unwilling to change in response to competition
A: was unwilling to change in response to competition

Q: As a startup or an established business, if you neglect to track your current ________ your business is more likely to fail.
- mission statement
- organizational structure
- cashflow
A: cashflow

Q: Maria started a business last year designing websites for small business. She spent money on social media advertisements, handed out flyers at business fairs, advertised in the local newspaper and phone book. Maria sat down one day to look over her finances and she realized she hadn't tracked how successful any of these advertising campaigns had been. This is an example of ________ which can lead to business failure.
- word of mouth advertising
- unwillingness to change
- lack of objective targets
A: lack of objective targets

Q: Maria started a business last year designing websites for small businesses. She started her business without consulting the small business development center in town or asking which type of legal entity would be the best for her business. Maria sat down to fill out her taxes and realized she didn’t know which form to use. She decided just to fill out an individual income tax form. By not seeking expert guidance, Maria is ________, and this exposes her to greater risk of business failure.
- forgetting that cash is king
- unwilling to change
- failing to ask the right questions
A: failing to ask the right questions

Q: Margaret had been baking cakes for friends and family for several years when she decided to open a bakery in her hometown. She cashed in her retirement account and with the money rented space downtown, purchased some equipment and had signs painted and erected announcing her grand opening. She started selling cakes and pies on the first day and after one month declared that her business was a success. However, a few days later the city health inspector arrived and immediately shut her business down because she had not applied for the permits necessary to run a bakery. Later that same week she received a letter from the city informing her that her business was in violation of the city zoning ordinances and would not be permitted to reopen. By not investigating the proper permits, licenses and zoning laws Margaret has now lost all of her retirement and her business is closed. This could have been avoided if Margaret had known:
- that cash is king
- that change is inevitable in small businesses
- to ask the right questions
A: to ask the right questions

Q: If you are a small business owner, which of the following are common pitfalls to avoid?
- getting stuck on the details and missing the big picture
- losing sight of cash incomings and outgoings
- adapting your business as the market changes
A: getting stuck on the details and missing the big picture; losing sight of cash incomings and outgoings