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Exam 6: Entrepreneurship and Starting a Small Business

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Question 131

Multiple Choice

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Business incubators are usually government-funded facilities intended to:

A) provide health care benefits for small business owners and their families.
B) offer startup firms low-cost office space and basic business services.
C) help rebuild the nation's infrastructure.
D) assist foreign investors in identifying business opportunities in the U.S.

E) A) and B)
F) None of the above

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Question 132

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In discussions with bankers, entrepreneurs should be prepared to personally guarantee the loan for their business.

A) True
B) False

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Question 133

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Offering to manage an established business for a percentage of the profits plus a salary offers experience to the would-be entrepreneur and free time to the business owner.

Entrepreneurs are less important now than in the past to the U.S. economy.

Felicia decided to work for a floral design studio before opening her own shop. This approach to learning the business is okay, but her time would be put to better use starting her own business.

Your brother, a family dentist, has opened a new office in your home town. As a business student you know that this type of business experiences low failure rates.

When Krystal Ginger graduates from culinary school she dreams of opening her own Asian fusion restaurant. Her other passion is skiing in Colorado, where she schedules four or five trips each year. As her small business advisor, you believe it necessary to provide her with information that will help her make good business decisions. Which of the following would be helpful for Krystal to know?

Angel investors are the government agencies that invest money in new companies before they go public.

Entrepreneurial teams increase the cooperation between marketing, production and other functional areas of a business venture.

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

Prior to creating a business plan, discussions with bankers and investors can help entrepreneurs determine the amount of financing available.

The easiest businesses to start also have the least growth potential and the greatest failure rates.

Successful entrepreneurs rely on others for direction and support.

Small Business Administration microloans are based on the borrowers' integrity rather than collateral and credit history.

A presence on the Internet can benefit a business even if their product can't be sold to customers from the Web.

You can negotiate a win-win situation by offering to manage an established small business. You win from the experience; the owner wins with free time.

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 2009, 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?

The Spotlight on Small Business box "You're Never Too Young to be an Entrepreneur", features young people who

Because college students realize the importance of nursing homes for our aging population, students comprise an attractive market for nursing home insurance policies.

Bankers and potential investors are likely to read first.