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Introduction to Business – Small Businesses Test

True or False: the process of starting, organizing, managing, and assuming the responsibility for a business is called capitalism
False
True or False: Everyone who owns a business is an entrepreneur.
False
True or False: In the United States, nearly as many small businesses close as begin each year.
True
True or False: U.S. businesses with just a single owner and no staff account for over $600 billion in annual sales.
True
True or False: It is easier for a small business to meet the precise needs of customers than a large business.
True
True or False: Many small businesses fail simply because they are not located in the right spot.
True
True or False: The most important step in starting a business is preparation.
True
True or False: Once a business plan is written, it should never be revised and should never be updated.
False
True or False: The most popular use of business plans is to persuade lenders and investors to finance the venture.
True
Which of the following is probably the LEAST important factor in becoming an entrepreneur?
living in a major US city
In the United States, women own this percentage of small business.
35%
Successful entrepreneurs tend to have all of the following characteristics EXCEPT
hesistant
Entrepreneurs
come from all age categories and educational backgrounds
About how many new businesses are created in the United States every year?
625,000
Most of the money needed to start a new business comes from
the entrepreneur and his or her family friends
Small businesses account for ____ of the U.S. gross domestic product each year.
more than half
Scrubbles laundry detergent has been on the market for years. The manufacturer of Scrubbles recently added a new ingredient to give the detergent extra cleaning power. This is an example of an
improvement
Of all new businesses,
about 1/3 are profitable, 1/3 do not make a profit but continue to operate, 1/3 loses money
According to the Small Business Administration, a small business is an independent business with fewer than ____ employees.
500
Which of the following does NOT describe a typical small business?
It is dominant in its field
Small business owners
usually get direct information from their customers about what they like and dislike
Small businesses have an advantage over big businesses when customers
want more individual attention
Location is important to small retail businesses because
-most retailers need good customer traffic to survive
-many potential customers will stay away if the business is not easy to find
-customers generally do not want to travel long distances to find what they need
The most successful small business owners
establish good working relationships with professionals such as bankers, lawyers, and accountants
Which element of a business plan discusses the entrepreneur’s short- and long-term goals for the business?
description of the business
Which of the following would NOT be discussed in the operations plan section of a business plan?
sales forecast
If you start a new business, you need information about
competitors, government regulations, and customers
The first step in developing a business plan is to
gather and review information
Short-term financing is obtained for a period of less than
one year
A(n) ____________________ is someone who takes a risk in starting a business to earn a profit.
entrepreneur
____________________ capital is money provided by large investors to finance new products and new business that have a good chance to succeed.
venture
A(n) ____________________ is an invention or creation that is brand new.
innovation
A designed change that increases the usefulness of a product, service, or process is called a(n) ____________________.
improvement
Almost all people starting small businesses have graduated from ____________________.
high school
The Small Business ____________________ is a U.S. government agency that helps small business owners obtain financing and other support for their companies.
administration
Members of the Service Corps of Retired ____________________ are retired local businesspeople who volunteer their services to counsel and mentor new business owners.
executives
A business ____________________ is a written description of a business idea and how it will be carried out.
plan
Most business plans are developed for ____________________ year(s).
one
The amount of money needed to open a business is called ____________________ financing.
start-up
Products or raw materials a business keeps on hand to do business are referred to as ____________________.
inventory
Money needed to pay for the current operating activities of a business is referred to as ____________________ financing.
short-term
The source of owner-supplied money depends on the business’s ownership structure. In a(n) ____________________, one person will supply the money.
proprietorship
____________________ financing is money needed for the main resources of a business that will last for many years.
long-term
Name at least three sources of funding for new businesses. Which is the most important?
Most of the money needed to start a new business comes from the entrepreneur and his or her family and friends. This is the most important source of small business funding. Other funding sources for new businesses include venture capital, loans from banks and other financial institutions, and credit given by businesses that sell products and services to the new business.
Why should all small business owners develop business plans even if they are not required to obtain financing?
By developing a business plan, the owner is forced to think about important activities, the amount of time they will take, and their cost. This process may identify potential problems. The plan also serves as a guide to keep the business on track.

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