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1) Entrepreneurial education: a. more courses are being offered in entrepreneurship

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1) Entrepreneurial education:
a. more courses are being offered in entrepreneurship
b. has become extremely popular
c. universities are not able to meet the demand
d. all of the above
2) Which of the following is not a common characteristic of entrepreneurs?
a. Desire for responsibility
b. High energy level
c. Preference for moderate risk
d. Business plan expertise
3) More businesses fail because of ________ than for any other reason.
a. poor choice of location
b. incompetent management
c. insufficient capital
d. theft by employees
4) Earl was a financial consultant who liked to work with his hands, especially in making furni-
ture. He quit his rat race financial job to start a small custom furniture business. After strug-
gling for several years, he closed it and went back to financial services. Earl discovered that
there was a big difference between making furniture for himself and running a customer furni-
ture manufacturing business. Tom’s business failed because of:
a. an inability to access start-up capital
b. poor financial control
c. his lack of experience
d. uncontrolled growth
5) The key ingredient-the crucial element-to avoiding the failure of a new business is:
a. technical expertise regarding the product
b. the business plan
c. knowing the business
d. differentiating the business and product from the competition
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BAM 418 – Small Business Management
6) A knowledge based business economy favors small business because:
a. information technology is driving cost of managing and transmitting knowledge lower
b. small businesses are more successful
c. the cost of managing and transmitting knowledge is very low
d. Both A and C
7) “Copreneurs” are:
a. business magazines targeted towards entrepreneurs
b. entrepreneurial couples who work together as co-owners of their business
c. personality traits of entrepreneurs
d. none of the above
8) The most important change due to expansion occurs in:
a. organizational structure
b. personnel assignments
c. managerial expertise
d. inventory and financial control procedures
9) Customer service, convenience, speed and quality are all examples of:
a. learning to manage people effectively
b. generating more revenue
c. setting your business apart from others
d. small businesses
10) How is the strategic planning process for small companies different from that for large compa-
nies?
a. It should be conducted by top management and provided to lower management.
b. The process should be informal and not overly structured–”a shirtsleeve approach.”
c. The planning horizon should cover at least five years into the future.
d. The process should begin with setting objectives and conclude with competitive analysis.
11) Which of the following is true about successful entrepreneurs and their vision?
a. It is created independently of their market or their customers.
b. It includes their understanding of the competition and their key market segments.
c. They create it in cooperation with their employees.
d. They are able to communicate it and their enthusiasm for it to all those around them.
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BAM 418 – Small Business Management
12) ________ are relationships between a controllable variable–plant size, quality, packaging–and a
critical factor influencing the firm’s ability to compete in the marketplace.
a. Core competencies
b. Key success factors
c. Goals and objectives
d. The competitive advantages
13) A ________ strategy tends to be ideally suited to the small business.
a. product quality
b. cost leadership
c. focus
d. differentiation
14) The ________ is a set of measures unique to the company that gives managers a quick and
comprehensive view of how the business is doing and includes both financial and operational
factors.
a. key success factors
b. core competencies
c. balanced scorecard
d. action plan
15) The strategic management procedure for a small business should include the following fea-
tures:
a. encourage the participation of employees moderate
b. be informal and not overly structured difficult
c. use a relatively short planning horizon easy
d. all of the above
16) A partnership agreement sets how the partners will be compensated. Normally,
a. both general and limited partners are permitted salaries, but all silent or dormant partners
are compensated only by sharing in the profits.
b. partners are not entitled to salaries or wages, but are compensated by a share of the profits
of the business.
c. while the agreement establishes payout schedules, it does not spell out what constitutes
profit.
d. the general partner’s salary is set at 2 times the salaries of the limited partners.
17) The limited liability company is most like a/an:
a. S-corporation
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BAM 418 – Small Business Management
b. master partnership
c. sole proprietorship
d. general partnership
18) Which of the following is true about choosing a limited liability company form of ownership?
a. It is inexpensive, easy to form, and covered by little regulation due to its newness.
b. It has no disadvantages except its newness.
c. It’s an excellent conversion vehicle for existing businesses that are suffering from double
taxation but problematic for sole proprietorships.
d. It is ideal for a new company but difficult to convert to with an existing company.
19) ________ partners are not active in a business but generally are known to be members of the
partnership.
a. Silent
b. Limited
c. General
d. Dormant
20) Shares the corporation itself owns are called:
a. preferred stock
b. common stock
c. treasury stock
d. bonds
21) In franchising, the reputation of the franchiser is dependent on:
a. the quality of the goods and services provided
b. the brand name recognition and appeal
c. their locations and popularity with the local customer
d. the rate of growth and the number of national outlets
22) When it comes to purchasing products, equipment, etc., the franchiser:
a. is permitted to set the retail price for the franchisee
b. cannot require franchisees to buy from an “approved” supplier
c. can set prices paid for the products, etc., but cannot set the retail price the franchisee
charges
d. cannot require the franchisees buy from the franchise company
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BAM 418 – Small Business Management
23) Typically, the franchiser controls are very tight on what the franchisee
a. sets in terms of retail pricing and hours of operation.
b. does in terms of who they hire as employees.
c. sales in terms of the product or service they offer.
d. does with his/her net profits after fees and taxes are paid.
24) The Uniform Franchise Offering Circular
a. requires the release of a detailed earnings projection.
b. includes 23 major topics in its disclosure statement.
c. was developed in 1946 in the State of California.
d. is only necessary in the 33 states that do not have their own franchise disclosure laws.
25) ________ is when owners of independent businesses become franchisees to gain the advantage
of name recognition.
a. Master franchising
b. Multiple-unit franchising
c. Combination franchising
d. Conversion franchising

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