Canadian Entrepreneurship and Small Business Management Wesley Balderson 10e - Test Bank

Canadian Entrepreneurship and Small Business Management Wesley Balderson 10e – Test Bank

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Sample Questions Are Posted Below

Chapter 04

Organizing a Business—The Business Plan

Multiple Choice Questions

1. Starting a business from scratch may be chosen by an entrepreneur because:
   A.it provides a sense of satisfaction.
   B. it is the most likely strategy to lead to success.
   C. customers are often sympathetic to such start-ups.
   D. there is lots of government funding for this strategy.

Difficulty: Easy
Learning Objective: 04-01 Describe the advantages and disadvantages of organizing a business from scratch compared with purchasing a business or becoming a franchisee.
Topic: 04-01 Getting Started: Establishing the Business

2. Starting a business from scratch can:
   A.reduce the usual risks inherent in a new business.
   B. is a proven model for surviving the first few years of operation.
   C. result in the least amount of start-up costs.
   D. requires a significant personal investment of money from the entrepreneur.

Difficulty: Easy
Learning Objective: 04-01 Describe the advantages and disadvantages of organizing a business from scratch compared with purchasing a business or becoming a franchisee.
Topic: 04-02 Advantages of Organizing a Small Business from Scratch

3. Organizing a new business from scratch:
   A.eliminates the need to do significant market research.
   B. often fails because of the lack of historical information.
   C. is a good strategy for eliminating risk.
   D. often overcomes the new owner’s uncertainties.

Difficulty: Easy
Learning Objective: 04-01 Describe the advantages and disadvantages of organizing a business from scratch compared with purchasing a business or becoming a franchisee.
Topic: 04-03 Disadvantages of Organizing a Small business from Scratch

4. When a competent feasibility study has been done by a new business owner:
   A.it is possible to eliminate uncertainties.
   B. starting a business from scratch is the most appropriate strategy.
   C. demand after start-up is likely to be sufficient.
   D. some uncertainties will always remain.

Difficulty: Medium
Learning Objective: 04-01 Describe the advantages and disadvantages of organizing a business from scratch compared with purchasing a business or becoming a franchisee.
Topic: 04-03 Disadvantages of Organizing a Small business from Scratch

5. A new business ______ has start-up problems.
   A.rarely
   B. only sometimes
   C. always
   D. never

Difficulty: Medium
Learning Objective: 04-01 Describe the advantages and disadvantages of organizing a business from scratch compared with purchasing a business or becoming a franchisee.
Topic: 04-03 Disadvantages of Organizing a Small business from Scratch

6. Writing a business plan is essential for:
   A.both raising money and assisting with day-to-day management.
   B. raising money.
   C. managing the new business.
   D. attracting reliable suppliers.

Difficulty: Medium
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-05 The Small Business Plan

7. A business plan helps to:
   A.attract customers.
   B. generate growth.
   C. direct retail store layout.
   D. keep business growth on course.

Difficulty: Medium
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-05 The Small Business Plan

8. Business plan formats and emphasis:
   A.are standard.
   B. vary depending on the use.
   C. reflect the adequacy of funding.
   D. define success.

Difficulty: Easy
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-06 Writing the Plan

9. It is recommended that business plans:
   A.should be written by an outside consultant.
   B. should be adapted from existing successful business plans.
   C. should only be used when required by lenders.
   D. should be written by the entrepreneur.

Difficulty: Easy
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-06 Writing the Plan

10. It is advisable to:
    A.work on a business plan based on intuition.
    B. draft sections of a business plan as information becomes available.
    C. plan the preparation of your business plan.
    D. work on a business plan in its entirety at once.

Difficulty: Hard
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-06 Writing the Plan

11. The executive summary:
    A.is primarily for investors.
    B. is primarily for management.
    C. is primarily for lenders.
    D. is primarily for employees.

Difficulty: Medium
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-06 Writing the Plan

12. A business plan is of value to:
    A.start-ups.
    B. both start-ups and established businesses.
    C. established businesses.
    D. new business owners.

Difficulty: Medium
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-05 The Small Business Plan

13. An analysis of competitors in a marketing plan would:
    A.consider suppliers’ needs.
    B. be written for investors.
    C. assess legal restrictions.
    D. determine who the competitors are.

Difficulty: Medium
Learning Objective: 04-02 Discuss the importance of formulating and following a business organizational plan.
Topic: 04-06 Writing the Plan

14. Some well-known investors insist on business owners:
    A.with relevant industry experience.
    B. with engaging personalities.
    C. who are well funded.
    D. who are younger than 55.

Difficulty: Hard
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-10 Describe The Management Team

15. A business plan should include:
    A.location impact on industry history.
    B. product failure statistics.
    C. social media contact information for management.
    D. industry growth trends.

Difficulty: Hard
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-07 Components of the Plan

16. New laws can mostly negatively:
    A.impact management passion.
    B. influence customer attraction.
    C. affect proposed marketing practices.
    D. change product usefulness.

Difficulty: Hard
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-12 Plan the Marketing Approach

17. A saturation index refers to:
    A.the number of units of products owned by customers in the trading area.
    B. the ratio of competing retail sales to competing retail space.
    C. the frequency with which customers encounter products in retail outlets.
    D. the age and history of a product.

Difficulty: Medium
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-13 Describe the Selection of the Location

18. The personnel plan would include the:
    A.plan for hiring, training, and managing those who will work in the business.
    B. computer systems that would contain job descriptions.
    C. accounting system that contains payroll information.
    D. renovation required for physical facilities.

Difficulty: Medium
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-16 Plan the Personnel

19. The following advice is offered to new entrepreneurs:
    A.it is good business to risk your own savings.
    B. assume that you could possibly lose at least half of your personal investment in a business.
    C. if you are very confident of your likely success, don’t be distracted by thoughts of losing it all.
    D. don’t risk more than you can afford to lose.

Difficulty: Hard
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-14 Determine the Physical Facilities

20. Which is not a control element to measure business plan progress?
    A.Inventory control
    B. Production control
    C. Customer control
    D. Disbursements

Difficulty: Medium
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-20 Measuring Plan Progress

21. Business owners would consider incorporation mostly because:
    A.they wish to limit liability.
    B. it presents a more sophisticated looking image.
    C. they are confused by a partnership arrangement.
    D. it makes them feel successful from the beginning.

Difficulty: Easy
Learning Objective: 04-03 List the essential components of a small business plan.
Topic: 04-17 Investigate the Legal Requirements