Chapter 10 Financing Strategy and Tactics Entrepreneurship IT

Statistics indicate that 45 percent of all small businesses ________.

• survive ten plus years

• fail after three years

• survive five or more years

• fail after the first year

Business failure is defined by Dun and Bradstreet as "business termination ________."

• with no notice

• because of owner illness

• with losses to creditors

• with loss of sales in three continuous quarters

The amount of risk or threat of loss that an entrepreneur is willing to sustain is ________.

• risk acceptance

• risk tolerance

• risk aversion

• risk allowance

Raising money for a business is an aspect of ________, which is the use of money for a purpose.

• comparative advantage

• equity analysis

• surety sequencing

• financing

Financing with earnings is an option under what circumstances?

• A company has no debt and is growing.

• A company is profitable and has positive cash flow from operations.

• A company is profitable and has negative cash flow from operations.

• A company has substantial cash savings and marketable securities.

What do you have to do before you can sell stock in your business?

• hold an initial public offering

• register

• incorporate

• seek an attorney's help

Financing a corporation with debt means borrowing or ________.

• taking a loan on a credit card

• borrowing from the entrepreneur's personal accounts

• lending money to customers

• selling bonds

An investor who invests money into your business in exchange for equity receives ________.

• a monthly dividend out of the business profits

• liability for any debt the business incurs

• a share of ownership of the business

• annual dividends

________ are forms of gifts or grants to businesses.

• Tax abatements

• Tax credits

• Unpaid labor by friends and family

• All of the above.

You could borrow money from friends and family who would like to invest in your business, or you could offer them ________.

• equity

• a bonus

• debt

• a job