Chapter 5 Quiz

Which of the following businesses would not be considered a small business?

• A wholesale trade company with $1 million in profit and 300 employees

• A car repair shop with over $250,000 in revenue and eight employees

• A real estate development company with $100 million in revenue and 54 employees

• A manufacturing firm with $17 million in revenue and 95 employees

Small businesses are important to the U.S. economy for all of the following reasons except _____.

• pay 40 percent of total U.S. private payroll

• they employ about half of all private-sector employees

• Correct answer.they have generated 50 percent of net new jobs over the past 20 years

• that they represent 99.9 percent of all employer firms

Portia knows the customers of her hat shop by name and knows each of their preferences. What small business advantage does this demonstrate?

• Independence

• Personal relationships with customers

• Simplified record keeping

• Ability to adapt to change

Sriranjani has a motorcycle and ATV store. Her customers often talk about trikes. Sriranjani orders some Harley-Davidson Trikes for her inventory. Her actions are possible because small businesses _____.

• can keep all profits

• have simplified record keeping

• have personal relationships with customers

• have the ability to quickly adapt to change

Giovanni would like to start his own business, but he has very little savings. Additionally, his family isn’t willing to invest any money into his business because they fear it may fail. Giovanni’s bank is also unwilling to provide a loan that is large enough to start the business. This is an example of which disadvantage of small business?

• Limited potential

• Risk of failure

• Limited ability to raise capital

• Inability to adapt to change

________ is a government agency that assists, counsels, and protects the interests of small businesses in the United States.

• Federal Small Business Association

• Small Business Administration

• Small Business Enterprise

• Federal Agency of Small Business

_______ is money that is invested in small (and sometimes struggling) firms that have the potential to become successful

• Stock

• Small Business Grants

• Venture Capital

• Shareholders

____ is a carefully constructed guide for the person starting a business

• business prospectus

• business organizational chart

• business plan

• none of the above

Frustrated that she was working many hours for someone else, Morgan decided to start her own business. She could work when she wanted to and take a day off as needed instead of having to work on a set schedule. Morgan was likely influenced by ____ when starting her own business.

• age

• money

• independence

• family background

Kushi has collected money from savings, family investments, and bank loans in order to start her own florist shop. She is optimistic that her business will be a success because she loves arranging flowers and receives many likes and comments when she posts her designs online. Kushi asks you, a business major, what advice you have about starting a business. Which of the following is correct information you can share with Kushi?

• Entrepreneurs should always adopt a “fast growth” mindset.

• Most small businesses generate a profit in their first year of operation.

• Small businesses inherently possess the ability to expand.

• Starting a small business requires much more than optimism and a good idea.