Entrepreneurship: Ideas in Action 6e - Chapter 7 Quiz

What is an advantage of buying an existing business?

• Opportunity for freedom and independence

• Serious problems may be inherited

• High level of risk and uncertainty

• Less freedom to make decisions

What is a disadvantage of starting your own business?

• Financing can be difficult to obtain

• High level of risk and uncertainty

• The seller of a business may train a new owner

• Business owner keeps all of the profits

What is a step in buying a business?

• Ask for important information in written form

• Determine how you would finance the business

• Meet with business sellers or brokers to investigate specific opportunities

• Visit during business hours to observe the business in action

What is a legal agreement that gives an individual the right to market a company’s products or services in a particular area?

• Initial franchise fee

• Franchise Disclosure Document (FDD)

• Royalty fees

• Franchise

What is an advantage of a family business?

• Often no exit strategy

• Less freedom to make decisions

• High level of commitment and loyalty from employees

• Inadequate leaders and/or employees

What are the operating costs of a franchise?

• The costs associated with beginning a business

• The amount the local franchise owner pays in return for the right to run the franchise

• Paid to the franchise company to support advertising of the franchise as a whole

• Weekly or monthly payments made by the local owner to the franchise company

What is a disadvantage of a family business?

• High level of commitment and loyalty from employees

• More flexibility than other types of businesses

• Inadequate leaders and/or employees

• Stable leadership

What is a disadvantage of buying an existing business?

• Many businesses are for sale because they are not making a profit

• The existing business already has the necessary equipment, suppliers, and procedures in place

• The seller of a business may train a new owner

• Financial arrangements can be easier

What is a disadvantage of starting your own business?

• High level of risk and uncertainty

• Business owner keeps all of the profits

• Financing can be difficult to obtain

• The seller of a business may train a new owner

What is an advantage of a family business?

• Less freedom to make decisions

• Often no exit strategy

• Inadequate leaders and/or employees

• High level of commitment and loyalty from employees