Which of the following organizations would be considered a small business? A. Producer of semiconductors with 2,000 employees Wholesaler with 50 employees Retail clothing store chain with annual sales of $26 million d. Construction company with average annual receipts of $32 million e. Farmer with annual receipts of $10 million ANSWER: B 3. A company generally needs more than considered large. A. 50 1 ,oho ANSWER: D employees in order to be 4. What is the primary reason that so many new businesses fail? A. Owner does not work hard enough Mismanagement resulting from lack of business know-how
Low employee quality for new businesses Lack of brand-name recognition Inability to compete with well-established brand names 5. Which of the following is not considered a category in the distribution (INTERMEDIARIES) industries? A. Manufacturing Wholesaling Retailing Transportation Communications ANSWER: A 6. Statistically, approximately what percentage of all new businesses can be expected to fail within their first seven years? A. 10 24 31 69 ANSWER: E 7. Ben has been thinking about going into business. However, he has discounted entering automobile manufacturing because it a. Quires little skill and knowledge. Is not a part of the production industry. Requires huge investments in machinery and equipment. Is unprofitable. Requires by law a corporate form of business. 8 Businesses are generally placed into three broad categories: service industries, production industries, and industries. A. Financial manufacturing distribution transportation 9. The industry concerned with the movement of goods from producer to consumer is a. Service. Distribution. Production. Agriculture. Wholesaling. 10. Joe decides to start his own business designing websites for other genuineness.
Joey’s business would be classified as a A. Distribution business. Retailer. Production business. Wholesaling business. Service business. 1 1 . Mean’s business sells souvenirs and craft items to tourists in Myrtle Beach, South Carolina. This is an example off business. A. Service communication production 12. Dana owns and operates a catering business. This is an example of a A. Manufacturer. 13. Small businesses are typically managed by relatives. Professional managers. Friends. The people who start and own them. A board of directors. 14. All of the following are reasons people go into business except the a. Sire to create a new business. Willingness to accept a challenge. Guaranteed return on investment. Desire for independence. Desire to determine one’s own destiny. 15. Which of the following statements is correct? The risk of failure for women-owned businesses is lower than average. B. Women are starting businesses at about the same rate as men. C. Women are almost always sure to succeed. Women own 7. 7 million businesses in the United States. Minority business owners pay lower federal tax on profits than men do. ANSWER: A 16. Steven Jobs and David Waking, the founders of Apple Computer, Inc. Are creative, free-spirited individuals who decided that being corporate underlings was not what they wanted from a career. They had an innovative idea for a product and desired to create their own business based on this idea. All of the following are factors that could have led them to go into business except a. The independence. The willingness to find and accept a challenge. The desire to determine their own destiny. The low risk and high rewards inherent in entrepreneurship. Entrepreneurial spirit. 17. Which of the following statements is true regarding the profitability of new businesses? A.
It may take several years for a new business to begin showing a profit. B. Profitability is not an important issue for new businesses. Most new businesses will turn a profit within the first year. D. If a company does not show a profit within the first year, it will fail. E. Most new businesses are highly profitable when they first start. ANSWER: A ; C 18. Lauren starts a business that sells personal computers. Within the first year she discovers that computer technology becomes outdated very quickly, and she has to been able to sell her products for as much as she thought due to the passage of time.
Lauren has mismanaged a. Inventory. (stock of goods) cash flow. Financing arrangements. Personnel. Money. 19. A new small business, Underwater Wildlife, has opened to sell tours of underwater sites around the country and in South America. However, money has to be paid up front by the Underwater staff to book hotels and other travel arrangements before its clients have paid for the tours. That means Underwater is facing a potential a. Insurance difficulty. Cash-flow problem. Inventory-flow problem. Business plan crunch. Employee expansion task. 20.
The fact that insulin and power steering both originated with individual inventors and small companies is testimony to the power of small businesses as providers of a. Employment. Competition. Technical innovation. Capital. Quality products. 21. Which of the following statements is not true about small businesses? A. Small businesses provide technical innovation. Small businesses create cyclical unemployment. Small businesses provide employment. Small businesses provide competition. Small businesses fill the needs of society and other businesses.