Chapter 5: Entrepreneurship
Chapter Practice Review Quiz
1.. What is true of a long-term investment? D) Banks want to own the entrepreneur's business.
A) A "long term" is for less than two years.
9. What is the most important reason many small B) The investment includes a savings account.
businesses fail? C) The value of the investment fluctuates over time.
D) "Long-term investing" means "to retire." A) Entrepreneurs feel insecure.
B) Entrepreneurs sometimes don't start with good financial
2. Who would NOT be considered an entrepreneur? planning.
A) a doctor who starts own practice C) Entrepreneurs work alone too often. B) a doctor who is employed by a hospital D) Entrepreneurs get bought out by bigger companies.
C) a doctor who writes a book in his spare time
10. What is the immediate future of virtual, or online, D) a doctor who works as a consultant
3. Which would most likely describe a successful A) More and more are coming on the scene. entrepreneur? B) They are on the decline.
A) lazy C) No one can predict what will happen next. B) shy D) People aren't as interested in starting them now.
11. What is the most important reason for having a D) self-starter
4. Which is NOT a small business? A) to do market research
A) a babysitting team B) to help you focus on how to succeed in your new
venture B) a web store
C) a fast food chain C) to make a checklist
D) a delivery service consisting of ten teens with bikes D) to find out what to produce in your business
5. Which is often especially important to a small business? 12. What is a characteristic of the executive summary in a
business plan? A) creativity
B) digitizing A) It contains details.
C) electronics B) It discusses how you will fill in any gaps in expertise. D) accounting C) It tells the most important points of the business plan.
D) It describes your service plan. 6. What is a corporation?
13. What does a mission statement do? A) a business owned by one person
B) a person owned by two people A) describes the company
C) a business bought out by someone new B) tells your business concept
D) a business with many owners C) reflects the purpose of the company
D) tells the major goals of a business 7. Which is NOT a reward of entrepreneurship?
14. What other piece of the business plan is related to the A) being the boss
market analysis? B) risking capital resources
C) doing what you enjoy A) industry overview
D) being creative B) mission statement
C) marketing plan
8. Why do people have trouble getting money to start their D) competitive analysis
15. Which part of a business plan describes management A) Banks don't give loans to entrepreneurs.
and tells who will run the firm? B) Banks give more money to corporations.
C) Banks are concerned that they won't be repaid. A) operational
only has time to read a quick description of your plan. ANSWER KEYS: 13.D
Feedback: Every company should have a mission 1.C
Feedback: Long-term investors commit their money for at statement to help keep everyone involved focussed on
least five years. The value seesaws, but the risk improves the major goals of the business. over time. 14.D
Feedback: The market analysis looks at both what 2.B
Feedback: Only the doctor in the hospital is not in customers want and what the competition is already
business for himself; he is an employee of the hospital. doing.
Feedback: Entrepreneurs should be self-starters. They Feedback: The organizational plan also tells the
are often good at motivating others as well! management philosophy and the type of corporation the
business will become. 4.C
Feedback: A fast food chain is part of a system of many restaurants that is spread out over a large area. 5.A
Feedback: If you can creatively come up with the next new product, you may just make your fortune yet! 6.D
Feedback: A corporation usually has a board of directors who has one person run the company on a day-to-day basis—the CEO.
Feedback: Many rewards come with starting your own company - but it does come with risks, such as investing money.
Feedback: Banks need entrepreneurs to prove that they have a plan for their success so that the banks have confidence in the risk in the bank's investment. 9.B
Feedback: Most small businesses fail within the first five years, often because they don't have a strong business plan.
Feedback: The popularity of the Internet is increasing, as is business over the Net.
Feedback: Without a focussed plan, it will be harder to succeed in business. You can also take your written plan to a financial agency to help get start-up funds. 12.C
Feedback: The executive summary gives only the most important points. It should be written for someone who