Small Business Management
Midterm Exam
Course Introduction
Small Business Management explores the principles and practices involved in launching, operating, and growing small enterprises. The course covers key topics such as business planning, financing, marketing strategies, human resource management, legal and regulatory considerations, and innovation tailored to the unique challenges faced by small businesses. Students will analyze real-world case studies, develop entrepreneurial skills, and learn how to create sustainable competitive advantages in dynamic markets, preparing them to effectively manage or establish their own successful ventures.
Recommended Textbook
Entrepreneurship Theory Process and Practice 10th Editionby Donald F. Kuratko
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15 Chapters
444 Verified Questions
444 Flashcards
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Chapter 1: Entrepreneurship: Evolutionary
Development-Revolutionary Impact
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) The macro view can be broken down into which three areas?
A)environmental, financial, and displacement
B)financial/capital, strategic, and opportunity
C)displacement, trait, and financial
D)entrepreneurial trait, opportunity, and strategic
Answer: A
Q2) Name and describe four of the ten major myths of management.
Answer: One of the myths of management says that entrepreneurs are born,not made. This myth implies that entrepreneurs cannot be taught how to be successful. It says that they must be born with certain traits,such as aggressiveness,initiative,drive,and skill in human relations. However,recent recognition of entrepreneurship as a discipline is helping to dispel this myth. Another myth is the "all you need is money" myth,which says businesses fail because of inadequate financing. Actually,poor financing usually indicates other problems such as managerial incompetence,poor investments,and poor planning. A third myth says that entrepreneurs are either inventors or innovators. While many inventors and innovators are entrepreneurs,many entrepreneurs excel at other profit-seeking activities. A final myth is that all you need is luck. "Luck happens when preparation meets opportunity" means that being prepared for situations can lead to success when the time is right.
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Chapter 2: The Entrepreneurial Mind-Set in Individuals:
Cognition and Ethics
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Commitment,determination,and perseverance are the only characteristics one needs to become a successful entrepreneur.
A)True
B)False
Answer: False
Q2) A code of conduct is a statement of ethical practices or guidelines to which an enterprise adheres.
A)True
B)False
Answer: True
Q3) Every person has the _____ and _____ to pursue a career as an entrepreneur
A)stubbornness; stupidity
B)potential; free choice
C)rights; regulations
D)obligation; duty
Answer: B
Q4) There is a certain psychic risk involved with entrepreneurship.
A)True
B)False
Answer: True
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Chapter 3: The Entrepreneurial Mind-Set in Organizations: Corporate Entrepreneurship
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) In restructuring corporate thinking,top management should
A)identify potential entrepreneurs after an innovation program is in operation.
B)make the entrepreneur follow strict corporate guidelines.
C)promote entrepreneurship through experimentation.
D)create diversity and order in strategic activities.
Answer: C
Q2) Not all corporate entrepreneurial behavior is good for the organization. Why?
Answer: The encouragement of corporate entrepreneurship can and often does result in counterproductive rogue behavior. The senior manager's task is not simply to build an organizations whose core qualities are conducive to innovation but to design and develop innovation-facilitating and control-facilitating mechanisms that complement one another.
Q3) Groups that function outside traditional lines of authority permitting rapid turnaround of new ideas as well as instilling a high level of group loyalty are called:
A)skunk works.
B)multiple approaches.
C)champions.
D)strategic innovators.
Answer: A
Page 5
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Chapter 4: Social Entrepreneurship and the Global
Environment for Entrepreneurship
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) The triple bottom line is an accounting framework that focuses on optimizing short-term financial performance.
A)True
B)False
Q2) Bottom-line measures of economic performance include all of the following except:
A)global competition
B)personal income
C)cost of underemployment
D)job growth
Q3) In the context of benefit corporations,what does transparency refer to?
Q4) The first of five steps for entering the international marketplace is
A)securing adequate financing
B)filing the proper documents
C)conducting research
D)preparing a feasibility study
Q5) Ecopreneurship is a combination of ecologically and economically sustainable development.
A)True B)False
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Chapter 5: Innovation: the Creative Pursuit of Ideas
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Creativity is most likely to occur when the "climate" is right. The text listed several important characteristics of this climate. What is the right climate?
Q2) Looking for different or unorthodox relationships among elements and people is one way to develop creativity. How might a person develop this capacity?
A)by perceiving in a relational mode
B)by perceiving in a restraining mode
C)by perceiving in a restructured mode
D)by perceiving in a retinal mode
Q3) Which of the following is a characteristic of creative people?
A)bright but not necessarily brilliant
B)poor image of themselves
C)rigid and dogmatic
D)unmotivated by challenging problems
Q4) Identity and describe two arenas of creativity.
Q5) Innovation is the process by which entrepreneurs convert opportunities into marketable ideas.
A)True
B)False
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Chapter 6: Assessment of Entrepreneurial Opportunities
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) There is a great abundance of reliable data concerning the start-up,performance,and failure of new ventures.
A)True
B)False
Q2) Poor financial understanding is characterized by which of the following?
A)failure to anticipate technical difficulties
B)inadequate understanding of costs and funding requirements
C)failure to realize the life cycle of a product
D)lack of product differentiation
Q3) Overall market understanding rather than a time-consuming focus on market niches is sufficient for an evaluation.
A)True
B)False
Q4) The entrepreneurial motivations of individuals usually relate to which of the following factors?
A)the environment
B)the entrepreneur
C)the venture
D)all of the above
Q5) Explain three major reasons why new ventures fail.
Page 8
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Chapter 7: Pathways to Entrepreneurial Ventures
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) The terms upside gain and downside loss refer to the profits the business can make and the losses it can suffer.
A)True
B)False
Q2) When should a potential franchisee receive the FDD (Franchise Disclosure Document)?
A)two days before signing a contract or paying any money
B)at least ten days before signing a contract or paying any money
C)two days before signing a contract
D)at least ten days before paying any money
Q3) The advantages of franchising include:
A)training and guidance.
B)brand-name appeal.
C)proven track record.
D)all of the above.
Q4) What is the role of business brokers in acquiring an established entrepreneurial venture?
Q5) Franchisees have the option of using the logo and symbols of the franchisor.
A)True
B)False
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Chapter 8: Sources of Capital for Entrepreneurs
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Sample Questions
Q1) Informal risk capitalists are those who have already made their money and now seek to help new ventures.
A)True
B)False
Q2) Which of the following terms is not synonymous with social lending?
A)crowdfunding
B)peer-to-peer (P2P) lending
C)banking 2.0
D)commercially viable lending
Q3) An informal risk capitalist is referred to as:
A)your neighbor.
B)a business angel.
C)a retiree.
D)someone with extra money to invest but who is not interested becoming an entrepreneur.
Q4) The entrepreneur should ask the venture capitalist _____ questions.
A)at most ten
B)exactly twenty
C)an unlimited number of
D)no
Page 10
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Chapter 9: Legal Challenges of Entrepreneurial Ventures
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30 Verified Questions
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Sample Questions
Q1) Which of the following falls under Chapter 7 bankruptcy?
A)The debtor surrenders most property to a court trustee.
B)The debtor fails to file income taxes.
C)The debtor is relieved of obligations.
D)The debtor is arrested.
Q2) The registration of a trademark last for 40 years,with continuous renewal every 10 years.
A)True
B)False
Q3) What does a copyright protect?
Q4) That part of a patent application which identifies the features that are protected are known as the A)particular. B)claim.
C)identification. D)essence.
Q5) Three primary legal forms of organization are the sole proprietorship,the partnership,and the corporation.
A)True
B)False
Page 11
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Chapter 10: Marketing Challenges for Entrepreneurial Ventures
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) It is usually more expensive to gather secondary data than primary data.
A)True
B)False
Q2) Secondary data consists of
A)internal data only
B)external data only
C)existing information
D)newly developed primary research
Q3) All of the following techniques are used in gathering primary data except
A)observational methods
B)analysis of financial records
C)surveys
D)experimentation
Q4) A market is
A)a group of consumers who have purchasing power and unsatisfied needs
B)a way of gaining consumer data
C)a segment of the economy
D)a group of known purchasers
Page 12
Q5) Identify and describe two pricing models pertinent to the social media age?
Q6) Explain the new marketing concept?
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Chapter 11: Financial Preparation for Entrepreneurial Ventures
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30 Flashcards
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Sample Questions
Q1) List the elements of a capital budget and define its main objective.
Q2) The concept of the net present value method works on the premise that
A)a dollar today is worth less than a dollar in the future.
B)a dollar today is worth the same in the future.
C)a dollar today is worth more than a dollar in the future.
D)a dollar today cannot be measured in future dollars.
Q3) A budget that is a statement of estimated income and expenses over a specified period of time is referred to as an
A)anticipated budget.
B)operating budget.
C)entrepreneurial budget.
D)expected results budget.
Q4) Contribution margin is the difference between
A)selling price and fixed cost per unit.
B)purchase price and variable cost per unit.
C)selling price and variable cost per unit.
D)purchase price and fixed cost per unit.
Q5) What is included in an operating budget and how is this helpful?
Page 14
Q6) Define break-even analysis and identify some useful methods for finding the break-even point.
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Page 15
Chapter 12: Developing an Effective Business Plan
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Which of the following questions should an entrepreneur ask when a business plan is turned down?
A)"That means you do not know how to evaluate a good plan?"
B)"Can you identify friends who would like this kind of deal?"
C)"If you were in my position, how would you proceed?"
D)none of the above
Q2) Should an entrepreneur attempt to make a business plan sound too good for an investor to turn down?
Q3) How does a business plan benefit the entrepreneur?
Q4) Which of the following statements is not part of the "five-minute reading" by venture capitalists?
A)Determine the characteristics of the venture and industry.
B)Determine the strengths and weaknesses of the entrepreneur.
C)Determine the financial structure of the plan.
D)Read the latest balance sheet.
Q5) A business plan must illustrate the current status of the venture but not the projected results.
A)True
B)False
Q6) What is the basic structure of a business plan?
Page 16
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Chapter 13: Strategic Entrepreneurial Growth
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30 Flashcards
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Sample Questions
Q1) Research has shown that there is a distinct lack of strategic planning in new ventures. Relate some of the reasons for this lack of planning.
Q2) The entrepreneurial strategy matrix measures:
A)risk and security.
B)commitment and time.
C)risk and innovation.
D)opportunity and time.
Q3) Which of the following would be considered fatal mistakes in strategic planning,according to researcher Michael E. Porter?
A)no real competitive advantage
B)pursuing a solid competitive position
C)compromising strategy for growth
D)a and c only
Q4) All of the following are characteristic of entrepreneurial cultures except:
A)action orientation
B)hierarchy
C)episodic use of required resources
D)multiple informal networks
Q5) Does strategic planning pay off?
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Chapter 14: Valuation of Entrepreneurial Ventures
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Sample Questions
Q1) List and describe the sources an entrepreneur should examine to find available business buying opportunities.
Q2) Specific factors of a venture being offered for sale that should be examined include
A)age, trends, and future.
B)profits, sales, and operating ratios.
C)employees, suppliers, and competitors.
D)profits, price, product.
Q3) What hidden costs are involved when establishing the value of a firm?
A)insufficient controls and costs
B)divergent expenses
C)personal expenses
D)travel expenses
Q4) __________ refers to conducting a thorough analysis of every facet of an existing business.
A)Due diligence
B)Industry capitalization
C)Knowledge acquisition
D)Risk assessment
Q5) Explain the purpose of a letter of intent.
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Chapter 15: Harvesting the Entrepreneurial Venture
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Sample Questions
Q1) Describe the legal concerns over family business succession citing the Oakland Scavenger case.
Q2) The liquidity event stands for positioning the venture for the realization of a cash return for the owners and investors.
A)True
B)False
Q3) Research on family firms demonstrates which of the following facts?
A)only 16 percent make it to a third generation
B)many family firms cease to exist after one month
C)only nine out of ten make it to a second generation
D)only 3 percent make it to the next generation
Q4) Which of the following is not a contextual aspect to be considered in an effective succession plan?
A)technology
B)time
C)environmental factors
D)type of venture
Q5) There are two types of succession pressures: family and nonfamily.
A)True
B)False
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