MGMT 3000 Chapter 6

Question 1

what is entrepreneurship ?

Answer 1

the process of initiating a business venture, organizing the necessary resources, assuming the associated risks and enjoying the rewards

Question 2

what is an entrepreneur?

Answer 2

someone who engages in entrepreneurship

Question 3

what are the 5 types of small business owners?

Answer 3

• idealist
• optimizers
• hard workers
• jugglers
• sustainers

Question 4

what is an idealist?

Answer 4

rewarded by chance to work on something new and creative

Question 5

what is an optimizer?

Answer 5

get personal satisfaction from being business owners

Question 6

what is a hard worker?

Answer 6

thrive on the challenge of building a larger, more profitable business

Question 7

what is a juggler?

Answer 7

higher energy person who enjoy handling every detail of their own business

Question 8

what is a sustainer?

Answer 8

enjoy chance to balance work and personal life

Question 9

how many minority owned businesses are in the country ?

Answer 9

11 million, nearly twice as many as existed a decade ago

Question 10

how many people do minority firms employ?

Answer 10

6.3 million people

Question 11

how much revenue do minority businesses generate annually?

Answer 11

$2 trillion

Question 12

what type of minority owned businesses have shown the greatest amount of growth over the past 10 years, increasing 34% ?

Answer 12

hispanic - latino owned

Question 13

what percent of small business owners are white?

Answer 13

78%

Question 14

true or false? immigrants were almost twice as likely as native born Americans to start a new business in the US in recent years

Answer 14

true

Question 15

what percent of new entrepreneurs were immigrants?

Answer 15

30 percent

Question 16

true or false? women have less access to capital because they have to work harder to convince others that they have what it takes to be successful

Answer 16

true

Question 17

true or false? women have less access to capital because they have to work harder to convince others that they have what it takes to be successful

Answer 17

true

Question 18

true or false? women have less access to capital because they have to work harder to convince others that they have what it takes to be successful

Answer 18

true

Question 19

true or false? women have less access to capital because they have to work harder to convince others that they have what it takes to be successful

Answer 19

true

Question 20

what are the traits of entrepreneurs?

Answer 20

• autonomy
• entrepreneurial sacrifice
• high energy
• locus of control
• self - confidence
• need to achieve
• tolerance to ambiguity

Question 21

what is the suggested process of starting an online business?

Answer 21

• find a market niche
• create a professional website
• choose a domain name
• know when to pivot

Question 22

what is social entrepreneurship?

Answer 22

focuses primarily on creating social value by providing solutions to social problems, with a secondary purpose of generating profit and returns

Question 23

what is a benefit corporation (B corporation)?

Answer 23

entrepreneurs who want to include a strong social or environmental component for-profit business

Question 24

what is the process for launching a start up?

Answer 24

1. come up with viable idea
2. create a business plan
3. choosing a legal structure
4. arrange financing

Question 25

what is the main reason for starting a business?

Answer 25

joined a family business

Question 26

what are the two main sources of new business ideas?

Answer 26

1. in depth understanding of industry or profession 2. market niche spotted

Question 27

what is a business plan?

Answer 27

a statement specifying the business details prepared by an entrepreneur prior to opening a new business

Question 28

what are some characteristics of a business plan?

Answer 28

- well defined - clear and realistic projections - profile potential customers - have detailed information about industry - highlight critical risks - spell out the sources

Question 29

what are the types of legal structure?

Answer 29

- sole proprietorship - partnership - corporation

Question 30

what is a sole proprietorship?

Answer 30

an unincorporated business owned by and individual for profit

Question 31

what type of legal structure make up a majority of businesses in the US?

Answer 31

sole proprietorship

Question 32

does a sole proprietor have unlimited liability ?

Answer 32

yes

Question 33

what is a partnership?

Answer 33

an unincorporated business owned by two or more people

Question 34

are partnerships easy to start?

Answer 34

yes

Question 35

when do partnerships typically dissolve?

Answer 35

after 5 years

Question 36

what type of agreement do partnerships use?

Answer 36

formal partnership agreement

Question 37

do partnerships have unlimited liability?

Answer 37

yes

Question 38

what is a corporation?

Answer 38

artificial entity created by the state and existing apart from its owners

Question 39

are corporations liable for its actions and must pay taxes on its income?

Answer 39

yes

Question 40

who is liable if a corporation gets sued?

Answer 40

the corporation, not the owners

Question 41

what are the two types of arranging financing?

Answer 41

debt financing and equity financing

Question 42

what is debt financing?

Answer 42

borrowing money that has to be repaid at a later date to start a business

Question 43

what is a common source of debt financing for a start up?

Answer 43

borrowing from family or friends

Question 44

what is equity financing?

Answer 44

funds that are invested in exchange for ownership in the company

Question 45

what are the types of equity financing?

Answer 45

- angel financing - venture capital firm - crowd funding

Question 46

what is angel financing?

Answer 46

wealthy individuals who believe in the idea for the start up and are willing to invest their personal funds to help the business get started

Question 47

what is a venture capital firm?

Answer 47

group of companies or individual that invests money in new or expanding businesses for ownership and potential profits

Question 48

what is crowd funding?

Answer 48

rating capital be receiving small amounts of money from a large number of investors, usually through social media and the Internet

Question 49

what is a business incubator?

Answer 49

provides shared office space, management support services and management and legal advice to entrepreneurs

Question 50

what is a co working facility ?

Answer 50

open office environment that is shared by multiple freelance entrepreneurs as well as corporate telecommuting employees or others who do not have a regular officew

Question 51

what is franchising?

Answer 51

the firm collects upfront and ongoing feeds in exchange for letting other firms offer products and services under its brand name and using its processes

Question 52

what is the powerful advantage of franchising?

Answer 52

management help is provided by the owner, have a brand name

Question 53

what are disadvantages of franchises?

Answer 53

- lack of control that occurs when franchisors want every business managed the same way - expensive and high start up costs

Question 54

what percent of McDonalds are franchise operations?

Answer 54

93%

Question 55

how much must franchisee applicants for McDonalds have in liquid assets and what franchise fee must they pay?

Answer 55

$500,000 and $45,000

Question 56

what percent to McDonalds franchisees pay of store revenue to McDonalds each year?

Answer 56

82%