Small Business Final Exam

Question 1

Writing a business plan is largely a process of:

Answer 1

research, revision and rewriting.

Question 2

The most common problem when writing a business plan is:

Answer 2

overcoming procrastination.

Question 3

Entrepreneurship is best defined as:

Answer 3

risking time and money to make a profit.

Question 4

It is best to have a partner whose personality is:

Answer 4

complimentary to yours.

Question 5

The term micro-enterprise usually refer to a business that has fewer than:

Answer 5

5 employees.

Question 6

Compared to the general population, successful entrepreneurs tend to be:

Answer 6

more confident in their abilities to influence their own futures.

Question 7

Which of the following is a source of primary marketing research information?

Answer 7

A questionnaire or survey.

Question 8

The first research priority for a new business is to determine

Answer 8

market potential.

Question 9

Cash that owner takes out of the business for his/her peronal use is called:

Answer 9

Owners draw.

Question 10

The Financial Statement that shows the financial position of a company at a particular moment in time is the:

Answer 10

balance sheet.

Question 11

Liabilities are:

Answer 11

legal debts.

Question 12

The break-even point is where:

Answer 12

a company’s expenses are covered, a company starts to make a net profit, the income from sales is equal to all of a company’s costs and expenses.

Question 13

Supporting material included in a business plan appears in the:

Answer 13

appendix.

Question 14

The majority of dissatisfied customers:

Answer 14

do not complain to the service provider, tell numerous others about the problem, can be kept as customers if the problem is resolved.

Question 15

The pricing strategy of a business should be based on:

Answer 15

a break even analysis.

Question 16

True/False: All business plans follow the same 5 section model.

Answer 16

False

Question 17

True/False: The skills and traits that employers are looking for and the skills and traits needed to own a business are virtually identical.

Answer 17

False

Question 18

True/False: If the owner of a sole proprietorship is killed, the “business” no longer exists as a legal entity.

Answer 18

True

Question 19

True/False: The greater the variety of potential customers that a new business has, the easier it is to identify the target market.

Answer 19

False

Question 20

True/False: A new business must make sales projections for at least five years.

Answer 20

False

Question 21

True/False: “Competitive” pricing means pricing lower than your competition.

Answer 21

False

Question 22

True/False: Advertising and marketing are the same thing.

Answer 22

False

Question 23

True/False: It costs five times more to get a new customer than to keep an existing customer.

Answer 23

True

Question 24

True/False: “Cold calling” refers to approaching customers with whom there has been no previous contact.

Answer 24

True

Question 25

True/False: Sales "objections" are often raised by a prospect to avoid having to make a decision.

Answer 25

True

Question 26

True/False: Equipment or materials you already own and will use in your business, are considered to be part of the start up costs of the business.

Answer 26

True

Question 27

True/False: A corporation may be registered with either the federal government or a provincial government.

Answer 27

True

Question 28

True/False: Bookkeeping and accounting are interchangeable terms.

Answer 28

False

Question 29

True/False: Almost all businesses have some seasonal fluctuation in sales.

Answer 29

True

Question 30

A business where the owner is officially a "legal shareholder" is called a:

Answer 30

corporation.

Question 31

The simplest and cheapest legal form of business registration is a:

Answer 31

sole proprietorship.

Question 32

Businesses similar to your own, in terms of size, location, services and the customers they are pursuing would be classified as:

Answer 32

direct competition.

Question 33

People or businesses 'most likely' to purchase your product or service are known as your:

Answer 33

target market.

Question 34

Effective marketing delivers a strong message using an appropriate:

Answer 34

medium.

Question 35

By deducting your personal liabilities from your personal assets you determine your:

Answer 35

net worth.

Question 36

The M in SMART goals stands for:

Answer 36

measurable.

Question 37

A "profitable" business can still go bankrupt because of problems with:

Answer 37

cash flow.

Question 38

When business revenue equals business expenses, the company has reached the:

Answer 38

break even point.

Question 39

Assets pledged to secure a loan are known as:

Answer 39

collateral.

Question 40

True/False: It is much easier to lower your price than it is to raise your price.

Answer 40

True.

Question 41

Name the funding sources:

Answer 41

``` Personal Resources Love Money Government Programs Financial Institutions Partners and/or Investors Alternate Sources ```

Question 42

What is the most common method of financing a micro business?

Answer 42

Personal resources.

Question 43

The best funding comes from the:

Answer 43

positive cash flow.

Question 44

Rolling profits back into the business can reduce or even eliminate the need to seek:

Answer 44

funding from outside sources.

Question 45

Love money is from:

Answer 45

friends and family.

Question 46

True/False: You should write up a basic agreement outlining the terms and conditions of this funding and have all relevant parties sign it.

Answer 46

True.

Question 47

True/False: It is a popular misconception that there are hundreds of government programs out there throwing money at new business start ups.

Answer 47

True.

Question 48

True/False: Financial institutions are primarily interested in the owner/operators ability to repay the loan.

Answer 48

True.

Question 49

True/False: The majority of small business loans do not require personal guarantees from business owners.

Answer 49

False.

Question 50

True/False: The higher the risk, the higher the interest rate.

Answer 50

True

Question 51

What are the 5 C's of Credit

Answer 51

``` Character Capacity Collateral Capital Credit History ```

Question 52

Having partners and/or investors are referred to as

Answer 52

equity financing.

Question 53

True/False: Partnerships, in any form, are the riskiest of new business start up formats.

Answer 53

True

Question 54

No partnership, under any circumstances, should begin operation without a written:

Answer 54

partnership agreement.