231.After selling his software business for a sizeable profit, software
231.After selling his software business for a sizeable profit, software engineer Gus Greene decided to try something different. He would become a general contractor on a large condo development in an upcoming area of Atlanta, Georgia. He invested several million and then borrowed another $30 million (or 75% of the project cost) from a lending institution. He based his borrowing risk on the assumption that the housing market would continue to appreciate for several years to come. As the housing market began a free-fall in early 2008 and continued into 2010, Gus saw his business crashing around him. Sales were very meager and the bank wanted its money back. Which of the following statements might best describe the reason Gus' business failed?
A. Although Gus took some risk, it wasn't enough. In business, it is "more risk, more expected reward!"
B. The bank let Gus down. It should not have lent him that much money.
C. He should have designated himself as a passive investor. Therefore, his investment would not be in jeopardy.
D. Gus went into the business with very little knowledge about the industry or the market.
232.Jennifer, a talented photography major started a corporate photography business. She planned to solicit jobs from large corporations who needed pictures for their annual reports and websites. Although filling a unique niche, Jennifer needed the security that the business would thrive and that she would earn enough to support herself and her child. She also hoped that she would spend less time each day calling on potential clients and more time doing the actual shoots. As her small business consultant, which of the following suggestions would you have for Jennifer?
A. Jennifer should either take the risk necessary to develop a small business, or go to work for someone else.
B. In the beginning, it's doubtful that Jennifer will realize ease of entry, security, and good profits. She needs to make plans in the event that one or more of these does not materialize quickly.
C. Photographers can take pictures of a multitude of things. It's probably not good strategy to limit her business to only photographing the needs of large corporations.
D. Jennifer should definitely make time for herself each day so that she does not experience burn-out. If she plans well, leaping into her own business will provide with her several hours of unstructured time each day where she can perfect her craft even more.
233.Dr. Smiley White just graduated from dental school. He is hoping to acquire the necessary funding to start his own dental practice. One advantage of this type of business is:
A. above average opportunity to borrow funds at a high interest rate
B. nearly unlimited growth potential
C. the service is individualized and not easily mass-produced
D. very low startup costs
234.Jayne started a small bakery in a resort town. She was certain she had the ideal location, with plenty of hotels and inns within walking distance of her establishment. She planned to use her grandmother’s recipes, using only the finest ingredients for her upscale resort customers. During the first week of business, she was disappointed with lackluster sales. When she drove past the regular breakfast style restaurants and even the Starbucks™, she noticed they were rather bustling. Jayne most likely:
A. Did not publicize in the appropriate places.
B. Underestimated the competition.
C. Should have considered weather conditions before assuming that her business would be vibrant.
D. Did not consider that small businesses never get the name recognition in resort towns that larger businesses and franchises realize.
235.John, James, and Frank wanted to open J2F Sports Bar that offers unique brands of beer, weekend entertainment, and a limited menu. In one of the preliminary meetings, James presented a list of reasons that small businesses fail. Although many of the ideas on this list were applicable to many types of business, one challenge pertained specifically to the restaurant and bar business. The challenge he referred to was:
A. Underestimating how much time it will take to build a market.
B. Borrowing money without planning just how and when to pay it back.
C. Carrying habits of personal extravagance into the business.
D. Some of the easiest businesses to start have the least growth and greatest failure rate.
236.When Krystal Ginger graduates from culinary school she dreams of opening her own Asian fusion restaurant. Her other passion is skiing in Colorado, where she schedules four or five trips each year. As her small business advisor, you believe it necessary to provide her with information that will help her make good business decisions. Which of the following would be helpful for Krystal to know?
A. Restaurants are relatively easy businesses to start, but are labor intensive and also have the greatest failure rate.
B. Restaurants are not the easiest type of business to start, but once you get it going, you will have plenty of time for skiing.
C. Most restaurant owners get rich if they open their own, independent restaurant as opposed to starting a franchised operation.
D. Franchised operations will take less time on the part of the owner than a regular independently owned operation. If she opens a franchise, she will have more time for creativity in the business, and more time for skiing too.
237.A small business management course at a community college may offer entrepreneurs an opportunity to:
A. meet with experienced entrepreneurs and learn from their advice.
B. try out ideas on a computer simulation before risking real time and money.
C. listen to a qualified instructor solve all of the problems of small business owners.
D. be part of a group that will include angel investors.
238.One way to get into business is to buy an existing company. The value of the business used to determine a fair purchase price is based on:
A. the prospects for business competition.
B. the current owner's retirement plan.
C. the amount of government contracts the company has.
D. the value of what the business owns, what it earns, and what makes it unique.
239.Conversations with people who start their own business often reveal that:
A. many small business owners got their entrepreneurial idea from a previous job.
B. it is unusual for experienced corporate managers to start their own businesses.
C. the most successful entrepreneurs often start their business ventures right after high school.
D. most small business owners begin with significant personal wealth.
240.For prospective entrepreneurs, enrolling in an introduction to business or small business management course offered through their community college:
A. is likely to be wasted time since college courses tend to be too theoretical.
B. can be helpful by offering them an opportunity to meet experienced small business owners.
C. serves as supplementary information, only after starting their business venture.
D. seldom provides you with information to help make small business decisions.