Exam 6: Small Business and Entrepreneurship: Economic Rocket Fuel

A) They don't have well-developed property rights, making it much riskier to form new businesses.
B) These nations do not have well-developed markets.
C) They have restrictions that prohibit private ownership of businesses in most sectors of the economy.
D) They have liberal unemployment benefits and provide employees with a high level of employment protection.

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A) Uganda
B) Canada
C) Peru
D) Jordan

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A) one-third
B) one-quarter
C) one-tenth
D) one-half

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A) a venture capitalist
B) a necessity entrepreneur
C) a frictional worker
D) an intrapreneur

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A) vendors and suppliers
B) investors and lenders
C) customers
D) small business administrators

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A) There is more independence.
B) There is more opportunity for creativity.
C) If the national chain suffers, it doesn't affect the franchisee.
D) The initial purchase price can be very steep.

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Virtually all entrepreneurs have the following qualities: vision,self-reliance,energy,confidence,tolerance of uncertainty,and tolerance of failure. ·Vision.Most entrepreneurs are wildly excited about their own new ideas,which they seem to draw from a bottomless well.Entrepreneurs find new solutions to old problems,and they develop brand-new products that consumers didn't even know they needed.Entrepreneurs stay excited about their ideas,even in the face of skepticism on the part of their friends and relatives. ·Self-reliance.New business owners typically need to do everything themselves,from getting permits,to motivating employees,to keeping the books-all in addition to producing the product or service that made them start the business in the first place.Self-reliance seems to come with an internal locus of control,or a deep-seated sense that the individual is personally responsible for what happens in his or her life.When things go well,people with an internal locus of control feel that their efforts have been validated.When things go poorly,those same people feel that they need to do better next time.This sense of responsibility encourages positive action.In contrast,people with an external locus of control rely less on their own efforts,feeling buffeted by forces such as random luck and the actions of others,which they believe will ultimately control their fate. ·Energy.Entrepreneurs simply can't succeed without an enormous amount of energy.Six or seven 12-hour workdays are not atypical in the start-up phase of running a business.A recent survey found that today's small business owner works an average of 52 hours per week,with 57% working at least six days a week,and more than 20% working all seven. ·Confidence.Successful entrepreneurs typically have confidence in their own ability to achieve,and their confidence encourages them to act boldly.A recent study for the Small Business Administration's Office of Advocacy confirmed that entrepreneurs are typically overconfident regarding their own abilities.As a result,they're willing to plunge into a new business,but they don't always have the skills to succeed. ·Tolerance of uncertainty.More often than others,entrepreneurs see the world in shades of grey,rather than simply black and white.They tend to embrace uncertainty in the business environment,turning it to their advantage rather than shying away.Uncertainty also relates to risk,and successful entrepreneurs tend to more willingly accept risk-financial risk,for instance,such as mortgaging their home for the business,and professional risk,such as staking their reputation on the success of an unproven product. ·Tolerance of failure.Even when they fail,entrepreneurs seldom label themselves losers.They tend to view failure as a chance to learn,rather than as a sign that they just can't do it (whatever "it" may be for them at any given moment).Failure can actually be an effective springboard for achievement. Students' answers will vary on the qualities each may or may not possess.Clearly,students who believe they possess most of these characteristics are likely to view themselves as budding entrepreneurs.On the other hand,students who believe that they are lacking several of these characteristics are likely to judge that entrepreneurship isn't for them.

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A) He obviously needs to develop a stronger external locus of control before leaving his corporation.
B) He is likely to find franchising an attractive option.
C) He is unlikely to find a small business opportunity that suits his needs.
D) He would likely find that starting a business from scratch is the best way to go.

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A) It is a good idea to avoid advice from business owners who have recently failed.
B) Reliable sources of information are disappointingly scarce.
C) The best approach is to get hands-on experience by working at least seven years for someone else in the field before starting your own business.
D) Canada Business, industry associations, blogs, and websites are only a few of the many sources that are available.

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D

A) They put too much faith in the ability of others within their business.
B) They have trouble learning from past mistakes.
C) They are unwilling to accept personal responsibility for their actions.
D) They feel that the success or failure of their companies is largely the result of their own actions and decisions.

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D

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A) Don't worry about your lack of business experience and limited business skills. Entrepreneurs can make up for a lack of skills with enthusiasm and hard work.
B) Hang in there. If a business is going to fail, it almost always happens in the first year. If you can stick it out for more than a year, you'll be on your way to success.
C) Since your company will be small and new, it's important to impress your customers. Spend a lot of money on upscale offices and state-of-the-art equipment to create a "wow" factor.
D) Find a market segment that you can profitably serve but which is too small to attract larger companies.

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A) with commercial loans
B) by equity stakeholders
C) with family money
D) with the owner's personal savings

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