Small Business Management Chapter 6 Exam Questions with Verified Solutions (Graded A+)

Small Business Management Chapter 6 Exam Questions with Verified Solutions (Graded A+) Entrepreneur - Answers key factors: a real desire to be your own boss and developing a good initial plan. Having Special skills and abilities and coming up with innovative ideas. Advantages: Good opportunities for entrepreneurship through small business ownership. Entrepreneurship - Answers . Young people who have creative ideas and turn them into business each year. . Takes unique skills and personal characteristics to develop a new idea for a product or service. . A person must also have both the confidences and capability to turn it into a business. . Own their first business while in their teens. . More business owners are male, but young entrepreneurs are more equally divided between male and female. . Important to understand of business operation and management. Not always from the college degree. . May work in a business or ask for help and advice from an experienced business owner. Read and study on their own as well as in school. . Personal traits: energetic, persistent, self-confident, creative, reliable, strong integrity, problem- solving skills. . Key part of the U.S. economy. . One in ten of all Americans 18-64 years old is involved in some type of entrepreneurship activity. . Over 500,000 new business are created annually. . Risky ( as many small businesses close as begin each year. . 40 % of a new business owners run their own businesses with no help. Other 60% have one or more employees. . Most of the money needed to start a new business comes from the entrepreneur and his or her family and friends. . Over 50% lend financial support for the business of a family member or relative. 29% give money to neighbors and friends. 8% invest in business started by work colleagues. Venture Capital - Answers . is money provided by large investors to finance new products and new business that have a good chance to be very profitable. . Late 1990's many venture capital companies were formed. Supplied over $100 billion each year to new businesses. . Many of the businesses receiving those funds were e-commerce and high tech start-ups. . When businesses fail the amount of venture capital declined to less than $20 billion in 2003. Over 2,000 companies receive venture capital each year. ( People think that new businesses provide a good investment opportunities. The other sources of financing for new businesses are loans from banks and financial institutions and credit given by businesses that sell products and services to the new business. . New and Small businesses produces a large volume of goods and services for the economy. . Single owner and no staff account for over $600 billion in sales annually. Responsible for nearly half of the US GDP each year. 55% of all innovative products and services developed. Stable Income - Answers Benefits: personal control over your own business. Personal sanctification if your idea develops into a successful, profitable company. New Business Opportunities - Answers . American private enterprise economy promotes innovation and new business development. . Individuals are able to take the risk to start a new business. Compete with other businesses to sell their products and services and make a profit. . Consumers are always looking for new and better choices to meet their wants and needs. . Open to prospective entrepreneurs. Begins with the creation of new or improved products and services. Inventors - Answers .often develop innovations. Might become the basis for a new business. . Sell them to another company for development and sale. EX: Apple personal computer developed by Steven Jobs and Stephen Wozniak and Post-it Notes created by Arthur Fry and Spencer Silver. . Recent Innovations that may become successful products include a miniaturized artificial heart, a virtual computer keyboard, and an optical camouflage system that allows people wearing a special reflective material to seem to disappear. . Innovators- create new services that become the basis for a business. . Not all entrepreneurship opportunities emerge from those types of inventions and innovations. Many come from an improved design, more effective procedures, or greater attention to quality. Entrepreneurs are creative problem-solvers to improve products and services. Recognizing Risks - Answers Developing a successful new business isn't easy. Many more new businesses fail than succeed. The time and energy required of new business owners is much higher than most people expect. National Federation of Independent Business - Answers . reports that of all new business, about one-third are profitable, one-third don't make a profit but continue to operate, and the remaining third lose money. . Over a ten year period, well over 50% of all new businesses are discontinued. (Reasons: lack of adequate capital, low sales, higher than expected expenses, competitive pressure, an owner unprepared to manage a growing business, operations requiring more time than the owner is willing to commit.) Be Aware of... - Answers . Many risks they may be face and prepare for them. Most entrepreneurs are willing to face risks. Work hard to make their business succeed. . Many entrepreneurs have seen one or more of their businesses ideas fail before they are able to grow a successful company Small Business Ownership - Answers . Business viewed as very large corporations. . Companies employ thousands of people with locations all over the country and the world. . The greatest % of business in the US is small Businesses. Small Businesses Administration - Answers a Small Business is an independent business with fewer than 500 employees. . 99.7% of the roughly 24 million U.S. business are small business. . A more specific description is: The owner is usually the manager, It operates in one or very few locations, It typically serves a small market, It is not dominant in its field. . Most of those business are run on a part-time basis from the owner's home. 15 million businesses are set up as proprietorship. . No matter how you identify small businesses, they are by far the greatest number of businesses operating today. . Is a government agency that helps small business owners develop business plans and obtain financing and other support for their companies. SBA sponsors the Service Corps of Retired Executives are retired local businesses people who volunteer their services to counsel and mentor new business owners.