About 400,000 new firms a year are started by teams, with about 320,000 started by

1 Chapter 02 Small Business Entrepreneurs: Characteristics and Competencies True / False Questions 1. The majority of new businesses are run by a solo entrepreneur. True False 2. One way entrepreneurs display passion is by being persistently focused on the business. True False 3. Opportunistic planners always plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. True False 4. Habit-based planners don't plan, and they don't even tend to react to changes in their environments. True False 5. Most businesses run by teams are not family related. True False 6. Like every person, every small business is unique. There is no way to predict how the company will progress in the growth process. True False 2-1

2 7. The competency suggested by exchange relates to the organizational and business processes of a firm called basic business competency. True False 8. Skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business are called opportunity competencies. True False 9. With over 8.3 million businesses owned by women, they account for a quarter of small business revenue nationally. True False 10. Workers are opting for early retirement as corporations merge, downsize, and reorganize. True False 11. Entrepreneurs get used to a do-it-yourself approach, which can be especially trying for second career entrepreneurs. True False 12. Succession plans deal with the people who will take over, what roles they will fill, and what supports they will receive. True False 13. One way to maximize communication in the succession process is to create a family council. True False 14. In family-owned businesses, the board of directors can only be comprised of family members. True False 2-2

3 15. Several models exist for the life cycle of the small business firm. Each divides the stages a bit differently. True False 16. The slowest growing sector of all U.S. businesses is women-owned businesses. True False 17. Access problems for women- and minority-owned small businesses crop up most often as discrimination in marketing. True False 18. For corporations, certification for businesses owned by women or minority is handled by organizations that are not affiliated with the government or big business. True False 19. About a third of the second career types who return to work decide to become self-employed. True False 20. One of the major issues identified for second career entrepreneurs is keeping personal finances out of the business. True False Multiple Choice Questions 2-3

4 21. This stage of the business life cycle occurs once the firm is established in its market. A. The success stage. B. The emergence stage. C. The existence stage. D. The resource maturity stage. 22. Which of the following statements concerning family businesses is correct? A. Family members often work in the business but may not sit on the council. B. Family businesses employ about 20 percent of America's total workforce. C. Most top managers at family firms tend to stay in their positions much longer than those at nonfamily firms. D. Family businesses plan for succession using a critical-point plan. 23. Which of the following is one of the most common behaviors found in successful entrepreneurs? A. Preemption B. Frigidness C. Personalization D. Passion 24. Which of the following is best thought of as a type of learned optimism in successful entrepreneurs? A. Apathy B. Professionalization C. Perseverance D. Cognition 2-4

5 25. The majority of businesses run by teams are comprised of: A. five or more members. B. one member. C. three members. D. two members. 26. The problem behavior of trying the same action repeatedly without learning is called. A. perseveration B. prevention focus C. effectuation D. critical observation 27. Regulatory focus is a mix of two internal focuses, focus and focus. A. effectuation; comprehension B. comprehension; prevention C. effectuation; promotion D. promotion; prevention 28. About 400,000 new firms a year are started by teams, with about 320,000 started by: A. solo entrepreneurs. B. family teams. C. unrelated business associates. D. five or more team members. 2-5

6 29. When starting a business, more women choose industries that tend to have lower average sales levels. A. construction B. financial C. technology D. service 30. Which of the following approaches yields better results in an established industry or a poor one? A. External focus B. Effectuation focus C. Prevention focus D. Promotion focus 31. Which of the following approaches yields better results in richer, dynamic, uncertain environments or industries? A. Promotion focus B. External focus C. Effectuation focus D. Prevention focus 32. Which of the following was not listed as a time management technique in the textbook? A. 123 Prioritize B. Delegate C. Perseverance D. Strategize 2-6

7 33. Christopher is a hard-working entrepreneur who looked into all the details of his small gaming software business. He focused on all aspects of the business from the initial launch, promotion, and marketing aspects to the final set up. He finds planning convenient and works according to a plan. Christopher is a(n). A. opportunistic planner B. habit-driven planner C. reactive planner D. comprehensive planner 34. Entrepreneurs who develop plans focused on the most important aspect of the business first are known as. A. critical-point planners B. opportunistic planners C. comprehensive planners D. reactive planners 35. Which among the following is a critical-point planner? A. Amanda does not have a very long-term approach to planning and she plans only for those business aspects that are of paramount importance. B. Andrew looks at all aspects of the business, from launch to the complete working of it. C. Cathy looks for a good chance to achieve her goal and acts according to a routine. D. Joshua acts on what he has been doing and does not believe in planning. 2-7

8 36. Entrepreneurs who start with a goal instead of a plan and look for a chance to achieve it are known as. A. reactive planner B. critical-point planner C. comprehensive planner D. opportunistic planner 37. Which of the following would have a very short-term approach to planning? A. Individuals who look for opportunities to achieve their goal, even if the opportunity isn't the one related to their original goal. B. Individuals who develop long-range plans for all aspects of the business and act based on the plans they've developed. C. Individuals who plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. D. Individuals who are comfortable with planning and act based on the plans they have developed. 38. are completely passive, waiting for cues from the environment to determine what actions to take. A. Opportunistic planners B. Critical-point planners C. Comprehensive planners D. Reactive planners 2-8

9 39. The successful entrepreneurial personality exhibits certain types of business-related expertise which the text condenses into five competencies. Which of the following statements is NOT true about these competencies? A. Research shows these competencies can be learned through training. B. The amount of expertise is what distinguishes the more successful from the less successful firms. C. Determination competencies are activities, knowledge, and skills specific to businesses in a particular industry. D. Opportunity competencies are the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business. 40. When starting a business using entrepreneurial teams, which number of team members is the most common? A. Two team members B. Three team members C. Four team members D. Five or more team members 41. Which of the following characterizes a habit-based planner? A. They take a long-term view, develop long-range plans for all aspects of the business, are comfortable with planning, and act based on the plans they've developed. B. They plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. C. They are completely passive and generally wait for cues from the environment to determine what actions to take. D. They don't plan, and they don't tend to react to changes in their environments. 2-9

10 42. Which of the following planners do best in terms of getting a start-up launched, keeping it going, and making a living from it? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Reactive planners 43. Which of the following kinds of planners generally tend do very poorly in business, even if they do manage to get their firms started? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Critical-point planners 44. The extent to which a firm meets or exceeds the standard business practices for its industry is known as. A. bootstrapping B. professionalization C. effectuation D. Perceived Organizational Support (POS) 45. A business action that has been widely adopted within an industry or occupation is known as. A. best business practice B. specialized business professionalization C. standard business practice D. expert professionalization 2-10

11 46. Which of the following refers the three levels of professionalization? A. Low, medium, and high B. Company, industry, and global C. Personal, team, and organizational D. Expert, specialized, and minimalized 47. Which of the following is not listed as a challenge for the late career entrepreneur? A. access to financial backing B. adjusting to the entrepreneurial life C. keeping personal finances out of the business D. reestablishing self-confidence 48. Expert business professionalization is a situation that occurs: A. when only the most critical aspect of business is met. B. when most aspects of the business meet or exceed the industry's standards. C. when one or two aspects of the business are met. D. when none of the business can achieve the industry standard. 49. A situation that occurs when businesses have founders or owners who are passionate about one or two of the key business functions, such as sales, operations, accounting, finance, or human resources is known as. A. expert business professionalization B. specialized business professionalization C. minimized business professionalization D. maximized business professionalization 2-11

12 50. The key difference between a family council and a board of directors is that: A. the council is comprised of unrelated members while the board is comprised of family members. B. the board of directors maximizes communication while the council works on unique company problems. C. the council is to keep the family involved while the board is focused on running the business. D. the board can seek legal advice while the council gathers legal advice from the board. 51. Which of the following is true with regard to minimalized business professionalization? A. The entrepreneur does nearly everything in the simplest way possible. B. The entrepreneur is passionate about one or two of the key business functions. C. The entrepreneur meets or exceeds the industry's standards. D. The entrepreneur brings the highest levels of trust among customers. 52. Competencies are defined as: A. forms of business-related expertise. B. forms of personal development model. C. different forms of self-assessment. D. different forms of personality theories. 53. Getting the business organized and registered is an example of competency. A. opportunity B. resource C. industry-specific D. boundary 2-12

13 54. The competency suggested by relates to the organizational and business processes of a firm. A. intention B. resource C. exchange D. boundary 55. This stage of the business life cycle is characterized by a stable level of sales and profits over several years. The functional areas, the market, and the products or services are all being dealt with consistently and efficiently. A. The success stage. B. The existence stage. C. The resource maturity stage. D. The takeoff stage. 56. Activities common to all businesses such as sales, operations (also called production), accounting, finance, and human resources are known as. A. key business functions B. competencies C. business accreditations D. business-related expertise 2-13

14 57. Certain businesses demand higher safety related rules. For example, window cleaners that specialize in high-rise buildings have certain rules and safety protocols. These specific rules would comprise the. A. specialized business professionalization B. infant-industry argument C. industry-specific knowledge D. key business functions 58. The ability or skill of the entrepreneur at finding expendable components necessary to the operation of the business such as time, information, location, financing, raw materials, and expertise is known as. A. basic business competencies B. resource competencies C. opportunity competencies D. determination competencies 59. Which of the following stages of the business life cycle do most small business never go through? A. The takeoff stage. B. The emergence stage. C. The existence stage. D. The entrepreneur stage. 2-14

15 60. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's basic business competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having prior knowledge of the house-painting business 61. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following provides industry-specific knowledge to martin? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin getting his company registered D. Martin having worked in a house-painting company before starting his own business 2-15

16 62. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's resource competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin setting up the business's office in his garage D. Martin having prior knowledge of the house-painting business 63. Martin runs a successful house painting business. He runs his business out of his garage, which he converted into office space. Martin, who had previously worked as a house painter in another company had good knowledge of how to run a house-painting business. After a storm destroyed public properties in his neighboring town, he contracted with the mayor of that town to fulfill any painting jobs required during the town's reconstruction. In order to meet this demand and expand business, he hired more house painters. According to the BRIE model, which of the following is an example of Martin's opportunity competency? A. Martin hiring more house painters to meet demand B. Martin contracting with the mayor to help paint during reconstruction C. Martin setting up the business's office in his garage D. Martin deciding to set up his own business after quitting his previous job 2-16

17 64. Which of the following deals with the actual process of exploiting an opportunity for profit? A. Resource B. Exchange C. Intention D. Boundary 65. Which of the following relates to the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business? A. Determination competencies B. Basic business competencies C. Resource competencies D. Opportunity competencies 66. Which of the following comprises a family business? A. A firm in which two or more families own a stake in a company but with no authority for daily management B. A firm in which no family members are involved in the management of the business C. A firm in which two or more families are involved in the occasional management of the business D. A firm in which one family owns a majority stake 67. Which of the following is a major economic force, employing 58 percent of America's total workforce? A. Public companies B. Government enterprises C. Family businesses D. International assignments 2-17

18 68. Which of the following is true as an advantage of businesses run by a group of tight-knit family members? A. Succession issues don't crop up in family-owned businesses. B. Role conflicts never happen in family owned businesses. C. Board of members are not used in family-owned businesses. D. Communication-based integration is most effective in family-owned business. 69. Which of the following challenges is typical to family businesses? A. Motivation and nepotism B. Role conflict and succession C. Succession and finances D. Leadership and finances 70. Which of the following best describes the problem that arises when people have multiple responsibilities and each makes different demands on them? A. Role conflict B. Succession issues C. Strategizing challenges D. Leadership constraints 71. Which of the following is the most effective approach for avoiding role conflict? A. Keep family issues out of the family business B. Keep separate rules for family members and employees C. Have constant role reversals D. Have decisions narrowed down for family members based on family necessities 2-18

19 72. Which of the following problems is closely related to role conflict? A. Resource shortage B. Lack of skills C. Shortage of time D. Perseverance 73. The organizing process to help make the most efficient use of the day is known as. A. promotion focus B. competence C. certification D. time management 74. Only of family-owned businesses survive beyond the first generation. A. three-quarters B. one-half C. one-fourth D. one-third 75. refers to the process of intergenerational transfer of business. A. Role conflict B. Succession C. Certification D. Access 2-19

20 76. Which of the following statements is true about a family council? A. It helps to maximize communication in the succession process of family businesses. B. Its main function is complete the key business activities of a family business. C. It includes family members with immediate interests in the business and a significant number of non-family members. D. It is not a good forum for grappling with issues like role expectations, commitment, and personal responsibility. 77. Which of the following organizations tracks experts in family business? A. Association for Family Business Foundations B. Association for Small Business Entrepreneurs C. Family Business Management Institute D. Family Firm Institute 78. Which of the following statements about entrepreneurial teams is true? A. Most entrepreneurial teams are family related. B. The majority of new businesses have an entrepreneurial team of a minimum five co-owners. C. The trend is toward even more businesses being developed by a solo entrepreneur. D. Only 10 percent of teams are spouses or life partners working together. 79. Which of the following is true with regard to women in small businesses? A. Women-owned businesses are the slowest growing sector of all U.S. businesses. B. Women-owned firms accounted for 25 percent of small business revenue nationally. C. Women prefer less-risky firms, which also tend to be firms with lower returns. D. Women prefer more high-tech firms, as well as firms where technology is central to the business than men. 2-20

21 80. Qualification for requires certification as a business owned and operated by a woman or a minority. A. set-asides B. codicils C. product liability insurance D. professional liability insurance 81. Which of the following is true with regard to minorities in small businesses? A. Minority-owned firms have not grown much in recent years and are a slow growing sector. B. The establishment of both public and private funding and networking initiatives has helped to level the business playing field for minority entrepreneurs. C. There is a phenomenal decline in the number of minority entrepreneurs despite the growth of racial and ethnic groups within the U.S. population. D. Minority entrepreneurs do not face the challenge of access anymore. 82. The two fastest growing minority groups that represent the largest segments of minority business owners are: A. Hispanics and African Americans. B. Hispanics and Pacific Islanders. C. Asians and African Americans. D. Asians and Pacific Islanders. 83. The challenge of refers to when woman or minority-owned businesses are simply excluded from the opportunities offered to firms owned by white males. A. consistency B. access C. flexibility D. mutuality 2-21

22 84. Identify the simplest form of discrimination with regard to women and minority entrepreneurs within the U.S. population. A. Certification B. Role conflict C. Access D. Collusion 85. Access problems for women- and minority-owned small businesses crop up most often as: A. differences in labeling. B. discrimination in financing. C. problems involved in business contacts. D. the presence and absence of certain skills. 86. Government contracting funds which are earmarked for particular kinds of firms, such as small businesses, minority-owned firms, women-owned firms, and the like, are known as. A. collective investment scheme B. cooperative fund C. certified items D. set-asides 87. An examination based acknowledgement that the firm is owned and operated as specified is known as. A. performance analysis B. certification C. multi source assessment D. homologation 2-22

23 88. Which of the following statements about certification with regard to women- or minority-owned small business is true? A. Most corporate certification programs require a business to be in operation at least five years. B. Certification is for every women or minority-owned small business. C. For those businesses that qualify, certification provides a ready means of access to opportunity and to networks of businesses and government agencies. D. For corporations, certification is handled by organizations that are affiliated with the government or big business. 89. entrepreneurs are people who begin their business after having retired or resigned from work in corporations at or after the age of 50. A. Occasional B. Helical C. Second career D. Veteran 90. Which of the following is an example of a second career entrepreneur? A. Cynthia, a 24-year-old, starting a consultancy business after graduating from college. B. Mark, a 30-year-old, starting a new business venture in stock trading after the failure of his previous business in real estate. C. Ursula, a 60-year-old, starting a business in shrimp trading after being retired for 5 years. D. Timothy, a 62-year-old, joining a real estate agency as a sales representative, after being retied for 4 years. 2-23

24 91. Which of the following is one of the prime challenges faced by most second career entrepreneurs? A. Keeping personal finances out of the business B. Avoiding overconfidence C. Lacking resources D. Deciding whether to return to work Essay Questions 92. Define the five Ps of entrepreneurial behavior. 93. Name and briefly explain the stages of the entrepreneurial life cycle. Why is it important to understand this cycle? 2-24

25 94. What is the difference between key business functions and industry-specific knowledge? 95. Outline methods or techniques for time management. 96. Discuss the challenge of succession faced by family businesses. 2-25

26 97. What are the challenges faced by team entrepreneurs? 98. Describe the challenges faced by women and minorities in small businesses. 99. Compare determination competencies to opportunity competencies. 2-26

27 100.Who are referred to as the second career entrepreneurs? 101. Explain the challenges faced by second career entrepreneurs? 2-27

28 Chapter 02 Small Business Entrepreneurs: Characteristics and Competencies Answer Key True / False Questions 1. The majority of new businesses are run by a solo entrepreneur. FALSE The majority of new businesses have a team of two or more co-owners, and the trend is toward even more businesses being developed by teams of entrepreneurs. AACSB: Teamwork Learning Objective: Recognize the special nature of entrepreneurial teams. Topic: Entrepreneurial Teams 2. One way entrepreneurs display passion is by being persistently focused on the business. TRUE Passion is displayed in three ways: (1) by looking at the challenges of the business in a creative way, (2) by being persistently focused on the business, and (3) by being absorbed by the tasks and concerns of the business. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 2-28

29 3. Opportunistic planners always plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. FALSE Opportunistic planners generally start with a goal and look for opportunities to achieve it. Once they find a good opportunity, even if it isn't the one related to their original goal, they act on it, so it is very short term in orientation. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 4. Habit-based planners don't plan, and they don't even tend to react to changes in their environments. TRUE Habit-based planners do not really plan at all because their actions are dictated by their routines. They do today what they did yesterday. They don't plan, and they don't even tend to react to changes in their environments. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 2-29

30 5. Most businesses run by teams are not family related. FALSE In fact 53 percent of teams are spouses or life partners working together with another 18 percent having different arrangements of family members working together. Only 15 percent of teams are composed of unrelated business associates. AACSB: Teamwork Learning Objective: Recognize the special nature of entrepreneurial teams. Topic: Entrepreneurial Teams 6. Like every person, every small business is unique. There is no way to predict how the company will progress in the growth process. FALSE Like every person, every small business is unique. But just as we all go through childhood and adolescence on the way to adulthood, so do entrepreneurs' small businesses. There is a lot of predictability in this growth process, and knowing the developmental stages of the business life cycle can help you better understand your business. Learning Objective: Recognize the stages of development entrepreneurs and their firms go through. Topic: The Entrepreneurial Life Cycle 2-30

31 7. The competency suggested by exchange relates to the organizational and business processes of a firm called basic business competency. FALSE The competency suggested by boundary in BRIE theory relates to the organizational and business processes of a firm called basic business competency. Learning Objective: Assess the operational competencies of the successful entrepreneur. Topic: Entrepreneurial Operational Competencies 8. Skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business are called opportunity competencies. TRUE Exchange deals with the actual process of exploiting the opportunity for profit which is a fancy way of saying "making sales." The competencies that make this work are called opportunity competencies, which include identifying an opportunity, a product, or service idea that is likely to lead you to a profit and is ideally distinctive to your firm and, you hope, hard for others to copy. Learning Objective: Assess the operational competencies of the successful entrepreneur. Topic: Entrepreneurial Operational Competencies 2-31

32 9. With over 8.3 million businesses owned by women, they account for a quarter of small business revenue nationally. FALSE Although in 2012, there were 8.3 million businesses owned by women, women-owned firms accounted for only 4 percent of small business revenue nationally. AACSB: Diversity Learning Objective: Identify the challenges women and minority business owners face. Topic: Women and Minorities in Small Business 10. Workers are opting for early retirement as corporations merge, downsize, and reorganize. TRUE Firms are offering attractive retirement packages to encourage employees to voluntarily leave the organization. Workers are opting to accept generous offers to retire early. Learning Objective: Describe the situation of people who become second career entrepreneurs. Topic: Second Career Entrepreneurs 11. Entrepreneurs get used to a do-it-yourself approach, which can be especially trying for second career entrepreneurs. TRUE All entrepreneurs get used to a do-it-yourself approach, and this is a challenge for everyone, but it can be especially trying for second career entrepreneurs. 2-32

33 AACSB: Diversity Learning Objective: Describe the situation of people who become second career entrepreneurs. Topic: Second Career Entrepreneurs 12. Succession plans deal with the people who will take over, what roles they will fill, and what supports they will receive. TRUE Succession plans deal with the people who will take over, what roles they will fill, and what supports (such as training, outside assistance, voting power, resources control) they will receive. Problems arise when there are no successors available within the family. Learning Objective: Describe the challenges of family business owners. Topic: Family Businesses 13. One way to maximize communication in the succession process is to create a family council. TRUE One way to maximize communication in the succession process is to create a family council. A family council includes family members with immediate interests in the business (spouse, sisters and brothers, older children, etc.). The focus of council meetings is the business-family relationship. The meetings can also be a good forum for grappling with issues like role expectations, commitment, and personal responsibility. Learning Objective: Describe the challenges of family business owners. Topic: Family Businesses 2-33

34 14. In family-owned businesses, the board of directors can only be comprised of family members. FALSE The key difference between a family council and a board of directors is that the function of the family council is to keep the family involved while the board is focused on running the business. The board includes significant nonfamily membership. Learning Objective: Describe the challenges of family business owners. Topic: Family Businesses 15. Several models exist for the life cycle of the small business firm. Each divides the stages a bit differently. TRUE All models have the same general ideas. Learning Objective: Recognize the stages of development entrepreneurs and their firms go through. Topic: The Entrepreneurial Life Cycle 16. The slowest growing sector of all U.S. businesses is women-owned businesses. FALSE Women-owned businesses are one of the fastest growing sectors of all U.S. businesses. Between 1997 and 2012, the number of private businesses with at least 51 percent female ownership increased by 54 percent, while the rate for firms overall was 37 percent. AACSB: Diversity 2-34

35 Learning Objective: Identify the challenges women and minority business owners face. Topic: Women and Minorities in Small Business 17. Access problems for women- and minority-owned small businesses crop up most often as discrimination in marketing. FALSE Access problems for women- and minority-owned small businesses crop up most often as discrimination in financing. This means that they may not be given the same access to funds or contracting opportunities that white male-owned firms are given. AACSB: Diversity Learning Objective: Identify the challenges women and minority business owners face. Topic: Women and Minorities in Small Business 18. For corporations, certification for businesses owned by women or minority is handled by organizations that are not affiliated with the government or big business. TRUE For corporations, certification is handled by organizations that are not affiliated with the government or big business, such as the National Minority Supply and Diversity Council or the Women's Business Enterprise National Council. AACSB: Diversity Learning Objective: Identify the challenges women and minority business owners face. Topic: Women and Minorities in Small Business 2-35

36 19. About a third of the second career types who return to work decide to become self-employed. TRUE About a third of the second career types who return to work decide to become self-employed. Those who do face three challenges adjusting to the entrepreneurial life, reestablishing selfconfidence, and keeping personal finances out of the business. AACSB: Diversity Learning Objective: Describe the situation of people who become second career entrepreneurs. Topic: Second Career Entrepreneurs 20. One of the major issues identified for second career entrepreneurs is keeping personal finances out of the business. TRUE A problem for second career entrepreneurs is keeping personal finances out of the business. Often when individuals are laid off or given early retirement, they can receive lump-sum financial settlements. Frequently, people intending to become second career entrepreneurs plan to use a substantial portion of these funds to start the new business. AACSB: Diversity Learning Objective: Describe the situation of people who become second career entrepreneurs. Topic: Second Career Entrepreneurs Multiple Choice Questions 2-36

37 21. This stage of the business life cycle occurs once the firm is established in its market. A. The success stage. B. The emergence stage. C. The existence stage. D. The resource maturity stage. The success stage occurs once the firm is established in its market. Learning Objective: Recognize the stages of development entrepreneurs and their firms go through. Topic: The Entrepreneurial Life Cycle 22. Which of the following statements concerning family businesses is correct? A. Family members often work in the business but may not sit on the council. B. Family businesses employ about 20 percent of America's total workforce. C. Most top managers at family firms tend to stay in their positions much longer than those at nonfamily firms. D. Family businesses plan for succession using a critical-point plan. Most CEOs of family firms average a 17 year tenure as opposed to just 8 years for CEOs in other businesses. Blooms: Understand Learning Objective: Describe the challenges of family business owners. Level of Difficulty: 2 Medium Topic: Family Businesses 2-37

38 23. Which of the following is one of the most common behaviors found in successful entrepreneurs? A. Preemption B. Frigidness C. Personalization D. Passion There are five aspects of behavior that most successful entrepreneurs display. These are not the only possible behaviors that you could consider, but they are behaviors that have been shown in the research to relate to success among entrepreneurs. The five behaviors include passion, perseverance, promotion/prevention focus, planning style, and professionalization. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 24. Which of the following is best thought of as a type of learned optimism in successful entrepreneurs? A. Apathy B. Professionalization C. Perseverance D. Cognition Perseverance is best thought of as a type of learned optimism, the ability to stick with some activity even when it takes a long time, and when a successful or unsuccessful outcome is not immediately known. Learning Objective: Recognize the key aspects of entrepreneurial personality. 2-38

39 Topic: The Five Ps of Entrepreneurial Behavior 25. The majority of businesses run by teams are comprised of: A. five or more members. B. one member. C. three members. D. two members. Thirty-eight percent of team run businesses are owned by two team members. AACSB: Teamwork Learning Objective: Recognize the special nature of entrepreneurial teams. Topic: Entrepreneurial Teams 26. The problem behavior of trying the same action repeatedly without learning is called. A. perseveration B. prevention focus C. effectuation D. critical observation The danger is to keep trying the same action repeatedly without learning. That is a problem behavior called perseveration. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 2-39

40 27. Regulatory focus is a mix of two internal focuses, focus and focus. A. effectuation; comprehension B. comprehension; prevention C. effectuation; promotion D. promotion; prevention Most of us have some mix of two internal focuses (also called our regulatory focus), a promotion focus intent on maximizing gains, which gives us a bias toward pursuing opportunities likely to lead to those gains, and a prevention focus intent on minimizing losses, with a bias toward inaction or protective action. Being a successful entrepreneur involves balancing the two focuses. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 28. About 400,000 new firms a year are started by teams, with about 320,000 started by: A. solo entrepreneurs. B. family teams. C. unrelated business associates. D. five or more team members. About 400,000 new firms a year are started by teams, with about 320,000 started by family teams. AACSB: Teamwork Learning Objective: Recognize the special nature of entrepreneurial teams. Topic: Entrepreneurial Teams 2-40

41 29. When starting a business, more women choose industries that tend to have lower average sales levels. A. construction B. financial C. technology D. service More women choose service industries that tend to have lower average sales levels, while there are more men in construction, financial, and technology industries, which have higher average sales levels. AACSB: Diversity Learning Objective: Identify the challenges women and minority business owners face. Topic: Women and Minorities in Small Business 30. Which of the following approaches yields better results in an established industry or a poor one? A. External focus B. Effectuation focus C. Prevention focus D. Promotion focus In an established industry or a poor one, a prevention focus can work well, while a promotion focus can yield better results in richer, dynamic, uncertain environments or industries. Learning Objective: Recognize the key aspects of entrepreneurial personality. 2-41

42 Topic: The Five Ps of Entrepreneurial Behavior 31. Which of the following approaches yields better results in richer, dynamic, uncertain environments or industries? A. Promotion focus B. External focus C. Effectuation focus D. Prevention focus In an established industry or a poor one, a prevention focus can work well, while a promotion focus can yield better results in richer, dynamic, uncertain environments or industries. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 32. Which of the following was not listed as a time management technique in the textbook? A. 123 Prioritize B. Delegate C. Perseverance D. Strategize Basic time management techniques from the text include: List, 123 Prioritize, Delegate, Repeat, and Strategize. Learning Objective: Describe the challenges of family business owners. Topic: Family Businesses 2-42

43 33. Christopher is a hard-working entrepreneur who looked into all the details of his small gaming software business. He focused on all aspects of the business from the initial launch, promotion, and marketing aspects to the final set up. He finds planning convenient and works according to a plan. Christopher is a(n). A. opportunistic planner B. habit-driven planner C. reactive planner D. comprehensive planner Comprehensive planners take a long-term view, develop long-range plans for all aspects of the business, are comfortable with planning, and act based on the plans they've developed. Blooms: Apply Learning Objective: Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 2 Medium Topic: The Five Ps of Entrepreneurial Behavior 34. Entrepreneurs who develop plans focused on the most important aspect of the business first are known as. A. critical-point planners B. opportunistic planners C. comprehensive planners D. reactive planners Critical-point planners plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. It is not a very long-term approach to planning. Learning Objective: Recognize the key aspects of entrepreneurial personality. 2-43

44 Topic: The Five Ps of Entrepreneurial Behavior 35. Which among the following is a critical-point planner? A. Amanda does not have a very long-term approach to planning and she plans only for those business aspects that are of paramount importance. B. Andrew looks at all aspects of the business, from launch to the complete working of it. C. Cathy looks for a good chance to achieve her goal and acts according to a routine. D. Joshua acts on what he has been doing and does not believe in planning. Critical-point planners plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. It is not a very long-term approach to planning. Blooms: Understand Learning Objective: Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 2 Medium Topic: The Five Ps of Entrepreneurial Behavior 36. Entrepreneurs who start with a goal instead of a plan and look for a chance to achieve it are known as. A. reactive planner B. critical-point planner C. comprehensive planner D. opportunistic planner Opportunistic planners generally start with a goal and look for opportunities to achieve it. Once they find a good opportunity, even if it isn't the one related to their original goal, they act on it, so it is very short term in orientation. 2-44

45 Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 37. Which of the following would have a very short-term approach to planning? A. Individuals who look for opportunities to achieve their goal, even if the opportunity isn't the one related to their original goal. B. Individuals who develop long-range plans for all aspects of the business and act based on the plans they've developed. C. Individuals who plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. D. Individuals who are comfortable with planning and act based on the plans they have developed. Opportunistic planners generally start with a goal and look for opportunities to achieve it. Once they find a good opportunity, even if it isn't the one related to their original goal, they act on it, so it is very short term in orientation. Blooms: Understand Learning Objective: Recognize the key aspects of entrepreneurial personality. Level of Difficulty: 2 Medium Topic: The Five Ps of Entrepreneurial Behavior 2-45

46 38. are completely passive, waiting for cues from the environment to determine what actions to take. A. Opportunistic planners B. Critical-point planners C. Comprehensive planners D. Reactive planners Reactive planners are completely passive, waiting for cues from the environment to determine what actions to take. Their focus is entirely short term, and there is little in the way of goals driving their efforts. They can make the most of a situation because there is no other plan competing for their attention. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 39. The successful entrepreneurial personality exhibits certain types of business-related expertise which the text condenses into five competencies. Which of the following statements is NOT true about these competencies? A. Research shows these competencies can be learned through training. B. The amount of expertise is what distinguishes the more successful from the less successful firms. C. Determination competencies are activities, knowledge, and skills specific to businesses in a particular industry. D. Opportunity competencies are the skills necessary to identify and exploit elements of the business environment that can lead to a profitable and sustainable business. Intentions reflects your determination to start your business and make it a success. These determination-driven skills can be called determination competencies. 2-46

47 Blooms: Understand Learning Objective: Assess the operational competencies of the successful entrepreneur. Level of Difficulty: 2 Medium Topic: Entrepreneurial Operational Competencies 40. When starting a business using entrepreneurial teams, which number of team members is the most common? A. Two team members B. Three team members C. Four team members D. Five or more team members Thirty-eight percent of entrepreneurial teams are comprised of two team members. Seven percent are comprised of three team members, four percent have four team members and three percent are comprised of five or more team members. AACSB: Teamwork Learning Objective: Recognize the special nature of entrepreneurial teams. Topic: Entrepreneurial Teams 2-47

48 41. Which of the following characterizes a habit-based planner? A. They take a long-term view, develop long-range plans for all aspects of the business, are comfortable with planning, and act based on the plans they've developed. B. They plan around the most important aspect of the business first, act on it, and then consider if additional plans are needed. C. They are completely passive and generally wait for cues from the environment to determine what actions to take. D. They don't plan, and they don't tend to react to changes in their environments. Habit-based planners do not really plan at all because their actions are dictated by their routines. They do today what they did yesterday. They don't plan, and they don't even tend to react to changes in their environments. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 42. Which of the following planners do best in terms of getting a start-up launched, keeping it going, and making a living from it? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Reactive planners Simply put, results from small business owners in countries around the world have shown that in terms of getting a start-up launched, keeping it going, and making a living from it, comprehensive planners do the best, followed by critical point planners, and opportunistic planning types. Reactive and habit planners generally do very poorly in business, even if they manage to get their firms started. 2-48

49 Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 43. Which of the following kinds of planners generally tend do very poorly in business, even if they do manage to get their firms started? A. Comprehensive planners B. Habit-based planners C. Opportunistic planners D. Critical-point planners Simply put, results from small business owners in countries around the world have shown that in terms of getting a start-up launched, keeping it going, and making a living from it, comprehensive planners do the best, followed by critical point planners, and opportunistic planning types. Reactive and habit planners generally do very poorly in business, even if they manage to get their firms started. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 2-49

50 44. The extent to which a firm meets or exceeds the standard business practices for its industry is known as. A. bootstrapping B. professionalization C. effectuation D. Perceived Organizational Support (POS) The extent to which a firm meets or exceeds the standard business practices for its industry is known professionalization. One hallmark of successful entrepreneurs is that they usually do at least one thing much better than average. That average is called a standard business practice and every industry has them. Doing that level or better is what professionalization is all about. Learning Objective: Recognize the key aspects of entrepreneurial personality. Topic: The Five Ps of Entrepreneurial Behavior 45. A business action that has been widely adopted within an industry or occupation is known as. A. best business practice B. specialized business professionalization C. standard business practice D. expert professionalization One hallmark of successful entrepreneurs is that they usually do at least one thing much better than average. That average is called a standard business practice and every industry has them. Doing that level or better is what professionalization is all about. Learning Objective: Recognize the key aspects of entrepreneurial personality. 2-50