Academic year 2023-2024
Semester Number - Fall
Course Name: Entrepreneurship
• Instructor Name: Dr. Heba El-Qasaby
Chapter 1
Entrepreneurs: The Driving
Force Behind Small Business
Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.
1-2
Chapter 1
Review Questions
MCQ
1. Entrepreneurs seem to be characterized by:
A) a desire for money
B) an inability to organize but strong conceptual skills
C) a desire to work alone because of weak management skills and a need for control
D) a high energy level.
2. Juan is able to work well in a constantly changing atmosphere and has little concern for what tomorrow
will bring. Juan demonstrates which of the following characteristics of a typical entrepreneur?
A) The willingness to take extreme risks
B) A desire for immediate feedback
C) A tolerance for ambiguity.
D) A future orientation
3. Entrepreneurs start businesses for a number of reasons including:
A) an opportunity to make a difference.
B) having to deal with less government regulation than as an executive of a large company
C) a much lower risk of career failure due to layoff or acquisition than working for a large company
D) the opportunity to get rich much quicker than if they work for a large company
4. Surveys show that owners of small businesses believe that:
A) they work harder on their own than if they worked for someone else.
B) they earn less than if they worked for someone else
C) they are less satisfied than if they worked for someone else
D) venture capital is relatively easy to raise
5. A significant benefit of starting your own company is:
A) more leisure time because there is less of a need to punch a time clock.
B) contributing to society and being recognized for your efforts.
C) to be able to choose who you work with or don't work with
D) more job security than working for a large corporation
6. Mary and Ted are discussing starting a new business and are asking themselves a
series of questions like; "What is the worst that could happen if we fail?" "How likely is
that to happen?" They are assessing which potential drawback of small business
ownership?
A) The long hours and hard work involved
B) The risk of losing their entire investment.
C) The lower quality of life they'll experience
D) The uncertainty of their income
7- Potential drawbacks of small business ownership include:
A) a relatively low guaranteed income
B) a significantly freer personal schedule but less personal income and assets with which to
enjoy the more relaxed schedule
C) a high likelihood of a lower quality of life while starting and establishing the small business.
D) relatively limited potential for further personal development
8. The growth of entrepreneurship is being fed by:
A) the return to a manufacturing-based economy
B) technological advancements.
C) diminished opportunities in overseas markets for larger corporations
D) the vilifying of large corporations in society
9. The international market:
A) has proven to be a tremendous opportunity for small business.
B) is being dominated by large corporations based in Europe and Japan
C) is largely closed to small U.S.-based businesses because of the growth of international
entrepreneurship
D) provides greater opportunities for women and minority entrepreneurs than U.S. domestic
markets do
10. Small businesses thrive in every industry, but the majority of them are in:
A) the general construction industry.
B) retail businesses.
C) mining and manufacturing.
D) service industries.
11. More businesses fail because of ________ than for any other reason.
A) incompetent management.
B) theft by employees
C) insufficient capital
D) poor choice of location
12. Tom was a financial consultant who liked to work with his hands, especially in
making furniture. He quit his rat race financial job to start a small custom furniture
business. After struggling for several years, he closed it and went back to financial
services. Tom discovered that there was a big difference between making furniture
for himself and running a customer furniture manufacturing business. Tom's
business failed because of:
A) uncontrolled growth
B) poor financial control
C) his lack of experience.
D) an inability to access start-up capital
13. Successful entrepreneurs recognize that their most valuable resource is their
________.
A) time.
B) energy
C) vision
D) Age
14. One key to success with a business startup is to begin with enough ________.
A) capital.
B) sales
C) accounts payable
D) suppliers.
15. A key characteristic of a successful entrepreneur is:_________
A) never having failed
B) expert technical knowledge of the product
C) learning to fail intelligently.
D) earning at least a 25% return for investors
16. The key to effective financial management in a start-up is:________
A) excellent controls
B) the use of ABC accounting processes
C) sufficient start-up capital.
D) an adequate inventory on hand
17. Which of the following is true about avoiding business failure?
A) You must understand financial statements.
B) You need to learn how to manage others.
C) You must differentiate your product from the competition.
D) You must do all of these.
18. Small businesses are those that employ: ___________
A) more than 100 employees.
B) fewer than 20 employees.
C) fewer than 100 employees.
D) Number doesn't matter.
19. Which of the following is not a common characteristic of entrepreneurs?
A) Desire for responsibility
B) Business plan expertise.
C) Preference for moderate risk
D) High energy level
20. Primary cause of business failure is:___________
A) improper managerial attitude
B) poor financial controls
C) incompetent management.
D) location
21. To avoid business failure, an entrepreneur should:
A) know the business in depth.
B) develop a solid business plan.
C) take entrepreneurship courses
D) Both A and B
22. Management incompetence includes all but: ___________
A) the owner lacks the leadership ability necessary to operate it successfully.
B) lack of capacity to make the business work
C) insufficient capital.
D) inexperience
23. Joanne is thinking about running her own business. What risks does she face?
A) Getting stuck in a job she hates
B) Having to deal with more government regulation than if she were a manager in a larger
company
C) Having less status in society, as most people do not respect small business owners
D) Losing her entire invested capital.
True or False
1. Entrepreneurs are people who grow existing businesses by careful management of existing resources
2. Entrepreneurial success requires little more than a good idea for a product or service
3. Research has isolated a set of characteristics that can predict who will succeed as an entrepreneur
4. It is common to experience a lower quality of life during a business start-up than after the business is established.
5. Entrepreneurs can outsource many of the operations of their companies.
6. Two characteristics common to entrepreneurs are creativity and an eye for opportunity.
Essay Questions:
Briefly outline the key characteristics of a typical entrepreneur.
Answer: Entrepreneurs have some common characteristics, including a desire for responsibility, a preference for
moderate risk, confidence in their ability to succeed, desire for immediate feedback, a high energy level, a future
orientation, skill at organizing, and a value of achievement over money. In a phrase, they are high achievers.
Identify and explain the advantages and the disadvantages of small business ownership.
Answer: Driven by these personal characteristics, entrepreneurs establish and manage small businesses to gain
control over their lives, become self-fulfilled, reap unlimited profits, contribute to society, and do what they enjoy
doing. Small business ownership has some potential drawbacks. There are no guarantees that the business will
make a profit or even survive. The time and energy required to manage a new business may have dire effects on the
owner and family members.
What are the primary causes of small business failure?
Answer: Because they are building businesses in an environment filled with uncertainty and shaped by rapid
change, entrepreneurs recognize that failure is likely to be a part of their lives; yet, they are not paralyzed by that
fear. Successful entrepreneurs have the attitude that failures are simply stepping stones along the path to success.
What can an entrepreneur do to avoid the failure of his/her company? Discuss at
least six actions they can take.
Answer: There are several general tactics small business owners can employ to avoid
failure. Entrepreneurs should know their business in depth, develop a solid business
plan, manage financial resources effectively, understand financial statements, learn to
manage people effectively, set the business apart from the competition, and keep in tune
with themselves.