chapter 5

Question 1

reasons to start your business right away

Answer 1

1. You have potential for long-term returns!
2. You don’t have a mortgage or kids to take care of.
3. You can survive on little funds and work long hours.
4. No disruption to your career path. It hasn’t started yet!
5. You’re more adaptable and have higher risk tolerance at a younger age.

Question 2

Why People Take The Entrepreneurial
Challenge

Answer 2

Reasons to Become an Entrepreneur
1. Opportunity.
2. Profit.
3. Independence.
4. Challenge

Question 3

What Does it Take to Be an Entrepreneur?

Answer 3

• Self-directed.
• Self-nurturing.
• Action-oriented.
• Highly energetic.
• Tolerant of uncertainty

Question 4

Entrepreneurship within Firms

Answer 4

Intrapreneurs

use a company’s existing resources—
human, financial, and physical—to launch new products and generate new profits.

Question 5

Micropreneurs

Answer 5

and Home-Based Businesses
* More than half of all small businesses are run from
owners’ homes

Question 6

Benefits of Home-Based Businesses

Answer 6

Benefits of Home-Based Businesses
* Ability to start your business immediately.
* Minimal start-up capital needed.
* No rent or excessive set-up charges.
* Comfortable working conditions.
* Reduced wardrobe expenses.
* No commuting.
* Tax benefits.
* Elimination of office politics.
* Low risk for trial and error.

Question 7

Downsides of Home-Based Business

Answer 7

• Difficult to establish work habits.
• Limited support system.
• Isolation.
• Workspace may be limited.
• Clients may be uncomfortable coming to your home.
• Zoning restrictions.
• Success is based 100 percent on your efforts.

Question 8

Small versus Big Business

Answer 8

A small business is considered “small” only in
relationship to other businesses in its industry.
* There are over 31 million small businesses in the United States. Importance of Small Businesses
* 65 percent of the nation’s new jobs are in small
businesses.
* There’s a very good chance you’ll either work in a small business someday or start one.

Question 9

Small-Business Success and Failure

Answer 9

• Half of new businesses don’t last five years.
• Some reasons:
• Managerial incompetence.
• Inadequate financial planning.
• Choosing the wrong type of business

Question 10

Functions of Business

Answer 10

• Planning your business.
• Financing your business.
• Knowing your customers (marketing).
• Managing your employees (human resource
  development).
• Keeping records (accounting).

Question 11

Business Plan

Answer 11

• A good plan takes a long time to prepare.
• A good executive summary catches interest and tempts
  potential investors to read on.
• Getting the plan into the right hands is almost as important
  as getting the right information in it.

Question 12

Financing Your Small Business

Answer 12

Financing Your Small Business
* Family and business associates.
* Banks and finance institutions.
* CDFIs.
* Angels, crowdfunding, and venture capitalists.
* GoFundMe, Kickstarter.
* The JOBS Act of 2012.

Question 13

Small Business Administration (SBA)

Answer 13

1991 microloan program.
* Based on belief in the borrowers’ integrity and the soundness of
their business ideas.

Small Business Investment Company (SBIC)
Program.

Small Business Development Centers (SBDC).

Question 14

SBA may provide the following types of financial
assistance

Answer 14

• Standard 7(a) loans.
• Microloans.
• SBA Express.
• Export Express.
• Community Adjustment and Investment Program (CAIP).
• 504 certified development company (CDC) loans.
• CAPLine loans

Question 15

SCORE

Answer 15

Service Corps of Retired Executives