1.2 Introduction to Entrepreneurship

True/False
Indicate whether the statement is true or false.

____	1.	An entrepreneuer usually doesn’t have to work hard to make large profits.

____	2.	A chain is a business that has one location owned by several people

____	3.	A franchise fee is the money that the outside person pays the chain owner for the right to use the chain’s brand name.

____	4.	All chains are a part of a franchise, but not all franchises offer chains.

____	5.	The costs to start a new business are called start-up costs.

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____	6.	Which of the following are traits of successful entrepreneurs?
a.	aloofness	d.	agnostic	
b.	confidence	e.	only b and c	
c.	responsibility	f.	all of the above	

____	7.	Who of the following can be an entrepreneur
a.	a dentist	d.	a teacher	
b.	a market analyst	e.	only a, b, and d	
c.	a burger flipper at a fast food place	f.	all of the above	

____	8.	Which is NOT a benefit of being an entrepreneur?
a.	being your own boss	c.	setbacks for which you are solely responsible	
b.	being able to do work you’re interested in	d.	earning a large profit	

____	9.	Three main advantages of a sole proprietorship are: 
a.	easy and inexpensive startup, owner has total control, many government regulations	c.	easy and inexpensive startup, limited liability, very easy to earn money	
b.	easy and inexpensive startup, owner has total control, minimal government regulations	d.	complex startup, government regulated,  owner has total control	

____	10.	A franchise agreement is: 
a.	a document that binds all franchise owners to each other	c.	the legal document that sets up a franchise	
b.	a document that gives the franchisee the power to change a brand 	d.	an agreement between two franchisors that enables them to collapse their franchises into one business (e.g. Pizza Hut/Taco Bell restaurant)	

____	11.	The costs to keep a business running are called:
a.	operating expenses	c.	running expenses	
b.	running costs	d.	operating costs	

____	12.	A business plan is a(n):
a.	PowerPoint presentation that entrepreneurs give to sponsors in order to raise money	c.	document that business owners look at before they aquire a new franchise	
b.	written document that describes a business and how it will operate	d.	description of the business to be distributed to marketing companies for product promotion	

____	13.	The U.S. Small Business Administration (SBA):
a.	was created to administer trade agreements and provide technical assistance to small businesses	c.	promotes fair advertising and selling practices	
b.	was created to help America’s entrepreneurs form successful businesses	d.	is an organization developed to keep small business from becoming larger and turning into monopolies	

____	14.	If an owner is responsible for all the debts and choices of a business he is considered to have
a.	unlimited liability	c.	public liability	
b.	unlimited responsibility	d.	warranty	

____	15.	A business that has only one location and is not part of any other business is called a(n)
a.	franchise	c.	private business	
b.	isolationist	d.	independent business	

Completion
Complete each statement.

	16.	_________ can be an entrepreneur.

	17.	Entrepreneurs must have excellent _________ skills.  They must be able to explain their plans and engage customers.

	18.	A ___________ has two or more owners and liability is distributed between owners.

	19.	A __________ is a more complicated form of ownership.  It is a legal entity established for the purpose of doing business.

	20.	The __________ market is where an entrepreneur intends for his product to be sold.

Short Answer

	21.	Give an example of a successful business venture that you could capitalize on right now.	

	22.	What is the entrepreneurial process?

	23.	List two examples of ways to start an original business.

	24.	You are recently unemployed to the downturn in the economy so you move to a small new town.  You have three naturally occuring materials lying abundantly around the old house you are renting, and you have decided to take your business destiny into your own hands.  Name one or two ways you might inventively use the materials to create a product and become an entrepreneur.  

The three materials are cypress wood, clay, and granite.

Essay

	25.	Create a business plan for a new business.  Include a description of the business, competition analysis, target market, marketing plan, day to day operations, and an executive summary.

1.2 Introduction to Entrepreneurship
Answer Section

TRUE/FALSE

	1.	ANS:	F
usually does have to work hard

PTS:	2

	2.	ANS:	F
A chain is a business that has more than one location but only one owner.

PTS:	2

	3.	ANS:	T	PTS:	2

	4.	ANS:	F
All franchises are a part of a chain, but not all chains offer franchises.

PTS:	2

	5.	ANS:	T	PTS:	2

MULTIPLE CHOICE

	6.	ANS:	E	PTS:	4

	7.	ANS:	F	PTS:	4

	8.	ANS:	C	PTS:	4

	9.	ANS:	A	PTS:	4

	10.	ANS:	C	PTS:	4

	11.	ANS:	A	PTS:	4

	12.	ANS:	B	PTS:	4

	13.	ANS:	B	PTS:	4

	14.	ANS:	A	PTS:	4

	15.	ANS:	D	PTS:	4

COMPLETION

	16.	ANS:	anyone

PTS:	3

	17.	ANS:	communication

PTS:	3

	18.	ANS:	partnership

PTS:	3

	19.	ANS:	corporation

PTS:	3

	20.	ANS:	target

PTS:	3

SHORT ANSWER

	21.	ANS:	
Selling old stuffed animals on Ebay, starting a neighborhood lawncare service, tutoring, selling worms for fishing, etc.

PTS:	5

	22.	ANS:	
The process of starting a new venture is embodied in the entrepreneurial process, which involvesmore than just problem solving in a typical management position. An entrepreneur must find,evaluate, and develop an opportunity by overcoming the forces that resist the creation ofsomething new. The process has four distinct phases: (1) identification and evaluation of the opportunity, (2) development of the business plan, (3) determination of the required resources,and (4) management of the resulting enterprise. Although these phases proceed progressively, no one stage is dealt with in isolation or is totally completed before work on other phases occurs.For example, to successfully identify and evaluate an opportunity (phase 1), an entrepreneurmust have in mind the type of business desired (phase 4).

Hisrich, PhD, Robert D., Michael P. Peters, PhD and Dean A. Shepherd, PhD. Entrepreneurship.
6 ed. New York: McGraw-Hill Irwin, 2005.

PTS:	5

	23.	ANS:	
buy an existing business, buy a franchise, start your own business

PTS:	5

	24.	ANS:	
start an eco-friendly lumber business (cypress is abundant and grows quickly), create pottery to sell, create granite/clay composite pieces...etc.  There are several industries that benefit from these materials.  Any feasible answer is passable, and extra points might be awarded for exceptional creativity.

PTS:	5

ESSAY

	25.	ANS:	
Grade subjectively based on the development of the business plan.

PTS:	15