Progress Check: Chapter 1
Directions
After reading each question carefully, choose the best answer based on information learned in this chapter. You will find the answers with explanations on the final page.
1. Based on the information below, which of these individuals is exhibiting entrepreneurial traits?
a. Bill took over the family air conditioning repair and maintenance business
b. Cruz started an aircraft rental business to fill a need in the marketplace
c. Monique pursued her passion for fitness by starting a personal training business
d. All of the above
e. b and c above
2. Jim purchased a business which sold ice cream from a vending cart at special events. The business was profitable enough to give a percentage of revenue to the event sponsor and to cover Jim’s living expenses. Plus, he was able to pursue his hobby of surfing. Later an opportunity to supply all the concession stands for air shows helped Jim grow his business.
Which of Jim’s actions best reflects entrepreneurship?
a. Starting a business selling ice cream
b. Operating the business profitably
c. Providing enough time for personal hobbies
d. Seizing opportunities to grow the business
3. Charles researched the market to identify a need for self-storage units in a certain region
of the country. He was able to obtain local funding to start the business and each year he added more units. The business was successful, but Charles was not happy living in this
area of the country.
What planning step would have helped Charles to avoid his eventual unhappiness?
a. Compare the initial business concept with his personal vision
b. Develop an exit strategy at the inception of the business
c. Assess the risks of starting a self-storage business
d. All of the above
4. Rachel is seeking a business opportunity that matches her personal vision, especially her professional criteria. She has 14 years of experience in insurance claims and billing, loves to refinish furniture, and needs some flexibility in her schedule to meet the needs of her children.
Which of the following business opportunities might be the best match for her?
a. Assistant in a day care center
b. Furniture refinishing and upholstery
c. Retail store specializing in health care products
d. Medical billing service
5. Gabriela is evaluating an interior design business concept against the financial criteria in her personal vision. The most critical financial criterion is whether or not the business will
a. support her personal financial commitments.
b. provide sufficient profit to reinvest in the company.
c. require personal funds to get started.
d. need outside investors.
6. The purpose of the business planning process is to
a. investigate all aspects of a potential business.
b. lead the entrepreneur in a desired direction.
c. determine if the entrepreneur has the qualities to succeed.
d. all of the above.
e. a and b above.
7. Fernando is ready to turn his dream of starting a business into a reality. To begin the business planning process, Fernando needs to
a. determine what product/service to offer.
b. develop his personal vision.
c. evaluate his entrepreneurial skills against the requirements of the business.
d. evaluate the availability of money to start the business.
8. When Daniel began planning a new boat charter company, he considered all aspects of the business including his exit strategy. Defining his exit strategy prior to starting the business
helped Daniel
a. raise the money necessary to start the business.
b. establish company goals and strategies.
c. develop a business that is very feasible.
d. all of the above.
9. Matthew has a strong desire to start his own business and is considering various options. Which strategy gives Matthew the greatest likelihood of succeeding?
a. Invent a new product and take it to market
b. Start a business in an industry that interests him, even though he has no experience in it
c. Base his business on an existing product/service with a well-established market
d. Start a business with friends
10. Elizabeth is developing a start-up business plan that includes sections necessary to establish the feasibility of her business. After successfully starting her business, Elizabeth will add more information to create a business plan for an existing business. Which of the following sections would not be part of the start-up business plan?
a. Management and Organization Plan
b. Marketing Plan
c. Operating/Control Systems Plan
d. Financial Plan
Answers
1 e
Among other traits, entrepreneurs identify unmet needs or wants, and then develop a product or service that meets them. They are people drawn to pursuing a passion. Simply owning a business is not an entrepreneurial trait.
2 d
Entrepreneurship is a process through which people pursue opportunity, use resources, and initiate change to create value. Buying a fun business, operating it at a profit, and providing time for personal hobbies make the business enjoyable to own, but are not true reflections of entrepreneurship.
3 a
Charles should have evaluated his initial business concept against his personal vision. The personal vision includes an analysis of personal, lifestyle, and professional criteria. Desired location is part of the lifestyle criteria.
4 d
Medical billing services would probably be the best business opportunity for Rachel. To evaluate a business opportunity against professional criteria, entrepreneurs should look at the level of status, involvement in daily operations, and job security that a particular business opportunity will provide.
5 a
In evaluating the financial criteria for a business, the most critical criterion is whether or not the business supports the entrepreneur's personal financial commitments.
6 e
The purpose of the business planning process is to investigate all aspects of a potential business and lead the entrepreneur in a desired direction.
7 b
The first step in business planning is to develop the entrepreneur's personal vision.
8 b
Smart entrepreneurs plan their exit from a business in the early planning stages because it forces them to establish their goals and strategies to reach those goals. The exit strategy includes a plan to harvest the value of the business at a pre-determined time.
9 c
Matthew would have the greatest likelihood of succeeding in a business based on an existing product/service with a well-established market – especially if he can develop a niche in that market.
10 c
The Business Plan for an existing business includes the same sections as the start-up plan plus the Operating/Control Systems Plan and Growth Plan, which concentrate on aspects of a business after the start-up stage.
Planning the Entrepreneurial Venture
Progress Check 1
Page 3 of 3