- The area from which a small business expects to draw customers over a reasonable time span is its:
metropolitan statistical area.
- A(n) ________ layout has the advantage of creating a relaxed, friendly shopping atmosphere encouraging shoppers to linger and increasing the number of impulse purchases.
- The type of business that does well when located near competitors is:
one that has a unique product line, dissimilar to that of its competitors.
one that sells high-priced products that customers comparison shop for.
one whose location is part of its trademark.
one located in an incubator.
- The best way to determine where to place merchandise, what a store’s “hot” and “cold” spots are, is to:
conduct a kinesiology study.
hire a market research firm to study your business.
conduct focus groups with former customers.
simply observe customers in the store.
- The secret to selecting the ideal location for a business is:
the available labor pool for the business.
knowing the customer and what is convenient to them.
the tax rate of the local and state governments.
the security of the area and the services provided by the site to the business owner.
- The vendor certification process assumes:
all vendors are charging the same prices.
the use of a cross-functional team to conduct the evaluation.
the business owner has detailed knowledge of the vendors.
vendors are publicly owned so information can be gathered on each of them.
- When seeking suppliers, a small business owner should use which of the following sources?
The local telephone directory
The industry trade association
All of these
- A firm’s reorder point for an item takes into consideration its ________, which is the difference between the time an order is placed and the time it is actually received.
minimum level of stock allowable
- The small company’s purchasing plan is closely linked to which of the other functional areas?
Marketing and sales
Finance and accounting
Production and engineering
All of the above
- A danger of an excessive investment in inventory for the small business is:
excessive inventory taxes by local and state government.
minimizing reordering costs.
creating too quick a turnover of inventory.
tying up an excessive amount of the firm’s capital.
- For most retailers and wholesalers, the investment in ________ is the largest capital outlay next to payroll.
office equipment, computers, etc.
vehicles, automobiles and trucks
taxes and licensing fees
- Employee theft can be caused or encouraged by a number of factors including:
physical breakdowns of security.
improper cash controls.
All of these
- A periodic physical inventory count:
is not necessary if the business owner uses a perpetual inventory control system or has a computerized point of sale (POS) terminal.
typically involves one employee and is done weekly.
allows the owner to evaluate the effectiveness and the accuracy of his/her inventory control system.
is not necessary if the business owner uses an ABC inventory system.
- Combining ________ with a POS system gives a small business owner a state-of-the-art checkout system and further extends the abilities of the POS system in the information it provides the owner.
an EDI system
universal product code labels and scanners
an ABC system
- The 80/20 rule suggests that business owners:
try to exercise control 80% of the time over 20% of their inventory.
identify those inventory items that represent the greatest value to the business and focus inventory control efforts on them.
focus on the 80% of their inventory that only produces 20% of their results in order to improve performance.
try to earn 20% more out of the 80% of their inventory that isn’t producing.
- A ________ outlines the duties and responsibilities associated with a job and the working conditions involved.
human resource plan
- When checking references, the small business owner:
can largely ignore the references of professional job candidates.
should also talk with previous employers, not just the references provided.
may only ask for confirmation of employment dates, job title, and salary information.
is able to ask any question of the reference to find about things he/she could not ask the candidate.
- Teams can be helped to succeed by:
placing a few underperformers on the team to minimize internal conflict.
forming teams around natural work flows, giving them specific tasks.
keeping pay based on individual effort.
not permitting teams’ involvement in the assessment of their own performance.
- If a company is to succeed, a leader must perform four vital tasks which include:
knowing what to do.
motivate workers to higher levels of performance.
knowing how to do.
wanting to do something.
- A motivational tool that also helps to guide performance and lets the owner know that his/her company is accomplishing its operational goals is:
a human resource audit.
- While a large percentage of business founders plan to pass on their businesses, few create management succession plans because:
they don’t know how to do it.
they are reluctant to let go of the business.
they can’t afford the attorneys’ and accountants’ fees.
they don’t feel they need one because they know which child will assume management of the business.
- ________ is an essential quality for a successful family business but it can also become a barrier to change. When it provides a foundation, it works well, when it restricts the future, it becomes a barrier.
- ________ allow(s) employees and/or managers (that is, the future owners) to purchase the business gradually, which frees up enough cash to finance the venture’s future growth.
A sale for cash plus a note
Leveraged buyouts (LBOs)
Employee stock ownership plans (ESOPs)
Selling to insiders
- A business founder relying on a lifetime giving strategy to minimize the taxes on the estate she is passing on to her son can give him a maximum gift of ________ in company stock each year, tax exempt.
- Small business owners can make a number of mistakes in their management succession plan including:
naming a successor too early.
having another manager in the company mentor the successor.
assuming his/her children want control of the business.
All of these
- The ________ requires lenders and sellers who extend credit to disclose fully the terms and conditions of credit arrangements to enable consumers to “shop around.”
Fair Credit Reporting Act
Consumer Product Safety Commission
Equal Credit Opportunity Act
- In most cases dealing with the issue of consideration, courts:
still consider a promise binding even if made without a consideration.
do not evaluate the adequacy of the consideration.
consider offers of “love and affection” to be valuable consideration.
weigh the value of the consideration in ruling on the validity of the contract.
- Which of the following phrases is sufficient to disclaim an implied sales warranty?
“Seller makes no warranties on this product whatsoever”
None of the above. A merchant cannot disclaim sales warranties.
- To have an agreement, a contract must have:
a promise by one party to do something in the future.
the ability to contract.
an intention to be bound by the contract.
an offer and an acceptance.
- The owner of a small auto repair shop knowingly installs a used water pump in your car and tells you it is “brand new.” This is:
breach of contract.