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Chapter 6—Starting Your Own Business: The Entrepreneurship Alternative
MATCHING
Complete the following using the terms listed.

a. Seed capital
b. angel investor
c. venture capitalist
d. debt financing
e. Information technology
f. social entrepreneur
g. classic entrepreneur
h. lifestyle entrepreneur
i. targeted employment area
j. skunkworks
k. Intrapreneurship
l. Internal locus of control
1. A person who identifies a business opportunity and allocates available resources to tap that market is
a(n) _____.
2. A(n)_____ recognizes a societal problem and uses business principles to develop innovative solutions.
3. A(n) _____ starts a business to gain flexibility in work hours and control over his or her life.
4. _____ helps entrepreneurs work quickly and efficiently, provide attentive customer service, increase
sales.
5. _____ refers to the characteristic of entrepreneurs believing that they control their own destiny.
6. _____ is the initial funding used to launch a company.
7. Loans from banks are a source of _____.
8. When entrepreneurs use _____, they borrow money from banks, finance companies, credit card
companies, and family or friends that must be repaid.
9. A(n) _____ is a business organization or group of private individuals who invest early-stage,
high-potential growth companies.
10. A(n) _____ is an individual who invests money directly in new ventures in exchange for equity.
Copyright ©2015 John Wiley & Sons, Inc.

11. A(n) _____ is a rural area or an area that has experienced an unemployment rate of at least 150 percent
of the national average.
12. _____ is the process of promoting innovation within the structure of an existing organization.
13. A(n) _____ project is initiated by an employee who conceives an idea, convinces top management of a
company of its potential, and then recruits human and other resources from within the company to turn
that idea into a commercial project.
1. ANS: g DIF: MEDIUM LO: 6.2 Section: Identify the different

categories of entrepreneurs.
AACSB Analytical thinking BT: K
2. ANS: f DIF: MEDIUM LO: 6.2 Section: Identify the different
3. ANS: h DIF: MEDIUM LO: 6.3 Section: Explain why people
choose entrepreneurship as a career path.
4. ANS: e DIF: MEDIUM LO: 6.4 Section: Discuss the
environment for entrepreneurs.
AACSB Information Technology BT: K
5. ANS: l DIF: MEDIUM LO: 6.5 Section: Identify the
characteristics of entrepreneurs.
6. ANS: a DIF: MEDIUM LO: 6.6 Section: Summarize the
process of starting a new venture.
7. ANS: d DIF: MEDIUM LO: 6.6 Section: Summarize the
8. ANS: d DIF: MEDIUM LO: 6.6 Section: Summarize the
9. ANS: c DIF: MEDIUM LO: 6.6 Section: Summarize the
10. ANS: b DIF: MEDIUM LO: 6.6 Section: Summarize the
11. ANS: i DIF: MEDIUM LO: 6.6 Section: Summarize the
12. ANS: k DIF: MEDIUM LO: 6.7 Section: Explain
Intrapreneurship.
13. ANS: j DIF: MEDIUM LO: 6.7 Section: Explain
Intrapreneurship.
ESSAY
14. Describe the differences between entrepreneurs and small-business owners and managers.

ANS:
Entrepreneurs seek a profitable opportunity and take the necessary risks to set up and operate a
business. Although many small-business owners possess the same drive, creative energy, and desire to
succeed, what makes entrepreneurs different is that one of their major goals is expansion and growth.
Entrepreneurs are also different from managers. Managers are employed in order to direct the efforts
of others to achieve an organization’s goals. Entrepreneurs may also perform a managerial role, but
their overriding responsibility is to use the resources of their organizations—employees, money,
equipment, and facilities—to accomplish their goals.
DIF: MEDIUM LO: 6.1 Section: Define entrepreneur.

AACSB Analytical thinking BT: C
15. Explain the differences among classic entrepreneurs, serial entrepreneurs, and social entrepreneurs.
ANS:
A classic entrepreneur identifies a business opportunity and allocates available resources to tap into
that market. A serial entrepreneur starts one business, runs it, and then starts and runs additional
businesses in succession. A social entrepreneur recognizes a societal problem and uses business principles to
develop innovative solutions.
DIF: MEDIUM LO: 6.2 Section: Identify the different categories of

entrepreneurs.
AACSB Analytical Thinking BT: C
16. Discuss the four motives frequently cited as major reasons why people become entrepreneurs.
ANS:
The four main reasons for becoming an entrepreneur include a desire to be one’s own boss, succeed
financially, attain job security, and improve the quality of one’s life.
DIF: MEDIUM LO: 6.3 Section: Explain why people choose

entrepreneurship as a career path.
17. Discuss lifestyle entrepreneurs.
ANS:
A lifestyle entrepreneur is a person who starts a business to gain flexibility in work hours and control
over his or her life. But this does not mean working fewer hours or with less intensity. Generally it is
the opposite—people who start their own businesses often work longer and harder than ever before, at
least in the beginning. But they enjoy the satisfaction of success, both materially and in the way they
live their lives.
DIF: MEDIUM LO: 6.3 Section: Explain why people choose
18. List the four factors that have contributed to the expansion in entrepreneurship.
ANS:
The four factors are (1) globalization, (2) education, (3) information technology, and (4) economic and
demographic trends.
DIF: MEDIUM LO: 6.4 Section: Discuss the environment for

entrepreneurs.

19. Describe how social networking has transformed the business environment for entrepreneurs.
ANS:
The explosion in information technology (IT) has provided one of the biggest boosts for entrepreneurs.
As computer and communications technologies have merged and dropped dramatically in cost,
entrepreneurs have gained tools that help them compete with large companies. Information technology
helps entrepreneurs work quickly and efficiently, provide immediate and attentive customer service,
and increase sales. In fact, technology has leveled the playing field to the point that, with the use of
smart phones and other wireless devices, along with instant web distribution, a dorm-room innovator
can compete with a much larger firm. Social networking continues to transform the business
environment for entrepreneurs. According to a recent study, more than 90 percent of successful
companies now use at least one social media tool.

entrepreneurs.
AACSB Information Technology BT: C
20. Explain recent demographic and economic trends that create opportunities for entrepreneurs to market
new goods and services.
ANS:
Recent trends that have created new marketing opportunities include the aging of the U.S. population,
increasingly diverse ethnic groups, and the predominance of two-income families. Convenience
products for busy parents, ethnic foods that cater to individuals and services designed specifically for
older consumers all enjoy opportunities for success.

entrepreneurs.
21. List the eight major characteristics of an entrepreneur.
ANS:
The eight major characteristics of an entrepreneur are (1) vision, (2) high energy level, (3) need to
achieve, (4) self-confidence and optimism, (5) tolerance for failure,(6) creativity, (7) tolerance for
ambiguity, and (8) internal locus of control.
DIF: MEDIUM LO: 6.5 Section: Identify the characteristics of

entrepreneurs.
22. Explain the difference between debt financing and equity financing.
ANS:
When entrepreneurs use debt financing, they borrow money that they must repay. Loans from banks,
finance companies, credit card companies, and family and friends are all sources of debt financing. To
secure equity financing, entrepreneurs exchange a share of ownership in their company for money
supplied by one or more investors. An entrepreneur does not have to repay equity funds.
DIF: MEDIUM LO: 6.6 Section: Summarize the process of starting a

new venture.

23. Distinguish between venture capitalists and angel investors.
ANS:
Venture capitalists are business organizations or groups of private individuals that invest in
early-stage, high-potential growth companies. In exchange for taking a risk with their own funds, these
investors expect high rates of return, along with a stake in the company. Angel investors are wealthy
individuals who invest money directly in new ventures in exchange for equity. In contrast to venture
capitalists, angel investors focus primarily on new ventures.
DIF: MEDIUM LO: 6.6 Section: Summarize the process of starting a

new venture.
24. What is intrapreneurship, and why is it important today?
ANS:
Intrapreneurship is the process of promoting innovation within the structure of an existing
organization. Today’s fast-changing business climate compels established firms to innovate
continually to maintain their competitive advantages.
DIF: MEDIUM LO: 6.7 Section: Explain intrapreneurship.

25. Explain how CEOs like George Buckley believe that intrapreneurship pays off despite the extra effort
required.
ANS:
3M is a firm that has long been known for its innovative products. Coming up with the ideas for these
products, developing them, and testing them before bringing them to market takes time and resources.
Former 3M CEO George Buckley believes that the only way to do this is to allocate both time and
money in support of intrapraneurship. 3M allows its researchers to devote 15 percent of their time to
pursue their own ideas.
DIF: MEDIUM LO: 6.7 Section: Explain intrapreneurship.
MULTIPLE CHOICE
26. An entrepreneur:
a. is a risk taker in the private enterprise system.
b. is a gambler in the private enterprise system.
c. does not tolerate ambiguity.
d. does not tolerate failures.
ANS: a DIF: MEDIUM LO: 6.1 Section: Define entrepreneur.
27. Zainab is opening her own bakery. Zainab is most likely to be categorized as a(n) ________.
a. manager
b. entrepreneur
c. angel broker
d. venture capitalist

ANS: b DIF: MEDIUM LO: 6.1 Section: Define entrepreneur.
AACSB Application of knowledge BT: AP
28. Unlike small-business owners, one of the major goals of entrepreneurs is:
a. the desire to succeed.
b. to possess creative energy.
c. expansion and growth.
d. to seek a profitable opportunity.
ANS: c DIF: EASY LO: 6.1 Section: Define entrepreneur.
29. Victoria is an employee at Pegasys Inc., a consulting firm. She uses the resources of the firm
to expand and diversify into related fields. Victoria is most likely to be classified as a(n) _____.
a. manager
b. entrepreneur
c. stock broker
ANS: a DIF: MEDIUM LO: 6.1 Section: Define entrepreneur.
30. Syed and Mica come up with an idea for making sugar-free ice cream. They open their own small
business to cater to the needs of those who are health conscious. Their products are distributed
nationwide and their sales continue to increase. Syed and Mica are examples of _____.
a. serial entrepreneurs
b. classic entrepreneurs
c. change agents
d. social entrepreneurs
ANS: b DIF: MEDIUM LO: 6.2 Section: Identify the different
31. After starting a web design company while still in college, Ricardo sold the company after graduation.
He then opened a computer repair shop; and most recently, he has started a marketing firm that
specializes in social media. Ricardo is an example of a(n):
a. serial entrepreneur.
b. social entrepreneur.
c. lifestyle entrepreneur.
d. classic entrepreneur.
ANS: a DIF: MEDIUM LO: 6.2 Section: Identify the different
32. _____ focus on solving society’s challenges through their businesses.
a. Classic entrepreneurs
b. Change agents
c. Atypical entrepreneurs
d. Social entrepreneurs
ANS: d DIF: EASY LO: 6.2 Section: Identify the different

33. Sophia is the CEO of a not-for-profit organization. She runs the organization to provide quality
education for the underprivileged children. Sophia is most likely to be categorized as a:
a. serial entrepreneur.
b. social entrepreneur.
c. lifestyle entrepreneur.
d. classic entrepreneur.
ANS: b DIF: MEDIUM LO: 6.2 Section: Identify the different
34. The primary reasons people become entrepreneurs include all of the following reasons EXCEPT:
a. to be one’s own boss.
b. to achieve financial success.
c. to avoid taking risks.
d. to create one’s own job security.
ANS: c DIF: MEDIUM LO: 6.3 Section: Explain why people
35. Financial success _____.

a. rarely results from starting a business
b. is part of the appeal of becoming an entrepreneur
c. plays little role in motivating people to become entrepreneurs
d. is virtually guaranteed if people work hard enough starting their own businesses
ANS: b DIF: MEDIUM LO: 6.3 Section: Explain why people
choose entrepreneurship as a career path
36. Michelle works for a large bank that recently merged with another financial institution. Word of
layoffs has been discussed. Michelle is most likely to become an entrepreneur in order to _____.
a. avoid taking risks
b. obtain job security
c. have employment as a cushion for failures
d. guarantee financial success
ANS: b DIF: MEDIUM LO: 6.3 Section: Explain why people
37. Vaida is a single mother who is required to work evenings and weekends at a local retail store. She is
thinking of starting a consulting business primarily so she can _____.
a. have guaranteed job security
b. avoid taking risks
c. have guaranteed financial success
d. enjoy a higher quality of life
ANS: d DIF: MEDIUM LO: 6.3 Section: Explain why people
38. _____ of the fastest-growing small companies in the United States have international sales.

a. Two of every five
b. Three of every five
c. Four of every five
d. Five of every six
ANS: a DIF: EASY LO: 6.4 Section: Discuss the
39. Which of the following statements regarding globalization and entrepreneurship is correct?
a. The business ownership rate is highest in economies that compete based on unskilled
labor.
b. Most entrepreneurs are from countries whose economies are driven by innovation.
c. Entrepreneurship is least common in Latin America, Sub-Saharan Africa, and the
Caribbean.
d. The United States leads in the percentage of adults engaged in entrepreneurship.
ANS: a DIF: MEDIUM LO: 6.4 Section: Discuss the
AACSB Analytic thinking BT: C
40. Which of the following has contributed the LEAST to the boom in entrepreneurship?
a. Information technology
b. Demographic and economic trends
c. Education
d. Economies driven by innovation
ANS: d DIF: MEDIUM LO: 6.4 Section: Discuss the
41. Which of the following is an example of a country with a factor-driven economy?

a. Thailand
b. The United States
c. Zambia
d. The United Kingdom
ANS: c DIF: EASY LO: 6.4 Section: Discuss the
environment for entrepreneurs
42. Concerning education and entrepreneurs, all of the following statements are correct EXCEPT:
a. today, many U.S. universities offer full-fledged majors in entrepreneurship.
b. a number of schools offer opportunities to intern with a start-up.
c. one has to major in business to become an entrepreneur.
d. some colleges and universities offer entrepreneurship courses outside the usual business
curriculum.
ANS: c DIF: MEDIUM LO: 6.4 Section: Discuss the
43. Information technology can help entrepreneurs in all of the following ways EXCEPT:
a. provide improved customer service.
b. guarantee financial success.

c. work quickly and efficiently.
d. increase sales.
ANS: b DIF: MEDIUM LO: 6.4 Section: Discuss the
AACSB Information technology BT: C
44. Which of the following demographic/economic trends has increased the opportunities for
entrepreneurs?
a. Stagnating wages
b. Steady interest rates
c. Aging population
d. Increase in wages
ANS: c DIF: EASY LO: 6.4 Section: Discuss the
45. An overall idea for how to convert a business idea into a success is called _____.
a. creativity
b. internal locus of control
c. vision
d. tolerance for ambiguity
ANS: c DIF: EASY LO: 6.5Section: Identify the characteristics of
entrepreneurs.
46. Which of the following persons is LEAST likely to become an entrepreneur?

a. A person with tolerance for ambiguity
b. A person with internal locus of control
c. A person with a competitive drive
d. A person with low energy level
ANS: d DIF: EASY LO: 6.5 Section: Identify the
47. Studies indicate that most entrepreneurs spend _____ on their new business.
a. less than 30 hours a week
b. about 40 hours a week
c. at least 70 hours a week
d. weekends only
ANS: c DIF: EASY LO: 6.5 Section: Identify the
48. Who is most likely to succeed as an entrepreneur?

a. Marcel who cannot tolerate failures.
b. Philip who has an aversion for taking risks.
c. Fiona who blames others for her failures.
d. Gina who is driven by the need to excel.
ANS: d DIF: MEDIUM LO: 6.5 Section: Identify the

AACSB Reflective thinking BT: AP
49. Entrepreneurs possess all of the following traits EXCEPT _____.

a. tolerance for ambiguity
b. creativity
c. low self-confidence
d. vision
ANS: c DIF: EASY LO: 6.5 Section: Identify the
50. All of the following are important characteristics of entrepreneurs EXCEPT:

a. tolerance for failure.
b. internal locus of control.
c. creativity.
d. dependence on others.
ANS: d DIF: EASY LO: 6.5 Section: Identify the
51. Aisha wants to start a business. She takes a personality test and discovers she possesses a trait that may
reduce the likelihood of her success. Which of the following is that trait?
a. Creativity
b. Low tolerance for ambiguity
c. Vision
d. Internal locus of control
ANS: b DIF: MEDIUM LO: 6.5 Section: Identify the
52. Carlos routinely bids on contracts even though most of the other bidders are extremely large firms.
Carlos believes his company offers better service at lower prices. Which of the following personality
traits, common in entrepreneurs, does Carlos exhibit?
a. Creativity
b. Tolerance for failure
c. High energy level
d. Self-confidence
53. Which of the following statements best describes how entrepreneurs view failure?
a. They enjoy risk and gambling.
b. They are easily discouraged when things don’t go as planned..
c. They view failure as a learning experience.
d. They worry that if they fail they’ll never get another opportunity.
ANS: c DIF: MEDIUM LO: 6.5 Section: Identify the

54. Deena is a successful entrepreneur. She stays close to her customers and is constantly looking for
effective strategies. She is also willing to make adjustments when necessary. Deena is demonstrating
_____.
a. internal locus of control
b. creativity
c. vision
d. tolerance for ambiguity
55. Claude is an entrepreneur who takes personal responsibility for the success or failure of his actions
rather than believing in luck or fate. Which characteristic best describes Claude’s entrepreneurial
philosophy?
a. Internal locus of control
b. Need to achieve
c. Tolerance for failure
d. Tolerance for ambiguity
ANS: a DIF: MEDIUM LO: 6.5 Section: Identify the characteristics
of entrepreneurs.
56. Which of the following is one of the most important considerations in selecting a business idea?
a. Making sure no company is currently offering the product/service
b. Ensuring that the idea solely appeals to a niche market
c. Finding something one loves to do and is good at doing
d. Choosing a product/service that is inexpensive to sell
ANS: c DIF: MEDIUM LO: 6.6 Section: Summarize the
57. All of the following are major advantages of buying an existing business over starting a new business
EXCEPT:
a. obtaining financing is often easier.
b. less risk is involved.
c. product or service is not known in the marketplace.
d. existing suppliers and employees are in place.
ANS: c DIF: MEDIUM LO: 6.6 Section: Summarize the process of
starting a new venture.
58. Simone is opening a home health care business that she knows will do well in her community. She
makes this assumption based on prior research. Although she must repay borrowed funds, Simone
chooses _____ to maintain complete control over the business without having to answer to investors or
partners.
a. debt financing
b. funding from venture capitalists
c. funding from angel investors
d. equity financing
ANS: a DIF: MEDIUM LO: 6.6 Section: Summarize the

59. Gary is in the process of using debt financing to fund his new venture. In this case, he is most likely to:
a. borrow loans from banks.
b. obtain funding from venture capitalists.
c. secure funding from angel investors.
d. exchange a share of ownership in his company for money.
60. Philomina invests in her new venture along with the fund supplied by Deccan Corp., the co-owner of
her start-up. This type of funding is known as _____.
a. equity financing
b. debt financing
c. social venture capital funding
d. focused funding
61. Stefan wants to start a new business, but his bank will not lend him the money he needs. Stefan saw an
advertisement sponsored by a business organization that provides financing for early-stage,
high-potential growth companies. The organization sponsoring the advertisement would be considered
a _____.
a. franchisor
b. franchisee
c. mortgage lender
ANS: d DIF: MEDIUM LO: 6.6 Section: Summarize the
62. _____ are business organizations or groups of private individuals who invest in early-stage,
high-potential growth companies.
a. Angel investors
b. Share brokers
c. Intrapreneurs
d. Venture capitalists
ANS: d DIF: EASY LO: 6.6 Section: Summarize the
63. Miguel is a wealthy person who focuses on investing in new ventures. He is looking to invest money
directly into a new consulting business in return for equity in the company. Michael is an example of
a(n) _____.
a. franchisor
b. stock broker
c. angel investor
d. franchisee

ANS: c DIF: MEDIUM LO: 6.6 Section: Summarize the
64. Juanita is trying to start a new business. A women’s business network puts her in touch with a wealthy
investor who is willing to invest in her company in exchange for an equity stake. This investor is most
likely to be a(n) _____.
a. angel investor
b. franchisor
c. stock broker
d. mortgage lender
AACSB Reflective thinking BT: K
65. _____ are specific geographic areas designated for economic revitalization.
a. Economic stimulus zones
b. Enterprise zones
c. Commerce areas
d. Investor zones
ANS: b DIF: EASY LO: 6.6 Section: Summarize the
66. A(n) _____ is another form of intrapreneurship initiated by an employee who conceives an idea,
convinces top management of its potential, and then recruits human and other resources from within
the company to turn that idea into a commercial project.
a. wealth creation
b. angel investor
c. skunkworks
d. debenture
ANS: c DIF: EASY LO: 6.7 Section: Explain
intrapreneurship.
67. Bella works as an artist for a major textile company and created an instrument for producing designs.
The company will implement Bella’s idea as part of its _____ strategy.
a. skunkworks
b. angel investment
c. seed capital
d. entrepreneurship
ANS: a DIF: MEDIUM LO: 6.7 Section: Explain
intrapreneurship.
68. Which of the following instances best represents a skunkworks project?

a. Fathima obtains funding from a venture capitalist to start her new venture.
b. Frank obtains funding from an angel investor who also helps him with launching his
business.
c. Laila obtains funding from the company she works for to turn her idea into a commercial

project.
d. Janet obtains funding through bank loans and finance companies that she must repay.
ANS: c DIF: MEDIUM LO: 6.7 Section: Explain
intrapreneurship.
69. _____ percent of large firms allocate funds toward intrapreneurship.

a. Twenty
b. Five
c. Fifteen
d. Thirty
ANS: d DIF: EASY LO: 6.7 Section: Explain
intrapreneurship.
70. Former CEO George Buckley believes that the key to supporting intrapreneurship is the willingness to
_____.
a. categorize targeted employment area
b. allocate time and money
c. appoint dedicated personnel
d. pursue a degree in business management
ANS: b DIF: MEDIUM LO: 6.7 Section: Intrapreneurship
TRUE/FALSE
71. Entrepreneurs take necessary risks to set up and operate a business.
ANS: T DIF: EASY LO: 6.1 Section: Define entrepreneur.

72. Owning a business, by definition, means that you are an entrepreneur.
ANS: F DIF: EASY LO: 6.1 Section: Define entrepreneur.

73. Entrepreneurs may also perform a managerial role, but their overriding responsibility is to use the
resources of their organizations to accomplish their goals.
ANS: T DIF: EASY LO: 6.1 Section: Define entrepreneur.

74. Studies confirm that the personality traits common to entrepreneurs are very similar to those required
for managerial success.
ANS: F DIF: MEDIUM LO: 6.1 Section: Define entrepreneur.

75. Classic entrepreneurs start one business, run it, and then start and run additional businesses in
succession.
ANS: F DIF: EASY LO: 6.2 Section: Identify the different

76. Elon Musk, founder of PayPal, and CEO of Tesla Motors, Solar City, and SpaceX, is a serial
entrepreneur.
ANS: T DIF: EASY LO: 6.2 Section: Identify the different

77. Jamal began a furniture company and ran it for five years. Afterward, he started another company for
selling home appliances and then an interior designing company. Jamal is a social entrepreneur.
ANS: F DIF: MEDIUM LO: 6.2 Section: Identify the different

78. Social entrepreneurs recognize a societal problem and use business principles to develop innovative
solutions.
ANS: T DIF: EASY LO: 6.2 Section: Identify the different

79. Overseas, workers have yet to discover the benefits of entrepreneurship compared to employment by
big firms.
ANS: F DIF: EASY LO: 6.3 Section: Explain why people

80. The desire to work fewer hours is one of the main drives for those who choose to become
entrepreneurs.
ANS: F DIF: EASY LO: 6.3 Section: Explain why people

81. Entrepreneurs enjoy guaranteed job security because no one can fire them.
ANS: F DIF: MEDIUM LO: 6.3 Section: Explain why people

82. Nina started her own business because she was tired of worrying about corporate downsizing despite
her highly positive annual reviews. This is a common motivation for becoming an entrepreneur.
ANS: T DIF: MEDIUM LO: 6.3 Section: Explain why people

83. A lifestyle entrepreneur is a person who starts a business to gain flexibility in work hours and control
over his or her life.

ANS: T DIF: EASY LO: 6.3 Section: Explain why people
84. Desire for improved quality of life is often a motivation for becoming an entrepreneur.
ANS: T DIF: EASY LO: 6.3 Section: Explain why people choose
85. Overall, in the United States the current outlook for becoming an entrepreneur is positive.
ANS: T DIF: EASY LO: 6.4 Section: Discuss the

86. Growth in entrepreneurship is a worldwide phenomenon.

87. Countries whose economies are driven by innovation, like Italy and Japan, have lower established
business ownership rates.

88. Many U.S. universities offer programs in entrepreneurship.

89. Students who graduate from entrepreneurship programs are more likely to be self-employed.

90. Most entrepreneurs are skeptical of using social media to promote their businesses.
ANS: F DIF: MEDIUM LO: 6.4 Section: Discuss the

AACSB Information technology BT: K
91. The aging of the U.S. population has made it more difficult for entrepreneurs to find opportunities.
ANS: F DIF: EASY LO: 6.4 Section: Discuss the


92. Today, there are fewer two-income households, making it more difficult for people to pursue
entrepreneurship.
ANS: F DIF: EASY LO: 6.4 Section: Discuss the

93. Entrepreneurs generally begin with a vision.
ANS: T DIF: EASY LO: 6.5 Section: Identify the

94. Generally, entrepreneurs do not have a high energy level.
ANS: F DIF: EASY LO: 6.5 Section: Identify the

95. As a rule, entrepreneurs believe in their ability to succeed.

96. Entrepreneurs are often easily discouraged by setbacks and failures.
ANS: F DIF: EASY LO: 6.5 Section: Identify the

97. Truly successful entrepreneurs take responsibility for their mistakes.

98. An important part of launching any new business is establishing a code of ethics.

AACSB Ethical understanding and reasoning BT: K
99.Dealing with unexpected events is the norm for most entrepreneurs.
ANS: T DIF: EASY LO: 6.5 Section: Identify the characteristics of

entrepreneurs.
100. Entrepreneurship is comparable to gambling.
ANS: F DIF: MEDIUM LO: 6.5 Section: Identify the


101. Internal locus of control involves the personal belief that one controls his or her own destiny.

102. Obtaining financing for an existing business is easier than it is for most start-up companies.
ANS: T DIF: EASY LO: 6.6 Section: Summarize the

103. Buying a franchise offers a less risky way to begin a business than starting an entirely new firm.

104. In the past, most entrepreneurs started their ventures without creating formal business plans.

105. The Small Business Administration (SBA) recommends avoiding the use of personal credit cards for
business expenses.
ANS: T DIF: MEDIUM LO: 6.6 Section: Summarize the

106. Banks cannot research an entrepreneur’s personal credit history when making lending decisions.
ANS: F DIF: MEDIUM LO: 6.6 Section: Summarize the

107. Equity financing may benefit an entrepreneur who possesses good ideas and skills, but has little or no
money.
ANS: T DIF: MEDIUM LO: 6.6 Section: Summarize the

108. Venture capitalists take an equity stake in businesses in which they invest their funds.

109. Entrepreneurs must repay the money sourced through angel investors.

ANS: F DIF: EASY LO: 6.6 Section: Summarize the
110. There is very little the government can do to encourage entrepreneurship.
ANS: F DIF: EASY LO: 6.6 Section: Summarize the

111. A targeted employment area is generally an urban area with a high rate of employment, making it a
hotbed for prospective startup businesses.
ANS: F DIF: MEDIUM LO: 6.6 Section: Summarize the


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Chapter 6—Starting Your Own Business: The Entrepreneurship Alternative

Complete the following using the terms listed.

Copyright ©2015 John Wiley & Sons, Inc.

1. ANS: g DIF: MEDIUM LO: 6.2 Section: Identify the different

Copyright ©2015 John Wiley & Sons, Inc.

DIF: MEDIUM LO: 6.1 Section: Define entrepreneur.

DIF: MEDIUM LO: 6.2 Section: Identify the different categories of

DIF: MEDIUM LO: 6.3 Section: Explain why people choose

17. Discuss lifestyle entrepreneurs.

DIF: MEDIUM LO: 6.4 Section: Discuss the environment for

Copyright ©2015 John Wiley & Sons, Inc.

DIF: MEDIUM LO: 6.4 Section: Discuss the environment for

DIF: MEDIUM LO: 6.4 Section: Discuss the environment for

21. List the eight major characteristics of an entrepreneur.

DIF: MEDIUM LO: 6.5 Section: Identify the characteristics of

DIF: MEDIUM LO: 6.6 Section: Summarize the process of starting a

Copyright ©2015 John Wiley & Sons, Inc.

23. Distinguish between venture capitalists and angel investors.

DIF: MEDIUM LO: 6.6 Section: Summarize the process of starting a

24. What is intrapreneurship, and why is it important today?

DIF: MEDIUM LO: 6.7 Section: Explain intrapreneurship.

Copyright ©2015 John Wiley & Sons, Inc.

32. _____ focus on solving society’s challenges through their businesses.

Copyright ©2015 John Wiley & Sons, Inc.

35. Financial success _____.

Copyright ©2015 John Wiley & Sons, Inc.

41. Which of the following is an example of a country with a factor-driven economy?

Copyright ©2015 John Wiley & Sons, Inc.

46. Which of the following persons is LEAST likely to become an entrepreneur?

48. Who is most likely to succeed as an entrepreneur?

Copyright ©2015 John Wiley & Sons, Inc.

49. Entrepreneurs possess all of the following traits EXCEPT _____.

50. All of the following are important characteristics of entrepreneurs EXCEPT:

Copyright ©2015 John Wiley & Sons, Inc.

Copyright ©2015 John Wiley & Sons, Inc.

Copyright ©2015 John Wiley & Sons, Inc.

68. Which of the following instances best represents a skunkworks project?

Copyright ©2015 John Wiley & Sons, Inc.

69. _____ percent of large firms allocate funds toward intrapreneurship.

71. Entrepreneurs take necessary risks to set up and operate a business.

ANS: T DIF: EASY LO: 6.1 Section: Define entrepreneur.

72. Owning a business, by definition, means that you are an entrepreneur.

ANS: F DIF: EASY LO: 6.1 Section: Define entrepreneur.

ANS: T DIF: EASY LO: 6.1 Section: Define entrepreneur.

ANS: F DIF: MEDIUM LO: 6.1 Section: Define entrepreneur.

ANS: F DIF: EASY LO: 6.2 Section: Identify the different

Copyright ©2015 John Wiley & Sons, Inc.

ANS: T DIF: EASY LO: 6.2 Section: Identify the different

ANS: F DIF: MEDIUM LO: 6.2 Section: Identify the different

ANS: T DIF: EASY LO: 6.2 Section: Identify the different

ANS: F DIF: EASY LO: 6.3 Section: Explain why people

ANS: F DIF: EASY LO: 6.3 Section: Explain why people

ANS: F DIF: MEDIUM LO: 6.3 Section: Explain why people

ANS: T DIF: MEDIUM LO: 6.3 Section: Explain why people

Copyright ©2015 John Wiley & Sons, Inc.

ANS: T DIF: EASY LO: 6.4 Section: Discuss the

86. Growth in entrepreneurship is a worldwide phenomenon.

ANS: T DIF: EASY LO: 6.4 Section: Discuss the

ANS: T DIF: EASY LO: 6.4 Section: Discuss the

88. Many U.S. universities offer programs in entrepreneurship.

ANS: T DIF: EASY LO: 6.4 Section: Discuss the

ANS: T DIF: EASY LO: 6.4 Section: Discuss the