Answers to Questions and Exercises

Topics: Business, Entrepreneurship, Small business Pages: 2 (1114 words) Published: November 2, 2014

Answers to Questions and Exercises
Questions for Review
Why are small businesses important to the U.S. economy?
Small businesses create new jobs, foster entrepreneurship and innovation, and supply goods and services needed by larger businesses. What is the difference between a small-business owner and an entrepreneur? A person may be a small-business owner only, an entrepreneur only, or both. For example, a person who opens a small pizza parlor with no plans to grow and expand is not really an entrepreneur. The basic distinction between small-business ownership and entrepreneurship is aspiration – the former wants to remain small and support a lifestyle whereas the latter is motivated to grow, expand, and build. From the standpoint of the franchisee, what are the primary advantages and disadvantages of most franchise arrangements? Proven business opportunity and access to management expertise are advantages. Disadvantages include: high start-up costs, possible on-going fees, management rules and restrictions. Which industries are easiest for start-ups to enter? Which are hardest? Why? The most difficult businesses to begin might be in the transportation, manufacturing, and construction industries. There are numerous federal and state guidelines that govern each of these industries; in addition, firms within these industries often require high initial outlays of capital. The easiest businesses to begin might fall within the retail sector; these businesses require little start-up capital which aids in market entry. Questions for Analysis

Why might a closely held corporation choose to remain private? Why might a closely held corporation choose to be publicly traded? Such corporations may choose to remain private if control retention is the aim. Many closely held corporations choose to become public to generate additional funding. If you were going to open a small business, what type would it be? Why? Answers will vary. Many students will choose...
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