· Low-cost Internet technology discourages the growth of e-businesses by denying easy entry into a market. True or False?
· 2. First-mover advantage alone guarantees the success of an e-business. True or False?
· 3. Many traditional businesses are expanding into e-businesses where they are far less restricted by the constraints of physical space and time. True or False?
· 4. Two advantages of operating an auction e-business are the low barrier to entry and that there is no need to maintain an inventory. True or False?
· 5. The network effect is the ability of an e-business to continue to function successfully regardless of how large the e-business grows. True or False?
- 1. Which of the following may be a disadvantage to someone planning to start an e-business?
- a. high level of energy
- b. strong belief in the e-business idea
- c. inability to work extended hours most days
- d. support of family members and friends
- 2. The network effect is the:
- a. advantage of being the first to market.
- b. increased value to each participant as the number of participants increases.
- c. sending of unsolicited messages or advertisements.
- d. ability of an e-business idea to function well regardless of growth.
- 3. Which of the following factors is not important when evaluating an e-business idea?
- a. The idea provides a new, unique product.
- b. The idea exploits the network effect.
- c. The idea has a first-mover advantage.
- d. The idea is sure to make you famous.
- 4. Which of the following is not a useful trait for an entrepreneur?
- a. determination to succeed
- b. great organizational skills
- c. hesitancy to take risks
- d. ability to act quickly and decisively
- 5. Which of the following innovative marketing ideas secured early success for Hotmail?
- a. virtual marketing
- b. spam
- c. viral marketing
- d. scalable marketing
· 1. A startup company’s business plan is used only to solicit funding from investors. True or False?
· 2. It is not necessary to number multiple copies of a business plan. True or False?
· 3. An Executive Summary page is the least important part of a business plan. True or False?
· 4. A “C” corporation is a taxable entity separate from its owners and managers. True or False?
· 5. Information about key strategic partnerships should be included in a business plan. True or False?
Multiple Choice Questions
· 1. A business plan’s executive summary:
o a. allows plan readers to locate specific plan contents.
o b. provides a miniature version of the complete plan.
o c. provides details about products or services.
o d. is a “to do” list for promoting products and services offered.
· 2. A sole proprietorship:
- a. consists of multiple co-owners.
- b. is not a separate taxable entity.
- c. has both a general partner and several limited partners.
- d. provides an owner personal protection from legal claims against the business.
- 3. An issues analysis identifies:
- a. outside threats and opportunities.
- b. marketing strategies for pricing, promoting, and distributing the e-business’s products and services.
- c. the e-business’s business model.
- d. targeted customers’ buying habits.
- 4. A mission statement:
- a. describes business activities that will be outsourced to consultants.
- b. identifies outside advisors who bring additional background and experience to the e-business.
- c. briefly explains the overall purpose of the e-business.
- d. projects how and when the e-business can be profitable.
- 5. In order to explain how you and your investors will get your money back from a startup e-business, your business plan should include a formalized:
· 1. A term sheet is a list of the major points of a proposed investment deal. True or False?
· 2. An angel investor is typically an individual with money and time who enjoys the excitement of investing in startup businesses and is not averse to taking risks. True or False?
· 3. An accredited investor must have a minimum net worth of $2 million. True or False?
· 4. Venture capital firms can be a good source of first- and second-round funding for a new startup e-business. True or False?
· 5. Commercial business incubators generally charge an incubated company service fees as well as an equity position in the company. True or False?
Multiple Choice Questions
· 1. Sweat equity is the value added to a startup business by:
o a. friends and family investors.
o b. commercial business incubators.
o c. entrepreneurs.
o d. angel investors.
· 2. Informal investors include:
- a. non-profit business incubators.
- b. angel investors.
- c. commercial business incubators.
- d. venture capitalists.
- 3. A private placement memorandum is:
- a. a negotiating document sent to an entrepreneur by a potential investor.
- b. used to secure a personal bank loan.
- c. part of the business plan for a new e-business startup.
- d. an offering document prepared by a qualified attorney that discloses the benefits and risks of an investment.
- 4. Which of the following is a disadvantage to an entrepreneur attempting to obtain startup funding from a member of his or her family and friends network?
- a. It may be the easiest money an entrepreneur can find.
- b. Friends and family members are investing in the entrepreneur rather than in the e-business idea.
- c. Losing Aunt Ruth’s nest egg may upset family relationships.
- d. Each friend and family investor must have a minimum net worth of $1 million.
- 5. One way to enjoy the advantages of interacting with other startup entrepreneurs—such as being able to share ideas, discuss problems, and exchange products and services—without giving up any equity in your e-business or paying fees for business-development services is to become part of a:
- a. non-profit business incubator’s portfolio.
- b. self-incubation group of entrepreneurs.
- c. commercial business incubator’s portfolio of companies.
- d. None of the above.