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Which Of The Following Statements Is True Regarding The Profitability Of New Business?

Satisfactory Essays

Small Business, Entrepreneurship, and Franchises

ACTIVITY:
This activity is designed to encourage students to appreciate the process of generating business idea with limited funds. Anybody can come up with a good business idea regardless of their age, race, experience and others.

Time Limit: 35 minutes

What to Do:
1. Place students in 3 or 4 member per group and ask each group to come up with a business idea that will work. For this activity, each group has to come up with a business idea that will limit funding of only RM50, 000. Groups should consider the following questions: (30 minutes)

What is my product or service?
Who are my customers?
Where are my customers located?
Is my business idea easily copied? Do I …show more content…

All of the following are factors that could have led them to go into business except
a.
the independence.
b.
the willingness to find and accept a challenge.
c.
the desire to determine their own destiny.
d.
the low risk and high rewards inherent in entrepreneurship.
e.
entrepreneurial spirit.
ANSWER: D

17. Which of the following statements is true regarding the profitability of new businesses?
a.
It may take several years for a new business to begin showing a profit.
b.
Profitability is not an important issue for new businesses.
c.
Most new businesses will turn a profit within the first year.
d.
If a company does not show a profit within the first year, it will fail.
e.
Most new businesses are highly profitable when they first start.
ANSWER: A & C

18. Lauren starts a business that sells personal computers. Within the first year she discovers that computer technology becomes outdated very quickly, and she has not been able to sell her products for as much as she thought due to the passage of time. Lauren has mismanaged
a.
inventory. (stock of goods)
b.
cash flow.
c.
financing arrangements.
d.
personnel.
e.
money.
ANSWER: A

19. A new small business, Underwater Wildlife, has opened to sell tours of underwater sites around the country and in South America. However, money has to be paid up front by the Underwater staff to book hotels and other travel arrangements before its clients have

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