2529

OpenStax Entrepreneurship Test Bank
Chapter 2: The Entrepreneurial Journey and Pathways
* = Correct answer
Multiple Choice/Fill in the Blank
1. What factors decrease the risk of creating a new venture? (Select all that apply.)
A. Economy is strong.*
B. Job market is strong.*
C. Education is strong.
D. Trends are strong.
Difficulty: Easy
2. Which age range accounts for the most startup activity?

A. over 20
B. over 30
C. over 40*
D. over 50
Difficulty: Easy
3. Which of the following is not a characteristic of an independent contractor?

A. part of the payroll of a contracting business*
B. pays for their own benefits
C. responsible for paying their own taxes
D. works similar to an employee
Difficulty: Easy
4. What are the most pertinent considerations one should make before joining the gig economy?
(Select all that apply.)
A. Analyze the financial implication.*
B. Create a unique brand identity.
C. Know that becoming a freelancer is difficult.
D. Make sure you are goal oriented.*
Difficulty: Moderate
5. Which of the following are not examples of the gig economy?

A. offering talent for projects
B. promoting one’s specialty for interim assignments
C. offering editing on a freelance basis
D. working as in-house catering at a restaurant*
Page 1 of 12
6. What is not a reason, according to FreshBooks’ second annual Self Employment Report, that
there will be an increase in US employees leaving traditional work in favor of self-
employment?
A. control over acceptance of work
B. control over office attire*
C. control over one’s career
D. control over working hours
Difficulty: Easy
7. What percentage of startups include immigrants?

A. 20%
B. 35%
C. 40%*
D. 45%
Difficulty: Easy
8. How many self-employed Americans will there approximately be at the end of 2026
according to the US Bureau of Labor Statistics?
A. about 9 million
B. over 9 million
C. over 10 million*
D. about 12 million
Difficulty: Easy
9. Which of the following is not a reason for the downward slide in the number of employees
working for self-employed businesses?
A. desire over control of one’s career*
B. difficulty in finding qualified employees
C. gig economy employment
D. outsourcing activities
Difficulty: Easy
10. Which countries take the lead in entrepreneurial activity? (Select all that apply.)
A. Canada
B. Guatemala
C. India*
D. Luxembourg*
Page 2 of 12
11. Which of the following are venture types that allow an entrepreneur to pursue their mission
or vision?
A. earning income to meet a personal need
B. tax exempt status to solve a governmental problem
C. a nonprofit social enterprise for the environment*
D. a hybrid political action committee
Difficulty: Easy
12. Which of the following statements is true about women entrepreneurs?

A. Women receive significantly less venture capital funding than men.*
B. Women receive more Small Business Innovation Research program awards than men.
C. Despite the challenges, women are more likely to start businesses than men.
D. Investors tend to ask women entrepreneurs more difficult and probing questions.
13. What are the correct steps of the entrepreneurial journey?

A. Inspiration, Preparation, Assessment, Exploring Resources, Business Plan, Navigation,
Launch*
B. Inspiration, Preparation, Business Plan, Assessment, Navigation, Exploring Resources,
Launch
C. Inspiration, Preparation, Business Plan, Exploring Resources, Navigation, Launch,
Assessment
D. Preparation, Assessment, Navigation, Inspiration, Business Plan, Exploring Resources,
Launch
14. Which organization does not provide free or loss cost training and counseling associated with
the Small Business Association?
A. IBRD*
B. SCORE
C. VBOC
D. WBC
Difficulty: Easy
15. Which is not a factor that makes a location one of the 50 Best Places in America for Starting
a Business?
A. business friendly culture
B. federal government funding*
C. highly educated workforces
D. startup incubators
Page 3 of 12
16. What is the reason behind the benchmarking studies available from the American Society on
Quality website?
A. continuous improvement advancements*
B. local and federal budgeting
C. metrics and status on quality
D. regular economic sector updates
Difficulty: Difficult
17. Which of the following are examples of appropriate relationships that help an entrepreneur?
(Select all that apply.)
A. advisors*
B. mentors*
C. parents
D. researchers
Difficulty: Easy
18. Which is the most pragmatic way to plan a venture?

A. being frustrated with a situation
B. pursuing an existing franchise license*
C. quitting your job to start a venture
D. working for an independent contractor
19. Which of the following is an example of bootstrapping?

A. completing a trial run of your launch
B. launching a venture under the radar
C. maxing out personal credit cards to start a business*
D. starting a business in your parent’s garage
Difficulty: Easy
20. What type of training can one receive from business organizations? (Select all that apply.)
A. business coaches/counselors*
B. business launch training*
C. business mentoring*
D. business setup and rollout
21. Which places may not be appropriate for a trial run of a new venture?
A. farmers markets
B. friends/family
Page 4 of 12
C. in-home sales
D. VC/PE events*
Difficulty: Easy
22. How can you adapt your venture to track reactions and make improvements? (Select all that
apply.)
A. change the price*
B. change the packaging*
C. change the sales pitch*
D. change the variables
Difficulty: Easy
23. Which of the following are ways that you can fund your business? (Select all that apply.)
A. borrow money from savings*
B. take a loan from a bank*
C. sponsorship from FERC
D. utilize benchmarking
24. What is the most important aspect of the preparation step?

A. evaluation and gathering knowledge
B. gathering knowledge and exploring
C. research and evaluation
D. research and gathering knowledge*
True/False
25. True or false? Moore’s law is still valid.

Answer: True
Difficulty: Easy
26. True or false? Freelancing is the same as consulting.

Answer: False
27. True or false? Freelance workers earn a median rate of $50 per hour.
Answer: False.
Difficulty: Easy
Page 5 of 12
28. True or false? The number of self-employed persons has been dropping since 2016.
Answer: False
29. True or false? A soft launch is the same as a soft open.

Answer: True
Difficulty: Easy
30. True or false? Immigrants are half as likely to start a business as native-born Americans.
Answer: False
Difficulty: Easy
31. True or false? The number of women-owned businesses increased two times faster than the
national average between 2000 and 2020.
Answer: False
32. True or false? You can secure venture experience by shadowing an entrepreneur.
Answer: True
Difficulty: Easy
33. True or false? The rise of subscription services is attributable to grant funding.
Answer: False
34. True or false? Entrepreneurs who focus both on beta testing and market research for their
products are more likely to succeed.
Answer: True
35. True or false? An example of the design thinking process is how DoSomething.org came
about.
Answer: True
36. True or false? Business launches should occur before the target market is identified.
Answer: False
Page 6 of 12
Difficulty: Easy
37. True or false? Bootstrapping is a cash management technique that most entrepreneurs use.
Answer: True
Difficulty: Easy
38. True or false? Bartering is a type of business plan.

Answer: False
Difficulty: Easy
39. True or false? Assessment is determining the idea you plan to offer through your venture.
Answer: True
Difficulty: Easy
40. True or false? Late-stage entrepreneurial failures rates are similar to those of early-stage
startups, often due to never achieving traction or growing too quickly.
Answer: True
41. True or false? Over 50% of US billionaires are self-made.

Answer: True
42. True or false? The planning process of a venture includes the financial and human resources
to implement the idea.
Answer: True
Difficulty: Easy
43. True or false? A business plan does not need an executive summary since the other analysis
and information are very detailed.
Answer: False
Short Answer
44. What role does inspiration play in the entrepreneurial journey?
Page 7 of 12
Sample Answer: A major part of the entrepreneurial journey includes imagining yourself as an
entrepreneur or as part of an entrepreneurial team. For this stage, you need a creative, open, and
innovative state of mind, also known as an entrepreneurial mindset. Such persons are inspired to
dream big about their potential future and opportunities. When inspired to start an
entrepreneurial venture, one questions whether they can do it and identifies obstacles that might
present challenges.
Difficulty: Easy
45. What is benchmarking. Provide examples from outside of the reading.

Sample Answer: Benchmarking is a method of tracking target expectations with actionable
results by comparing one’s own company’s performance with an industry average, a leader
within the industry, or a market segment. Benchmarking can enable an entrepreneur to design
their service or product to meet incremental goals and timelines. Although benchmarking is used
as a control mechanism, we know that situations can arise that require an alteration in the plan,
causing the benchmarked items to also need adjustments. Benchmarking requires research about
other companies and assessment of comparable criteria. Sometimes it does not make sense to
compare an idea to existing businesses or products/services because there is a differential. The
choice of a benchmark is very important. There is no clear and defined standard for comparing
ventures. An entrepreneur needs to establish a methodology of comparison and contrast. For
example, if you are launching a new food establishment, you need to gather information about
existing food establishments whose characteristics are similar. This includes geography, sector,
customer base and lifecycle stage. Likewise if you have an idea for a new technology, you need
to consider similar technologies, the audience, sub industry, size, and growth metrics. This will
help you make a more valid comparison.
46. Explain some attributes of the gig economy that are lesser known and not covered in the
reading. Why does the gig economy appeal to some workers?
Sample Answer: The gig economy has touched all levels of workers. Freelancing enables
persons to obtain additional sources of income. It is understood that nearly half of all Americans
have taken part in the gig economy. Most people do not realize that gig work starts when you are
young with babysitting and lawn mowing. This type of work has become institutionalized with
companies focused on gig workers such as Uber and FlexJobs. There are staffing agencies and
websites dedicated to gigs such as Monster, CareerCast and SimplyHired. Some companies
prefer to hire interim workers who freelance to provide staffing flexibility. People leverage their
free time to sell stuff on eBay or Etsy, drive a car for Lyft, or deliver food for Grubhub. One
complication for multiple sources of financial support is ensuring that you follow tax reporting
obligations. Many workers appreciate the flexibility and variety of the work.
47. Define “entrepreneurial venture.” Provide one example of a success and one example of a
failure.
Page 8 of 12
Sample Answer: An entrepreneurial venture is any type of new business, organization, project, or
operation of interest that includes a level of risk in acting on an opportunity that has not
previously been established. ManiCare was started by a former lung replacement patient to
provide beauty services to people who are homebound and living in hospitals. The founder was
able to gain traction, expand into different locations and various beauty services, and receive
significant positive publicity on television and in the press. LuLaRoe was a startup clothing
company with multi-level market distribution. It had aggressive sales targets and initial
investment and inventory costs for salespersons. Then some of the clothes were found to be
damaged and salespersons complained when their bonus structure was changed. The founders
ended up dealing with significant legal challenges and many salespersons lost money. The
business was left with a lot of inventory they could not sell.
48. What is Prospurly and what makes it different than other typical subscription services?
Sample Answer: Prospurly functions on Cratejoy’s platform, which offers subscriptions for
monthly boxes of customized products, and markets a natural lifestyle focused on the happiness
of living a simple and grateful life. It is special because the products, centered around bath, body,
and home, are curated and natural. This enables artisans to distribute their wares. Some other box
services simply distribute well known and mass-manufactured brands. The founder of Prospurly
claimed on Reddit to have grossed over $60,000 in seven months. He also runs a website called
Subscription School, which includes a platform for box services. The company donates 2% of all
sales and not just profits. Prospurly has supported nonprofits and donated money for
agroforestry.
49. What are some examples of bootstrapping that have been successful for entrepreneurs?
Sample Answer: Bootstrapping is a funding strategy that optimizes the use of personal funds to
minimize cash outflows. It also includes bartering. Many entrepreneurs are known for using their
own credit cards and personal checking accounts. This risks your own money to have business
capital. Some stories include negotiating inventory management and using your home as an
office or staging center for business packaging. They also personally budget and cut expenses to
have more money to spend on the venture. Another example is finding team members who will
receive equity instead of being paid salaries. Michael Dell started Dell computers with a $1,000
loan from relatives. Bill Gates was also a tenacious bootstrapper. GitHub was started as a
weekend project, and the only initial money spent was on a domain name.
50. How is the Jitterbug an example of a target market identification? Include various product
elements.
Sample Answer: Jitterbug is a smart phone that is targeted to the senior market. The phone has
large buttons, simpler menus, and a larger screen, which better enables elder people with visual
or tactile challenges to send texts and make calls. There are also wearable devices and adaptive
Page 9 of 12
products and plans such as GreatCall to access health and safety professionals. On the website it
says “transforming the aging experience through innovative technology.”
Difficulty: Easy
51. Provide an example of visualizing the steps of an entrepreneurial journey for a food truck
business.
Sample Answer: You will need to visualize how you expect your company to grow and why it
will be successful. You will want to consider how your food truck will fill a gap in your target
market. You will need to do a lot of research and discovery about food that consumers like,
including ingredients, and how you can prepare it in a small truck kitchen or a rental kitchen.
You also need to contemplate your menu and compare it to local tastes and offerings. You will
need to decide where you plan to sell your food. You will also need to know the projected cost
and profit of your business.
52. List and analyze the strength and weaknesses of several guidance sources for entrepreneurs.
Sample Answer: When starting a new business, you can start to reach out to friends and family.
Maybe there is someone you know with some venture experience you can reach out to simply for
moral support. You will need help with financials and with understanding the economics of your
idea development as well as funding. Some banks and angel investors can offer more
sophisticated guidance here. Local colleges and libraries may have programs to help you learn
what is needed to develop your venture. There are federal and state small business associations
that provide seminars, training, research and often funding. Such sources may be more practical
than friends and family. You need to gather a lot of information and make an informed decision,
often beyond bootstrapping. However, with all of these sources, an entrepreneur needs to choose
which one to rely upon. It can be overwhelming with the selection. Perhaps some of the
information is not useful to a particular venture. Another weakness is that some guidance can be
limited in purpose and scope, such as attending a clinic and receiving only a half hour training
session.
53. What are some ways to get inspired?

Sample Answer: Idea conception is about generating solid options. It also means identifying
opportunities. Some of these ideas are personal and others are through market research. You look
at companies, goods, and services that you like and maybe think how you can improve them.
You need to build and test your business model. This is part of the startup phase.
Difficulty: Easy
54. What is the business model canvas, and how does it differ from the lean strategy canvas?
Which would you use for your venture?
Sample Answer: A business model canvas (BMC) offers a simple, one-page tool used to design
an innovative business model that can be presented to key stakeholders including significant
Page 10 of 12
partners. Your business model canvas must also include information about resources, activities,
value propositions, customer segments, customer relationships, cost structure, and revenue
streams. For example, if you are launching a babysitting service, you need to detail how your
venture is innovative which could be accomplished perhaps by detailing your experience, age
level, and special training. By placing all of these elements on one page, you can see what may
be missing and how the aspects of the business model relate to each other. The lean strategy
canvas (LSC) is a spinoff of the BMC that introduces a potential customer feedback loop for
continuous product or idea improvement to meet the market’s needs.
I would start with the LSC as customer focus is key. I need to have a sense of how the market
will accept your product and service, given their needs. This is also more meaningful to
deconstruct a venture idea into its key assumptions. It is easier to update that a large business
plan.
Students might choose to use the BMC so that they can fill in all the details such as customer
segmentation, value propositions, cost structures, and key activities/partnerships. In this way,
they are able to see their business’s strengths and what, if anything, is missing.
55. At what stage is a prototype developed, and why is it important?

Sample Answer: Within the phases of a new venture, as the idea is developed, a prototype is
made. At stage 3, it is then perfected in preparation for stage 4 when sales are generated. Stage 4
leads to the commencement of the growth stage. A prototype is a way to assess the marketability
of a product or service.
Prototyping means making a basic version of your product that gives your customers an idea of
what you are creating. Your prototype could also be something that demonstrates that your
technology or innovation actually works, so it is a good time to ask for funding. A successful
prototype garners enthusiasm from future customers and hopefully angel investors or venture
capitalists (VCs).
56. What are ways to avoid the decline and death of a business?
Sample Answer: Businesses have a lifecycle and sometimes start to slow in growth or face
challenges to operational sustainability. If a business is mature, it can try to add new features to a
product or service, based on market research or consumer sentiment. Extending a product or
service lifecyle can extend the venture. Some examples include technology and televisions which
have branched from color to cable to recording and smart technology. Ventures can expand by
relying on additional capital or perhaps merging with other businesses that bring more ideas or
funding. Grubhub, which had food-ordering technology, merged with Seamless, which had a
strong brand identification with restaurants, and the combined entity became more successful.
Page 11 of 12
57. How do you know when a venture is mature? Provide an example from outside of the
reading.
Sample Answer: This happens in the maintenance phase of the business cycle. You will identify
this by monitoring how the venture is growing in accordance with the business plan. Oftentimes
you need to identify changes to keep it on track. This means making changes to find a new
product or service or adopt new technologies. While you’re seeking to strengthen the market
position and return of the investment, you need to also be aware of and open to change.
One venture, which was impacted by exogenous factors and recognized its need to change is a
local New York City restaurant called Village Crown. Their location was known for events and
regular dining, but they also had developed an active catering business. When construction
overtook their block and their lease was being increased, they decided to focus instead on
catering. A catering facility does not have to be in an ideal dining or shopping area. You need the
basics of a kitchen and staging area. Any commercial kitchen that meets standards usually
suffices. Village Crown already had delivery personnel and vehicles along with a reputation for
catering, so their shift worked.
This file is copyright 2020, Rice University. All Rights Reserved.
Page 12 of 12

2529

Uploaded by

Copyright:

Available Formats

2529

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2529

Uploaded by

Copyright:

Available Formats

OpenStax Entrepreneurship Test Bank

Chapter 2: The Entrepreneurial Journey and Pathways

Chapter 2: The Entrepreneurial Journey and Pathways

Multiple Choice/Fill in the Blank

2. Which age range accounts for the most startup activity?

3. Which of the following is not a characteristic of an independent contractor?

5. Which of the following are not examples of the gig economy?

7. What percentage of startups include immigrants?

12. Which of the following statements is true about women entrepreneurs?

13. What are the correct steps of the entrepreneurial journey?

18. Which is the most pragmatic way to plan a venture?

19. Which of the following is an example of bootstrapping?

24. What is the most important aspect of the preparation step?

25. True or false? Moore’s law is still valid.

26. True or false? Freelancing is the same as consulting.

29. True or false? A soft launch is the same as a soft open.

38. True or false? Bartering is a type of business plan.

41. True or false? Over 50% of US billionaires are self-made.

44. What role does inspiration play in the entrepreneurial journey?

45. What is benchmarking. Provide examples from outside of the reading.

53. What are some ways to get inspired?

55. At what stage is a prototype developed, and why is it important?

This file is copyright 2020, Rice University. All Rights Reserved.

You might also like