Solution Manual for Small Business An Entrepreneurs

Business Plan 9th Edition Hiduke and Ryan 1285169956

9781285169958
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Chapter 6—Location and Distribution

TRUE/FALSE

1. A single location and one channel of distribution is the norm for most of today’s businesses.

ANS: F PTS: 1 REF: p. 148

2. Planning your daily work schedule is not important when you have a home-based business.

ANS: F PTS: 1 REF: p. 153

3. A B2B business can generally operate successfully out of the owner’s home.

ANS: F PTS: 1 REF: p. 149

4. Stand-up comedians are turning to websites as a new way to distribute their product.

ANS: T PTS: 1 REF: p. 150

5. According to the SBA, only about 20% of all businesses are home-based.

ANS: F PTS: 1 REF: p. 152

6. Coworking spaces nurture young firms and help them survive during the critical start-up period.

ANS: F PTS: 1 REF: p. 154

7. When planning the perfect location, a retailer needs to start by thinking about Target Customers.

ANS: T PTS: 1 REF: p. 156

8. Business incubators are a good option for start-up firms.

ANS: T PTS: 1 REF: p. 156

 9. As a retailer’s customer base becomes well established, location becomes more important.

ANS: F PTS: 1 REF: p. 158

10. Neighbor mix refers to the makeup of nearby businesses.

ANS: T PTS: 1 REF: p. 159

11. Availability of a skilled workforce is an important location factor.

ANS: T PTS: 1 REF: p. 160

12. The history of a property is only important if you are purchasing it.

ANS: F PTS: 1 REF: p. 160

13. Cheap rent is the most important location factor.

ANS: F PTS: 1 REF: p. 159

14. Community support should be a factor in your location analysis.

ANS: T PTS: 1 REF: p. 161

15. A business with multiple locations may need a different merchandise mix for each one.

ANS: T PTS: 1 REF: p. 163

16. Foot traffic analyses are easy to do yourself.

ANS: F PTS: 1 REF: p. 163

17. Commercial brokers are generally paid by the landlord or the seller.

ANS: T PTS: 1 REF: p. 163

18. It is best start working with a real estate broker before you have selected an area for your business.

ANS: F PTS: 1 REF: p. 164

19. Provisional terms are cast in stone.

ANS: F PTS: 1 REF: p. 165

20. The first draft of a lease will generally favor the tenant.

ANS: F PTS: 1 REF: p. 165

21. Most leases contain the same terms so it is not important to scrutinize each one.
 ANS: F PTS: 1 REF: p. 165

22. A cost-of-living cap limits the price increases on your goods or services.

ANS: F PTS: 1 REF: p. 165

23. In a percentage lease, you pay a portion of your sales as rent.

ANS: T PTS: 1 REF: p. 166

24. CAM charges are set to the Consumer Price Index.

ANS: F PTS: 1 REF: p. 166

25. Once signed a lease cannot be changed, even if conditions change dramatically.

ANS: F PTS: 1 REF: p. 165

26. For a manufacturing firm, access to transportation corridors is an important location factor.

ANS: T PTS: 1 REF: p. 167

27. Kiosks provide a low-risk environment but are too expensive for most small businesses.

ANS: F PTS: 1 REF: p. 168

28. Operating on the Internet requires all the major functions that are part of any business.

ANS: T PTS: 1 REF: p. 169

29. Selling on QVC is an easy and affordable way to start offering your product to consumers.

ANS: F PTS: 1 REF: p. 168

30. Channel decisions are among the most challenging you will make in establishing your business.

ANS: T PTS: 1 REF: p. 170

MULTIPLE CHOICE

1. Reaching customers at many different points using a variety of techniques is known as:
a. Channels of distribution
b. Multichannel distribution
c. Multichannel promotion
d. Social entrepreneurship
ANS: C PTS: 1 REF: p. 148

2. When thinking about starting a home-based business it is important to consider:

a. Zoning laws
b. Professional appearance
c. Balancing work and family life
 d. All of the above.
ANS: D PTS: 1 REF: p. 152

3. Coworking spaces:
a. Generally require tenants to sign a one year lease
b. Are only available to solo entrepreneurs
c. May provide the use of conference rooms and presentation equipment
d. Provide trained professional marketing, financing and technical support
ANS: C PTS: 1 REF: p. 154

4. Business incubators:
a. Support businesses during the challenging start-up period
b. Often provide space at less than market rent
c. Sometimes focus on very specific industries
d. All of the above
ANS: D PTS: 1 REF: p. 155

5. Business incubators:
a. Always require prospective clients to have fully developed business plans
b. Always require up-front cash payments
c. Typically graduate companies within 3 years
d. All of the above
ANS: C PTS: 1 REF: p. 155

6. A good physical retail location:

a. Increases the need for advertising
b. Becomes more important as a customer base is established
c. Can make everything easier for a new retail business
d. All of the above
ANS: C PTS: 1 REF: p. 158

7. Which of the following statements is true when considering a retail location?

a. Neighborhood mix is not important
b. It may be an advantage to have competitors nearby
c. The life-cycle stage of the area is an important consideration
d. Both B and C
ANS: D PTS: 1 REF: p. 159

8. When choosing a location for your retail business:

a. Rent is always the most important factor
b. Consider performing a site-location ring study
c. Only sign a one-year lease as retailers tend to relocate often
d. All of the above
ANS: B PTS: 1 REF: p. 162

9. A commercial real estate broker:

 a. Can save you time and money
b. May be a source of demographic data gathering
c. Is often a specialist in a certain area
d. All of the above
ANS: D PTS: 1 REF: p. 163

10. A lease document:

a. Is drawn up by the property owner's lawyer
b. Is provisional
c. Will favor the property owner
d. All of the above
ANS: D PTS: 1 REF: p. 165

11. If you're a pioneer tenant in a shopping center you should negotiate a payment scale based on
occupancy. This is known as:
a. Floating rent scale
b. Start-up buffer
c. Percentage lease
d. Use clause
ANS: A PTS: 1 REF: p. 166

12. When a tenant pays a base rate plus a percentage of gross sales, this is called:
a. Triple net lease
b. Floating rent scale
c. Percentage lease
d. Use clause
ANS: C PTS: 1 REF: p. 166

13. A rental payment calculation in which the tenant pays not only the rent for the space occupied, but also
a pro rata share of all utilities, services, and real-estate taxes is called a:
a. Gross rent
b. Net rent
c. Loss factor rent
d. Common Area Maintenance
ANS: D PTS: 1 REF: p. 166

14. Incentives are available to firms willing to locate in:

a. A tight labor market
b. Low income areas
c. High rents areas
d. Economically advanced areas
ANS: B PTS: 1 REF: p. 167

15. The Internet:

a. Is only used to sell products, not services
b. Is not a good choice for marketing your goods and services
c. Makes price comparison shopping more difficult for consumers
 d. Offers bloggers opportunities to make money through advertising revenue
ANS: D PTS: 1 REF: p. 169

SHORT ANSWER

1. Explain a cost of living cap.

ANS:
An agreement that the rent from one year to another cannot be increased by more than the CPI for the
period.

PTS: 1 REF: p. 165

2. Identify four retail locations that are alternatives to traditional brick and mortar stores.

ANS:
Alternatives to brick and mortar stores include swap meets and fairs, kiosks, QVC and the Internet.

PTS: 1 REF: p. 167

3. Describe an anchor tenant.

ANS:
A business firm in a commercial area that attracts customers.

PTS: 1 REF: p. 159

4. Describe showrooming.

ANS:
When a customer comes in looking for a product but leaves after checking his iPhone for a cheaper
price online or at a nearby store.

PTS: 1 REF: p. 158

5. Define location escape hatch.

ANS:
A provision to cancel or modify your lease if the landlord fails to meet the specified terms.
PTS: 1 REF: p. 165