Question 1

According to Industry Canada, which of the following best defines a small business?

Accepted Answer

A business with fewer than 100 employees and revenues not more than $2 million, not dominant in its market.

Question 2

What percentage of Canadian firms have fewer than 100 employees?

Accepted Answer

98%

Question 3

Which of the following is NOT a common reason why new ventures close their doors?

Accepted Answer

Excessive government subsidies

Question 4

If 1 in 5 small businesses close after 1 year, what is the probability that a randomly selected small business will survive past the first year?

Accepted Answer

$P = 1 - \frac{1}{5} = 0.8$

Question 5

Which of the following is a disadvantage of franchising?

Accepted Answer

Franchise fees

Question 6

A rural incorporated small business in Canada has an average annual revenue of $629,500. An urban incorporated small business has an average annual revenue of $553,700. What is the difference in average annual revenue between rural and urban businesses?

Accepted Answer

$629,500 - 553,700 = 75,800$

Question 7

Which organization assists, counsels, and protects the interests of small businesses in Canada?

Accepted Answer

Business Development Bank of Canada (BDC)

Question 8

What is the main purpose of a business incubator?

Accepted Answer

To provide low-cost, shared business facilities to help accelerate and encourage business development.

Question 9

Which of the following is a form of private business ownership where the organization’s goals do NOT include pursuing a profit?

Accepted Answer

Not-for-Profit Corporation

Question 10

A business owner is considering selling shares to raise capital. Which two types of shares can they sell?

Accepted Answer

Common shares and preferred shares

Question 11

Which of the following is a plausible impact of poor management on a small business?

Accepted Answer

No profit for months or years

Question 12

What is the role of the Canada Small Business Financing Program (CSBFP)?

Accepted Answer

To guarantee payment of 85% of a small business loan if the business defaults.

Question 13

Which of the following is NOT a benefit of franchising?

Accepted Answer

Franchise agreement restrictions

Question 14

If a small business underestimates its start-up costs, which management shortcoming is most directly involved?

Accepted Answer

Underestimating start-up costs

Question 15

Which of the following statements about small business survival rates in Canada is correct?

Accepted Answer

1 in 2 small businesses close within 5 years.

Question 16

Which of the following is a key function of a business plan?

Accepted Answer

Creates a framework for the organization and identifies mission and vision.

Question 17

What is the main difference between a sole proprietorship and a corporation?

Accepted Answer

A sole proprietorship does not legally separate the owner from the business, while a corporation does.

Question 18

Which of the following is a plausible reason why racial and ethnic minorities may choose to start small businesses?

Accepted Answer

To represent and thrive within their communities by adding diversity of goods and services.

Question 19

Which of the following is true about business incubators?

Accepted Answer

93% are run by not-for-profit organizations.

Question 20

Which of the following is a correct statement about venture capital?

Accepted Answer

It is money invested in a small business by another business or group of individuals in return for an ownership share.

Small Business Development and Ownership Structures in Canada

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