Questions for Chapter 6

True/False

1. A talented entrepreneur should be able to substitute for an experienced management team.
(False)

2. The size of your organization is inversely correlated to the amount of revenue your business can derive
(False)

3. Hiring a salesperson is more attractive than increasing support staff in regards to revenue generated.
(True)

4. Your team members can help you to evaluate feedback from outside sources.
(True)

5. Over 95% of entrepreneurs in the US report that their team members are the main source of seed financing.
(False)

6. A business superstar is unlikely to possess all the business skills needed for long term success.
(True)

7. Analysis of your resume will help you decide …show more content…

Which of the following is not a reason for distributing equity among employees? A) New companies often can’t pay market rates for salary and wages B) Including some equity in the compensation package aligns the employee with the company C) The sense of ownership boosts morale D) Distributing equity among employees reduces the risk of hostile takeover E) Having some equity, he team sticks together during the rough times in the early launch phase
(Answer – D)

14. None of the following tools are usually considered a reward for “sweat equity,” except: A) Founder shares B) Option pool C) Restricted stock D) Stock appreciation rights E) Phantom stock
(Answer – A)

15. What are the disadvantages of distributing founder shares equally among all co-founders? A) The lack of a primary shareholder slows down the decision making process B) CEO may be doing as much work as CEOs of comparable companies, but have less potential upside C) Such distribution makes unwanted acquisitions easy D) A and B E) A and C
(Answer – D)

16. Options give the holder the right to: A) Increase the number of the company shares he is allowed to purchase B) Buy a share in the company at a below-market rate C) Secure a salary increase on a regular basis D) Sell his stocks on the open market for