73. The shortest path to failure in a small business is A. Poor inventory contro

Question

73. The shortest path to failure in a small business is A. Poor inventory control. B. Poor vendor relations. C. Improper policies and procedures. D. Undercapitalization. E. Over regulation by government. To start any business you must first have A. Investors, B. An idea. C. Capital. D. Employees 74. E. A building. 75. A preci ise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals is a A. Mission statement. B. Corporate charter. C. Business plan. D. Balance sheet. 76. The most important source of funds for any new business is A. The Chamber of Commerce B. The Eximbank. C. Stockholders. D. The owner. E. Donations. 77. Persons or organizations that agree to provide some funds for a new business in exchange for ownership interest or stock are called A. Entrepreneurs. B. Corporate raiders. C. Venture capitalists. D. Stockholders. E. Bondholders. The license to sell another's products or to use another's name in business is called a A. Franchise B. Franchisee. C. Franchiser development system. 78· D. Franchise logo. E. Franchiser.

Explanation / Answer

Q73. The shortest path to failure in a small business is undercapitalization. Undercapitalization implies lack of funds or shortage of funds with business to run its normal business operations and to pay its creditors. This problem is perrenial with the small businesses because options to procure finance are limited for small businesses and due to that they are not able to procure funds in sufficient quantities and this make them vunerable to undercapitalization and when such thing happens businesses fail to sustain themselves and go bust.

Hence, the correct answer is opiton (D).

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