Typically managed by small groups such as husband-and-wife teams and c

A. Mostly only these businesses are managed by small groups such as life partners.

Incorrect: Out of Scope

The passage states that LB are normally managed by such teams and not ONLY LB are.

B. The revenues of such businesses do not necessarily represent the aspirations of the founders of such businesses.

Incorrect: Out of Scope

In the second paragraph, the author states that these companies do not necessarily have aspiration rapid growth in revenue and that their goals are aligned with the aspiration of the founders to sustain a particular lifestyle. This choice picks up words from this portion and twists them to state something which is not stated or implied at all.

C. Debt financing and equity financing by insiders are the only options available to such businesses looking for capital.

Incorrect: Out of Scope

The passage states that these business mostly produce capital by debt financing and that equity financing in such businesses is mostly done by close family and friends. This by no means implies that there are no other available options. It is possible that these are the preferred ways to procure capital by such companies.

D. In the short run, factors guiding the efforts of the founders of investor funded companies could differ from those of life-style businesses.

Correct

The final two sentences of the passage lead to this inference. The founders of investor funded businesses are concerned with building the equity value of the company in order to sell it in the short run. However, that's not necessarily the case with lifestyle businesses.

E. It is very rare for the founders of such businesses to sell them in the short term.

Incorrect: Out of Scope

The final sentence says that the founders can choose to keep these businesses as long as they want to. It by no means indicates the probability of their selling it.



A. describing how lifestyle businesses provide less hectic lifestyles for their founders.

Incorrect: Irrelevant

Nowhere in the passage does the author compare the lifestyles of the founders of lifestyle businesses with those of others.

B. explaining how difficult it is for lifestyle businesses to obtain capital from outside investors

Incorrect: Partial Scope

The author does mention in the first paragraph that such businesses are of less interest to outside investors but that is just a detail in the passage and does not form the main focus of the passage.

C. suggesting how lifestyle businesses are concerned with matters not entirely dissimilar from other business types

Incorrect: Irrelevant

If anything, the author dedicated more than a paragraph to differentiate between the key features of lifestyle businesses and others.

D. advocating how lifestyle businesses are equally profitable as other businesses despite the limited interest by outside investors

Incorrect: Irrelevant

The author does not compare the profitability of these businesses with others.

E. explaining various features of lifestyle businesses while differentiating them from other business types

Correct

This answer choices matches our pre-thinking and is the correct answer.



A. To contrast lifestyle businesses from other business types.

Correct

This answer matches the summary we came up with and indeed represents the author's tone in the final paragraph. The author lists two features of such businesses while differentiating them with other business types.

B. To describe the similarities and dissimilarities between investor funded businesses and life-style businesses.

Incorrect: Partial Scope

The author does mention certain dissimilarities; however, no similarities between these two business types are discussed/mentioned.

C. To indicate how most of the factors determining the success of a life-style business are internal and not external.

Incorrect: Out of Scope

The author does not discuss the factors responsible for the success of these businesses.

D. To discuss a feature of lifestyle businesses in detail.

Incorrect: Irrelevant

The author doesn't discuss any feature of such businesses here. He/She describes two features while differentiating them from other business types.

E. To suggest how the efforts of lifestyle businesses differ from those of investor funded businesses in the short-run.

Incorrect: Partial scope

This aspect is touched on only in the final two sentences of the paragraph; hence, it does not cover the complete scope of the paragraph.



A. The potential for fast growth in revenues is not synonymous with overall profitability of a business.

Correct

The first two sentences of the second paragraph lead to this inference. The author suggests that these businesses are profitable despite the lack of aspirations for rapid growth.

B. Although lifestyle businesses are fundamentally different from investor funded businesses, most of their features are common with those of other types of businesses.

Incorrect: Out of Scope

The author does say in the first sentence of the final paragraph that these businesses share "some" common features with types of businesses but that does not give us any grounds to conclude that they share "most" features.

C. Lifestyle businesses are generally limited in their scale because of their founders' modest aspirations.

Incorrect: Opposite

In the last sentence of the second paragraph, the author distinctly states that In fact, in that sense, a lifestyle business doesn't have to be small at all, either in revenue or employees.
The author gives us no information to conclude that "generally" such businesses are small.

D. The fields entered by lifestyle businesses are generally not found profitable by other types of businesses such as those funded by investors.

Incorrect: Irrelevant

Nowhere has the author given any information about the kinds of fields entered by lifestyle businesses and those entered by other business types.

E. For companies typically founded by friends and family, equity value is not a prime concern.

Incorrect: Out of Scope

The author does not make any generalization regarding the relationship between equity value and the founders of the company.