Text 1Recent analysis of entrepreneurial ventures reveals concerning patterns in small business sustainability. Data from the Small Business Administr...
GMAT Craft and Structure : (Structure) Questions
Text 1
Recent analysis of entrepreneurial ventures reveals concerning patterns in small business sustainability. Data from the Small Business Administration shows that approximately 50% of new businesses close within five years, representing significant economic loss. These closures often occur despite initial optimism and adequate market demand, suggesting that business failure involves complex, multifaceted challenges that extend beyond simple financial metrics.
Text 2
A comprehensive study tracking 2,000 small businesses over seven years identified specific patterns that distinguish successful ventures from those that fail. The research found that businesses implementing systematic planning processes - including detailed financial projections, competitive analysis, and contingency planning - demonstrated markedly higher survival rates. This systematic approach appears to address the complex challenges that lead to the high failure rates documented across the entrepreneurial sector.
Based on the texts, both authors would most likely agree with which statement?
Entrepreneurs should focus primarily on securing adequate startup funding.
Market research is essential before launching any new business venture.
Small business failure rates represent a significant challenge for entrepreneurs.
Financial planning is more important than competitive analysis for business success.
Step 1: Decode and Map the Passage
Create Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| Recent analysis of entrepreneurial ventures reveals concerning patterns in small business sustainability. |
|
| Data from the Small Business Administration shows that approximately 50% of new businesses close within five years, representing significant economic loss. |
|
| These closures often occur despite initial optimism and adequate market demand, suggesting that business failure involves complex, multifaceted challenges that extend beyond simple financial metrics. |
|
| A comprehensive study tracking 2,000 small businesses over seven years identified specific patterns that distinguish successful ventures from those that fail. |
|
| The research found that businesses implementing systematic planning processes demonstrated markedly higher survival rates. |
|
| This systematic approach appears to address the complex challenges that lead to the high failure rates documented across the entrepreneurial sector. |
|
Provide Passage Architecture & Core Elements
Main Point: Small business failure rates are a significant challenge that research suggests can be addressed through systematic planning approaches.
Argument Flow: Text 1 establishes that small business failure is a widespread, complex problem affecting 50% of new ventures. Text 2 then presents research showing that systematic planning processes can effectively address these high failure rates.
Step 2: Interpret the Question Precisely
This is a fill-in-the-blank question asking us to choose the best logical connector. The answer must create the right relationship between what comes before and after the blank.
Step 3: Prethink the Answer
- Both texts share the acknowledgment of high small business failure rates as a significant issue
- Text 1 explicitly calls the patterns concerning and provides the 50% failure statistic
- Text 2 references the high failure rates documented across the entrepreneurial sector
- Both texts treat this as a serious problem that deserves attention
Entrepreneurs should focus primarily on securing adequate startup funding.
✗ Incorrect
- This choice focuses specifically on startup funding as the primary concern
- Text 1 actually suggests challenges extend beyond simple financial metrics
- Neither text prioritizes funding as the main focus
Market research is essential before launching any new business venture.
✗ Incorrect
- Neither text specifically emphasizes market research as essential
- Text 1 mentions adequate market demand exists despite failures, suggesting market research alone is not the solution
Small business failure rates represent a significant challenge for entrepreneurs.
✓ Correct
- Both texts explicitly acknowledge high failure rates as a significant problem
- Text 1 calls the patterns concerning and cites 50% failure rates representing significant economic loss
- Text 2 refers to high failure rates documented across the entrepreneurial sector
- This shared acknowledgment is the clear point of agreement
Financial planning is more important than competitive analysis for business success.
✗ Incorrect
- Neither text suggests one element is more important than others
- This creates a hierarchy that neither author establishes