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Entrepreneurship and Small Business D1 Flashcards | StudBud
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Entrepreneurship and Small Business D1
Entrepreneurship and Small Business D1
179 terms
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Domain 1 entrepreneurship review
Flashcards
179 cards
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Questions
179
Answers
1
What is included in the start-up investment formula?
Emergency fund, salaries, and fixed costs
Emergency fund, start-up expenditures, and reserve for fixed expenses
Start-up expenditures, variable costs, and fixed costs
Fixed expenses, interest costs, and start-up revenue
2
Small business owners typically aim for rapid growth and taking on new business opportunities
True
False
3
Which type of business structure has double taxation on both corporate profits and shareholder dividends?
Sole Proprietorship
S Corporation
LLC
C Corporation
4
What is a key feature of an indirect distribution channel?
Use of wholesalers, agents, or retailers
Direct purchase from the manufacturer
No intermediaries involved
Only available for e-commerce businesses
5
Researching a service follows the same principles as researching a product
True
False
6
A business generates $8,000 in revenue in one month. What is the annual run rate?
$72,000
$96,000
$100,000
$80,000
7
What is the purpose of calculating the burn rate?
To calculate the ROI
To identify the company's annual revenue
To determine how quickly the company spends its cash reserves
To assess the total monthly expenses
8
Value engineering involves analyzing production processes to reduce costs while maintaining quality
True
False
9
What type of compensation is typically associated with sales roles?
Hourly
Commission
Salary
Equity
10
Retention Cost per Customer = Retention Expense / Number of Retained Customers
$25
$30
$20
$35
11
What is the primary purpose of quality control testing?
To track customer satisfaction
To increase employee productivity
To ensure consistent product or service delivery
To improve marketing strategies
12
Total Leasing Cost = (Monthly Lease Payment × Number of Months) + Fees
$53,000
$60,000
$56,000
$48,000
13
If a business has an income of $8,000, cost of goods sold of $650, and expenses of $4,300, what is the net income?
$7,350
$2,050
$4,300
$3,050
14
What type of intellectual property protects inventions?
Patent
Copyright
Trade secret
Trademark
15
ROI is used to calculate the profitability of an investment relative to its cost
True
False
16
The break-even point can be calculated using the formula Total Monthly Cost ÷ Selling Price
False
True
17
Variable costs change depending on the volume of production or sales
False
True
18
Retaining existing customers is often more cost-effective than acquiring new ones
False
True
19
A pitch deck is a detailed document with every part of the business plan
True
False
20
Gross profit is calculated as Income minus Cost of Goods Sold
False
True
21
Which of the following business structures limits ownership to U.S. citizens or residents only?
Limited Liability Company (LLC)
C Corporation
S Corporation
Sole Proprietorship
22
Passion and strong relationships are critical factors in determining the viability of a business opportunity
False
True
23
Which of the following is a disadvantage of Software as a Service (SaaS)?
Lack of control over features
Limited delivery methods
No subscription fees
No maintenance requirements
24
Secondary data may include personal bias because it interprets primary data
False
True
25
In the "Pivot or Persist" stage, what does the entrepreneur decide?
Whether to sell the company or retain ownership
Whether to adjust the business model or close operations
Whether to grow the business into a large company or start a new project
How to manage financial risks
26
Entrepreneurs are more focused on sticking with existing business operations than exploring new opportunities
True
False
27
A value proposition explains why a customer should do business with a company
True
False
28
Which of the following is typically not included in a business plan?
Executive summary
Personal goals of the entrepreneur
Organizational structure
Financial plan
29
Equity compensation is a form of non-cash compensation
False
True
30
Which type of data is more accurate and reliable?
Primary data
Neither
Both are equally accurate
Secondary data
31
A bakery competes with a coffee shop selling breakfast items. What type of competitor is the coffee shop?
Complementary competitor
Direct competitor
Substitute competitor
Indirect competitor
32
Total Leasing Cost = (Monthly Lease Payment × Number of Months) + Fees
$60,000
$54,000
$64,000
$70,000
33
Which of the following is a funding option that allows business owners to maintain full ownership of their business?
Angel investment
Bootstrapping
Venture capital
Crowdfunding
34
What is an example of primary data?
Interviews and surveys
Academic articles
Market reports
Trade journals
35
SWOT analysis is used to evaluate a company’s internal strengths and weaknesses only.
True
False
36
Which of the following is NOT a level in indirect distribution channels?
Manufacturer to retailer to customer
Manufacturer to wholesaler to retailer
Manufacturer to customer
Manufacturer to agent to wholesaler to retailer
37
Pay-per-click (PPC) advertising requires businesses to pay a fee every time their ad is clicked
True
False
38
Customer acquisition cost (CAC) is an important metric for evaluating the efficiency of marketing and sales expenses
True
False
39
True/False: Assets include liabilities such as loans and credit card balances.
False
True
40
Direct distribution channels typically result in lower-priced goods for customers
True
False
41
Break-even analysis determines how many units must be sold to cover total costs
False
True
42
Trademarks protect unique artistic expressions.
True
False
43
ROI measures the profitability of an investment relative to its cost
True
False
44
What stage involves creating solutions after identifying problems?
Empathize
Ideate
Test
Define
45
How is a run rate calculated?
Total cash ÷ Number of months
Total revenue ÷ Total costs
Operating budget ÷ Fixed expenses
Current monthly revenue × 12
46
Value engineering focuses on reducing costs while maintaining product function
True
False
47
Which of the following business structures allows income to "pass through" to owners, avoiding corporate taxes?
C Corporation
LLC
S Corporation
Both a and c
48
What is the main goal of market penetration pricing?
Target high-income customers
Maximize profit margins from the start
Establish a reliable customer base before raising prices
Quickly recover costs for a new product
49
Angel investors typically require an equity stake in the business they invest in
True
False
50
SBA grants need to be repaid with interest
False
True
51
A pitch deck is a brief slideshow overview of a business plan
True
False
52
Customer service is an essential part of sales channels
True
False
53
Which of the following is an example of an ongoing expense for a business?
Licensing and permits
Taxes
Website design
First month’s rent
54
Direct distribution is usually the shortest and least complicated way to deliver a product
False
True
55
The formula to calculate (CAC) is: (Marketing expense + Sales expense) ÷ New customers
False
True
56
What is a key characteristic of network marketing?
Selling and distributing products within a personal network
Independence from company rules
Guaranteed income
High startup costs
57
The purpose of a value proposition is to communicate the value of products and services to customers
False
True
58
Which is NOT a step in developing internal quality standards?
Define quality in measurable terms
Conduct government inspections
Review testing results
Refine processes
59
Break-even analysis helps businesses determine how much revenue is needed to cover their expenses.
True
False
60
Which type of customer data helps businesses understand buying habits?
Geographical data
Behavioral data
Statistical data
Psychographic data
61
Indirect competitors sell identical products to your business
True
False
62
Indirect distribution often involves:
Several levels of middlemen
Door-to-door sales
Direct contact with customers
Lower product prices
63
CAC = (Marketing Expense + Sales Expense) / Number of New Customers
$250
$400
$200
$300
64
An operating budget only includes variable costs
False
True
65
Product market fit is achieved when customers love your product so much that they recommend it to others
False
True
66
The first stage of the design thinking process is to define the problem.
False
True
67
When choosing between buying and leasing office space, a business should consider:
All of the above
Operational needs
Long-term costs
Short-term financial impact
68
Which of the following is an example of a "Threat" in a SWOT analysis?
Highly skilled staff
Low production costs
An innovative product line
A competitor entering your market
69
Specific Marketing Expense = Total Budget × Percentage Allocated
$18,000
$12,000
$10,000
$15,000
70
What is the formula for calculating ending cash balance?
Total Expenses - Total Sales
Total Revenue - Liabilities
Beginning Cash Balance + Sales - Total Costs
Net Income + Sales Revenue
71
In the prototyping stage of design thinking, what is the main goal?
Create a preliminary model of the product
Conduct surveys and focus groups
Observe customer behavior
Define a core problem statement
72
What does the COO primarily oversee in a business?
Day-to-day operations and administrative functions
Financial planning
Managing sales
Setting the company’s vision and strategy
73
Liabilities are the remaining value of a company after all assets are deducted
False
True
74
A target market is the group of customers that a business focuses on to maximize sales
False
True
75
A B2B transaction involves selling products or services directly to consumers
False
True
76
What is the main goal of reaching product/market fit?
Ensuring consistent growth in sales
Decreasing competition
Minimizing costs
Expanding distribution channels
77
ROI provides insight into the profitability of an investment
True
False
78
A business invests $10,000 in a project, which generates $15,000 in total returns. What is the ROI?
50%
40%
60%
33%
79
A business opportunity always guarantees a profit for the buyer
True
False
80
Licensing allows an entrepreneur to use someone else’s intellectual property for a fee
False
True
81
Formula: CAC = (Marketing Expense + Sales Expense) / Number of New Customers
$150
$200
$100
$50
82
If the cost to produce a product is $100 and the desired profit margin is 20%, what is the selling price?
$125
$100
$140
$120
83
Resiliency in entrepreneurs refers to their ability to tackle challenges with determination
False
True
84
Bundle pricing involves selling multiple products together at a lower price than their individual prices
True
False
85
Shipping Revenue = Shipping Fee × Number of Products Sold
$4,500
$4,000
$5,000
$5,500
86
Product/market fit is achieved when sales volume is high and continues to grow
False
True
87
What does Search Engine Optimization (SEO) aim to achieve?
Improve the rank of a website in search engine results
Develop a new product line
Reduce customer acquisition costs
Increase social media followers
88
Internal quality standards are defined by external regulatory agencies
False
True
89
Environmental factors are a type of business risk entrepreneurs should consider
True
False
90
The ideate stage of design thinking focuses on identifying customer problems
False
True
91
Fulfillment centers:
Process and ship customer orders on behalf of a company
Manufacture and distribute products
Store goods temporarily for retail stores
Handle only in-store purchases
92
Determining the price of a product depends on:
Customer satisfaction
Market competition
Company profitability
Target market willingness to pay
93
Marketing platforms are tools used to advertise, communicate, and connect with customers
False
True
94
The sales process includes which of the following steps?
Pricing, promoting, and placing products
Eliminating competitors and improving pricing
Identifying prospects, presenting, and closing sales
Conducting surveys, lowering costs, and increasing profits
95
What are the 4 P’s of marketing?
Product, Price, Promotion, and Profit
Positioning, Pricing, Placement, and Profit
Product, Price, Promotion, and Placement
Planning, Production, Pricing, and Promotion
96
The formula for ROI is (Net Profit ÷ Cost of Investment) × 100
False
True
97
Which of the following financial ratios helps determine whether a company can cover its immediate liabilities?
ROI
Operating budget ratio
Break-even point
Quick ratio
98
What is the primary purpose of an operating budget?
To calculate ROI
To track customer satisfaction
To forecast profit margins
To project revenues and expenses for a specific time period
99
A Limited Liability Company (LLC) can choose how it is taxed by filing Form 8832 with the IRS
False
True
100
The price a consumer pays for a product in an indirect distribution channel is influenced by the # of intermediaries
False
True
101
The CEO of a company is responsible for creating its vision, strategies, and mission
True
False
102
Which of the following best describes an entrepreneur?
Seeks rapid growth and innovative opportunities
Relies on traditional methods of operation
Prefers low risk and steady profits
Avoids new ventures and unknown risks
103
Fixed costs fluctuate based on the volume of products or services sold
True
False
104
If a company has assets of $50,000 and liabilities of $30,000, what is its equity?
$30,000
$50,000
$10,000
$20,000
105
External quality standards are defined and measured by the company internally
True
False
106
What is the formula for Customer Acquisition Cost (CAC)?
Total Expenses ÷ Total Customers
(Marketing Expenses + Sales Expenses) ÷ Number of New Customers
Marketing Expenses ÷ Total Revenue
Sales Expenses ÷ Total Expenses
107
Copyright protects inventions.
False
True
108
A level 3 indirect distribution channel involves an agent, wholesaler, and retailer before reaching the customer
True
False
109
What does customer retention cost focus on?
Identifying market opportunities
Acquiring new customers
Increasing sales expense
Keeping existing customers
110
Start-up costs are only related to one-time expenses like equipment and logo design
True
False
111
A company’s burn rate can only be positive
False
True
112
Premium pricing involves targeting customers looking to save the most money
False
True
113
Which of the following is NOT a sales channel?
Brick-and-mortar stores
Direct-to-consumer sales
Customer surveys
Online retailing
114
If the production cost is $6.75, the selling price is $10, and the net profit is $3.25, what is the ROI?
52%
48%
25%
35%
115
The burn rate measures how quickly a company depletes its cash reserves
False
True
116
Distribution centers receive and temporarily store goods before fulfilling retail orders
True
False
117
A product costs $80 to produce, and the desired profit margin is 25%. What is the selling price?
$105
$90
$120
$100
118
The design thinking process begins with empathizing with the customer.
False
True
119
Sales channels are the pathways through which products or services are delivered to customers
True
False
120
What does "Equity" represent in a balance sheet?
Total expenses
Total revenue
Total assets minus liabilities
Total liabilities
121
A marketing plan includes the company’s target market, value proposition, and promotional strategies
False
True
122
Which of the following is an advantage of buying office space?
Eventual ownership
Lower upfront costs
No need to pay property taxes
No property maintenance responsibilities
123
Which of the following is an example of a direct distribution method?
Supplier-to-retailer-to-customer
E-commerce
Two-level channel
Using a distribution center
124
What is the first stage of the business life cycle?
Existence
Success
Take-off
Survival
125
Cash flow analysis helps businesses understand how much cash they generate and spend over a specific time period
False
True
126
Which of the following is a phase of achieving product market fit?
Minimum viable product
Customer retention analysis
Distribution planning
Quality control testing
127
Which of the following is an example of a liability?
Company vehicle
Inventory
Accounts receivable
Credit card balance
128
What is the primary purpose of a lean canvas?
To market the company
To create detailed financial projections
To find investors
To simplify the business plan into key elements
129
A business spent $5,000 on marketing and $2,000 on sales, acquiring 70 new customers. What is the (CAC)?
$70
$100
$85
$120
130
A franchisee is allowed to open a location anywhere they choose without restrictions
True
False
131
A distribution channel is the method used to get a product from the manufacturer to the end user
False
True
132
What type of competitor sells products that satisfy the same need but are not identical?
Indirect competitors
Market entrants
Direct competitors
Niche competitors
133
What are the key responsibilities of the CEO?
Managing company finances
Creating and testing prototypes
Monitoring day-to-day administrative tasks
Overseeing operations and resources, setting vision and strategy
134
Which funding option uses online platforms to pre-sell products and raise capital?
Angel investment
Bootstrapping
Crowdfunding
Venture capital
135
When researching a product, a business should:
Ignore market trends
Focus only on design features
Focus only on costs
Understand customer needs and competitors
136
The run rate projects a company’s annual performance based on a single month’s financials
False
True
137
Burn rate measures the speed at which a company spends its cash reserves
False
True
138
Specific Marketing Expense = Total Budget × Percentage Allocated
$10,000
$8,000
$15,000
$12,500
139
What is a key benefit of using SaaS (Software as a Service)?
Ownership of the software code
Custom-built functionality
Time-saving pre-built platforms
No subscription fees
140
What is the formula for the break-even point?
Total Monthly Cost ÷ Selling Price
(Total Revenue ÷ Total Costs) × 100
Total Cash ÷ Net Profit
Fixed Costs ÷ Variable Costs
141
What is a characteristic of direct distribution?
Involves intermediaries
Increases shipping costs for customers
Adds middleman markups
Requires distribution centers
142
ROI measures the profitability of an investment relative to its cost
False
True
143
Leasing equipment has fewer upfront costs but can be more expensive in the long run due to interest and fees
True
False
144
Which of the following is a fixed cost?
Supplies
Credit card fees
Commissions
Salaries
145
The CFO is in charge of forecasting whether the company will meet budget requirements.
False
True
146
Which characteristic of an entrepreneurial mindset involves believing that any goal can be achieved with enough effort?
Risk tolerance
Growth mindset
Self-reliance
Critical thinking
147
What is the primary purpose of a lean canvas?
To provide detailed financial projections
To organize the company’s marketing strategy
To simplify and map key elements of a business plan
To outline the executive summary
148
True/False: The formula for calculating selling price is (Cost × Desired Profit Margin) + Cost.
False
True
149
Shipping Revenue = Shipping Fee × Number of Products Sold
$2,000
$1,500
$3,000
$2,500
150
Copyright protects written works, music, and art.
False
True
151
Retention Cost per Customer = Retention Expense / Number of Retained Customers
$40
$30
$20
$25
152
Which of the following is an example of a political risk?
Changing trade regulations
Environmental changes
Market competition
Customer dissatisfaction
153
What is an example of internal quality control?
Meeting local health inspection requirements
Following government regulations
Complying with industry certifications
Ensuring product standards within the production process
154
A negative burn rate indicates that a company is spending more cash than it generates
False
True
155
Emergency funds are typically half of the estimated start-up expenditures
False
True
156
Which of the following is NOT a characteristic of a franchise?
Ongoing support and training
Higher start-up costs
Guaranteed financial success
Strict rules on location
157
The resource maturity stage allows the owner to separate financially and operationally from the business
False
True
158
Entrepreneurs can mitigate risks by proactively planning.
False
True
159
Which of the following is NOT a responsibility of a Chief Financial Officer (CFO)?
Negotiating financial matters
Managing cash flow
Overseeing day-to-day operations
Creating budgets
160
Emergency funds are typically half of the estimated start-up expenditures
False
True
161
What is the purpose of the “Prototype” stage in the design thinking process?
To define problems
To create the final product
To identify customer needs
To test solutions
162
Which of the following is NOT a common risk faced by entrepreneurs?
Customer preferences
Competition
Environmental factors
Political changes
163
A Limited Liability Company (LLC) is globally recognized and taxed the same in every country
True
False
164
Which of the following is an example of a variable cost?
Rent
Depreciation
Commissions
Salaries
165
External quality standards are set by health and safety inspectors, government agencies, and industry leaders
True
False
166
Which of the following is an advantage of franchising?
No need to pay royalties to the franchisor
Lower upfront costs compared to starting your own business
Complete freedom over branding and products
Access to tested operational processes and recognized branding
167
A business opportunity involves an initial buyer fee of at least $500
True
False
168
High CAC indicates ineffective marketing or a demographic shift
False
True
169
Which of the following is NOT true about franchises?
They come with no restrictions on location
They have higher start-up costs
They lower the risks of starting a business
They offer ongoing training and support
170
A business invests $10,000 in a project, which generates $15,000 in total returns. What is the ROI?
500
333
200
1,000
171
What type of intellectual property protects a company’s logo?
Trade secret
Trademark
Copyright
Patent
172
A minimum viable product (MVP) is a product with the least amount of features needed to satisfy early customers
True
False
173
Which business structure is ideal for international businesses due to double taxation?
S Corporation
LLC
C Corporation
Sole Proprietorship
174
A SWOT analysis identifies a company’s internal strengths and weaknesses, as well as external opportunities and threats
False
True
175
Salaries are considered a one-time start-up expense
False
True
176
Demographic data includes information about customers’ values and motivations
False
True
177
Which type of data is typically easier and faster to obtain?
Neither
Primary data
Secondary data
178
Non-profit entities are exempt from paying U.S. federal taxes
True
False
179
Leasing equipment has higher upfront costs but costs less in the long run
False
True
