Small Business and Entrepreneurs Exam 1
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Questions and Answers

What is entrepreneurship?

Setting up a business with the aim to make a profit.

Classify the following businesses as either B2B or B2C: Motorcycle repair shop, chain of local grocery stores.

  • B2B
  • Neither
  • B2C (correct)
  • Both

    • What legal structure should you set up if you want corporate benefits without double taxation?

    S-Corporation.

    Founders own equity in a business.

    <p>True</p> Signup and view all the answers

    Partners own equity in a business.

    <p>False</p> Signup and view all the answers

    An example of ________ compensation is paying field laborers for the amount of fruit they pick.

    <p>Piece Work</p> Signup and view all the answers

    A ________ employee receives a set amount of pay each month without overtime compensation.

    <p>Salary</p> Signup and view all the answers

    Employees most affected by minimum wage laws are compensated ________.

    <p>Hourly</p> Signup and view all the answers

    An employee who is paid a percentage of a sale is paid by ________.

    <p>Commission</p> Signup and view all the answers

    Match the stages of business development with their descriptions:

    <p>1 = Existence 2 = Survival of the Fittest 3 = Success 4 = Take-off 5 = Maturity</p> Signup and view all the answers

    Match the design thinking stages with their descriptions:

    <p>1 = Empathize 2 = Define 3 = Ideate 4 = Prototype 5 = Test</p> Signup and view all the answers

    What are the three characteristics typical of successful entrepreneurs?

    <p>Responsible, Adaptable, and Tenacious.</p> Signup and view all the answers

    What is one of the greatest benefits of being an entrepreneur?

    <p>Schedule control.</p> Signup and view all the answers

    Which three characteristics help identify a business opportunity? (Choose three)

    <p>Service</p> Signup and view all the answers

    What should an entrepreneur do before offering to design and build water features?

    <p>Ask the customers in the area if they are interested in adding a water feature to their gardens.</p> Signup and view all the answers

    Which two documents summarize a business plan of a company? (Choose two)

    <p>Pitch Deck</p> Signup and view all the answers

    The goal of a business plan is to get investors' buy-in.

    <p>True</p> Signup and view all the answers

    A typical pitch deck has between 20-100 slides.

    <p>False</p> Signup and view all the answers

    Which three elements are required to have a trade secret? (Choose three)

    <p>Subject to reasonable efforts to maintain its secrecy</p> Signup and view all the answers

    What is a target market?

    <p>Customers to whom a company wants to sell its products and services.</p> Signup and view all the answers

    Classify the following data as either Primary or Secondary: a marketing survey you posted on Facebook.

    <p>Primary</p> Signup and view all the answers

    Classify the following data as either Primary or Secondary: demographic data you obtained from the government.

    <p>Secondary</p> Signup and view all the answers

    Indirect Competition is a business whose services are different from yours but satisfy the same need.

    <p>True</p> Signup and view all the answers

    All companies that sell goods and services are indirect competitors.

    <p>False</p> Signup and view all the answers

    Match the SWOT components with their corresponding descriptions:

    <p>1 = Strengths 2 = Weaknesses 3 = Opportunities 4 = Threats</p> Signup and view all the answers

    Which two are office marketing platforms? (Choose two)

    <p>TV ads</p> Signup and view all the answers

    What marketing method is best for expanding customer base with a limited budget?

    <p>Social Media.</p> Signup and view all the answers

    What is the most effective way to gather reactions from dance attendees?

    <p>Surveys.</p> Signup and view all the answers

    What is customer acquisition cost?

    <p>$10.</p> Signup and view all the answers

    Which three are segments in a Marketing Plan? (Choose three)

    <p>Geographic</p> Signup and view all the answers

    Determining if a potential customer can afford your product is part of prospecting.

    <p>True</p> Signup and view all the answers

    Closing the deal is the last final element in the sales process.

    <p>True</p> Signup and view all the answers

    Presentation is best done with a PowerPoint slide deck.

    <p>False</p> Signup and view all the answers

    Which sales channel has been opened to manufacturers because of digital tools?

    <p>Direct-to-Consumer.</p> Signup and view all the answers

    Match the sales channels with their descriptions:

    <p>Retail = Selling products directly to end customers for a profit. Wholesale = Selling products in bulk to various outlets or retailers. Direct-to-Consumer = When a brand sells directly to consumers. B2B = Businesses that sell to other businesses.</p> Signup and view all the answers

    Which two ways can customer service and support affect sales? (Choose two)

    <p>More sales through customer evangelists.</p> Signup and view all the answers

    Which three statements define market-fit hypothesis? (Choose three)

    <p>Product/market fit exists when the right solution aligns.</p> Signup and view all the answers

    What is an effective way to measure your teaching performance during an online course?

    <p>Conduct onscreen pop-up quizzes.</p> Signup and view all the answers

    What is one of the first steps you must do before creating a product prototype?

    <p>Identify materials.</p> Signup and view all the answers

    What needs to be considered regarding the mass production of your electric shaver? (Choose three)

    <p>Finding a manufacturer.</p> Signup and view all the answers

    Determine what standards must be met based on the product and industry.

    <p>True</p> Signup and view all the answers

    Don't spend money on product quality control testing unless more than 10% of customers complain.

    <p>False</p> Signup and view all the answers

    Perishable products require more direct distribution.

    <p>True</p> Signup and view all the answers

    Products that are bulky usually go through multiple handlers before reaching the end customer.

    <p>False</p> Signup and view all the answers

    Which are two characteristics of direct distribution that differ from fulfillment centers?

    <p>The manufacturer controls all aspects of distribution.</p> Signup and view all the answers

    What is the minimum amount the owner must now charge customers for labor to balance increased operational expenses?

    <p>30%.</p> Signup and view all the answers

    What is your equity in the business?

    <p>$11,000.</p> Signup and view all the answers

    What is an example of a fixed cost in a small insurance office?

    <p>Property lease for the office.</p> Signup and view all the answers

    What was last month's Return on Investment (ROI) for your affiliate marketing service?

    <p>20%.</p> Signup and view all the answers

    Which two should be included when calculating start-up costs for a business? (Choose two)

    <p>Permits, licenses, and incorporation fees</p> Signup and view all the answers

    Which two are benefits of equity funding? (Choose two)

    <p>Investors do not get paid if the business does not make a profit</p> Signup and view all the answers

    Creditors look favorably upon a relatively low debt-to-equity ratio.

    <p>True</p> Signup and view all the answers

    Debt financing requires selling a portion of the company.

    <p>False</p> Signup and view all the answers

    The main advantage of equity financing is that there is no obligation to repay the money acquired.

    <p>True</p> Signup and view all the answers

    Equity financing places a large burden on the company.

    <p>False</p> Signup and view all the answers

    Study Notes

    Entrepreneurship Overview

    • Entrepreneurship is the process of starting a business aimed at making a profit.

    Business Classifications

    • B2B (Business-to-Business): Involves transactions such as wholesale flooring distribution; often requires tax exemption certificates.
    • B2C (Business-to-Consumer): Includes motorcycle repair shops and grocery store chains.
    • S-Corporation: Suitable for small businesses with shareholders wanting liability protection and avoiding double taxation.

    Equity Ownership

    • True: Founders maintain equity ownership in a business.
    • False: Partners do not own equity in the same way as founders.

    Employee Compensation Types

    • Piece Work: Payment based on labor output (e.g., fruit picking).
    • Salary: Fixed monthly payment without overtime.
    • Hourly: Directly affected by minimum wage laws.
    • Commission: Percentage-based compensation on sales.

    Business Development Stages

    • Stages include: Existence, Survival of the Fittest, Success, Take-off, Maturity.

    Design Thinking Process

    • Steps include: Empathize (research needs), Define (state problems), Ideate (challenge assumptions), Prototype (create solutions), Test (try solutions).

    Traits of Successful Entrepreneurs

    • Key characteristics include being responsible, adaptable, and tenacious.

    Entrepreneurial Benefits

    • One major benefit of entrepreneurship is the ability to control one's schedule.

    Identifying Business Opportunities

    • Three elements that identify a business opportunity: Service, Price, Quality.

    Market Viability Research

    • Before introducing new services like water feature design, conduct surveys to assess customer interest.

    Business Plan Documents

    • Two key documents summarizing a business plan are Lean Canvas and Pitch Deck.

    Business Plans vs Pitch Decks

    • True characteristics: Business plans aim for investor buy-in and are text-based; Pitch decks are visual presentations.
    • False characteristics: Business plans are not highly visual; pitch decks typically have 10-20 slides.

    Trade Secret Requirements

    • A trade secret requires: reasonable secrecy efforts, information not publicly known, economic value.

    Creative Commons License Elements

    • Components include CC (Creative Commons), BY (Attribution), SA (ShareAlike), NC (NonCommercial), ND (NoDerivatives).

    Target Market Definition

    • A target market includes the specific customers a company seeks to sell its products or services to.

    Data Classification

    • Primary data includes direct surveys; Secondary data covers existing information from government and journals.

    Competition Types

    • True statements: Indirect competition satisfies the same need; direct competition offers similar products. False: Not all businesses are indirect competitors.

    SWOT Analysis

    • Components include Strengths, Weaknesses, Opportunities, Threats, with examples like stock photo galleries for strengths, lack of skilled help for weaknesses.

    Marketing Platforms

    • Office marketing platforms include TV ads and printed materials like flyers and pamphlets.

    Cost-effective Marketing Method

    • For expanding sales volume with limited budget, social media marketing is recommended.

    Customer Feedback Collection

    • Surveys are effective for gathering market reactions from event attendees.

    Customer Acquisition Cost Calculation

    • With 100 new customers and $1,000 in marketing costs, the customer acquisition cost is $10.

    Marketing Plan Segments

    • Three segments to include are Demographic, Behavioral, and Geographic data.

    Sales Process Understanding

    • True aspects include determining customer affordability as part of prospecting; Listening to customer concerns is critical.
    • False aspects suggest that closing is the final step and that presentations must use PowerPoint.

    Digital Sales Channel

    • The digital era has opened up direct-to-consumer sales channels for manufacturers.

    Distribution Types

    • Distinctions between Retail (selling directly to consumers), Wholesale (selling in bulk), and Direct-to-Consumer.

    Customer Service Impact on Sales

    • Positive impacts include increased sales through customer advocacy and responsiveness.

    Market/Fit Hypothesis Elements

    • Product fit occurs when there’s a true need for the product, with solutions solving significant problems; enthusiastic user referrals indicate success.

    Teaching Performance Measurement

    • On-screen pop-up quizzes can effectively measure teaching performance in online courses.

    Prototype Development Basics

    • Identifying necessary materials is an essential first step before creating a product prototype.

    Mass Production Considerations

    • Essential considerations include creating prototypes, finding manufacturers, and sourcing necessary materials.

    Product Quality Control

    • True aspects include determining and refining testing standards; establishing testing methods is also crucial.
    • False aspects suggest that competitor quality testing is irrelevant and that spending is only justifiable for high complaint rates.

    Distribution Channel Selection

    • True: Perishable items require direct distribution; product pricing impacts distribution length.
    • False: Bulky products often involve multiple handlers.

    Direct Distribution Characteristics

    • Key traits include manufacturer control over distribution aspects and the term "zero-level channel."

    Minimum Wage Impact on Costs

    • A 30% increase in minimum wage translates directly to a 30% required increase in customer charges for labor.

    Equity Calculation

    • Business equity is determined by subtracting total liabilities from total assets.

    Fixed Costs Example

    • In a small insurance office, a property lease represents a fixed cost.

    Return on Investment (ROI)

    • For $1,000 spent on PPC resulting in $1,200 sales, the ROI is 20%.

    Startup Costs Essentials

    • Start-up costs must consider permits, licenses, and business cards.

    Equity Funding Benefits

    • Benefits include assisting in raising working capital and investors only receiving payment if profits are generated.

    Equity vs Debt Financing

    • True: A low debt-to-equity ratio aids future financing opportunities.
    • False: Equity financing can be burdensome due to ownership implications.

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    Description

    Test your knowledge on entrepreneurship and business classification with this flashcard quiz. Topics covered include the definition of entrepreneurship and the distinction between B2B and B2C businesses. Perfect for those studying small business principles.

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