Small Business and Entrepreneurs Exam 1

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.

True Signup and view all the answers

Partners own equity in a business.

False Signup and view all the answers

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

Piece Work Signup and view all the answers

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

Salary Signup and view all the answers

Employees most affected by minimum wage laws are compensated ________.

Hourly Signup and view all the answers

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

Commission Signup and view all the answers

Match the stages of business development with their descriptions:

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

Match the design thinking stages with their descriptions:

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

What are the three characteristics typical of successful entrepreneurs?

Responsible, Adaptable, and Tenacious. Signup and view all the answers

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

Schedule control. Signup and view all the answers

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

Service Signup and view all the answers

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

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

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

Pitch Deck Signup and view all the answers

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

True Signup and view all the answers

A typical pitch deck has between 20-100 slides.

False Signup and view all the answers

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

Subject to reasonable efforts to maintain its secrecy Signup and view all the answers

What is a target market?

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

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

Primary Signup and view all the answers

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

Secondary Signup and view all the answers

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

True Signup and view all the answers

All companies that sell goods and services are indirect competitors.

False Signup and view all the answers

Match the SWOT components with their corresponding descriptions:

1 = Strengths 2 = Weaknesses 3 = Opportunities 4 = Threats Signup and view all the answers

Which two are office marketing platforms? (Choose two)

TV ads Signup and view all the answers

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

Social Media. Signup and view all the answers

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

Surveys. Signup and view all the answers

What is customer acquisition cost?

$10. Signup and view all the answers

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

Geographic Signup and view all the answers

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

True Signup and view all the answers

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

True Signup and view all the answers

Presentation is best done with a PowerPoint slide deck.

False Signup and view all the answers

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

Direct-to-Consumer. Signup and view all the answers

Match the sales channels with their descriptions:

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. Signup and view all the answers

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

More sales through customer evangelists. Signup and view all the answers

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

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

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

Conduct onscreen pop-up quizzes. Signup and view all the answers

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

Identify materials. Signup and view all the answers

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

Finding a manufacturer. Signup and view all the answers

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

True Signup and view all the answers

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

False Signup and view all the answers

Perishable products require more direct distribution.

True Signup and view all the answers

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

False Signup and view all the answers

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

The manufacturer controls all aspects of distribution. Signup and view all the answers

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

30%. Signup and view all the answers

What is your equity in the business?

$11,000. Signup and view all the answers

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

Property lease for the office. Signup and view all the answers

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

20%. Signup and view all the answers

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

Permits, licenses, and incorporation fees Signup and view all the answers

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

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

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

True Signup and view all the answers

Debt financing requires selling a portion of the company.

False Signup and view all the answers

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

True Signup and view all the answers

Equity financing places a large burden on the company.

False 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.

Legal Structures

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.