Entrepreneurship and Small Business Certification Exam
Actual Questions and Answers with complete solution
Elements of the Design Thinking Process
Stage 1: Emphasize- Research Your Users' Needs
Stage 2: Define- State Your Users' Needs and Problems
Stage 3: Ideate- Challenge Assumptions and Create Ideas
Stage 4: Prototype- Start to Create Solutions
Stage 5: Test- Try Your Solutions Out
Difference between small businesses and entrepreneurs?
Small businesses are not always interested in taking on new business opportunities.
Entrepreneurs set up a business with the aim to make a profit.
Compensation Types
1. Piece work- compensation on a per-unit basis. EX: an employer can choose to pay
mechanics a fixed rate for each vehicle they repair instead of paying an hourly rate.
2. Salary- employee receives a set amount of pay each month without overtime
compensation for extra hours worked.
3. Hourly- Employees most affected by minimum wage laws are compensated hourly.
4. Commission- An employee who is paid a percentage of a sale.
5. Equity- Non-cash compensations offered to employees in place of or in addition to a
lower salary.
Types of Sales Channel
1. Business-to-Business (B2B): a transaction or business conducted between one
business and another, such as a wholesaler and retailer. Transactions tend to happen
in the supply chain, where one company will purchase raw materials from another to be
used in the manufacturing process.
2. Business-to-Consumer (B2C): process of businesses selling products/services
directly to consumers, with no middle person.
Typically refers to online retailers who sell products/services to consumers through the
Internet.
Online B2C became a threat to traditional retailers, who profited from adding a markup
to the price.
3. Retail: sell items or services to customers. They typically sell items in-store or may be
sold online.
4. Wholesale: the act of buying goods in bulk from a manufacturer at a discounted price
and selling to a retailer for a higher price, for them to repackage and in turn resell in
smaller quantities at an even higher price to consumers.
Acquisition Costs
, These costs include shipping, sales taxes, and customs fees, as well as the costs of site
preparation, installation, and testing. When acquiring property, acquisition costs can
include surveying, closing fees, and paying off liens.
Angel Investor
a wealthy private investor who provides capital for a business start-up for a stake in the
business in return.
Asset
A tangible item a business owns. They can generate revenue or be converted into cash.
They can be physical items, such as machinery, or intangible, such as intellectual
property.
Balance Sheet
A financial statement used for evaluating the performance of a business. It compares
ASSETS to LIABILITIES plus owner's EQUITY on a specific date.
EX:
Equipment- Long term assets
Bank loans- Current liabilities
Inventory- Current assets
Mortgage payments- Long term liabilities
Bootstrapping
A TYPE OF FUNDING. A business owner that uses their own money to fund their
business.
Break-Even Point
The point where a business's revenue matches its expenses over a given period. AKA
there is no loss or gain for your small business; you've reached the level of production
at which the costs of production equals the revenues for a product.
Break-Even Point = Fixed Cost / (selling price per unit - variable cost per unit)
Budget
The amount of money a business plans on spending during a given period.
Burn Rate
A calculation used to measure a business's monthly cash flow. AKA the amount of $
your business needs in a certain period (usually a month) to cover all expenses. In other
words, burn rate tells you how quickly your business "burns through" capital. This
calculation helps business owners understand how long they can continue to operate at
this rate before running out of money.
Burn Rate = (Month starting Balance - Month ending Balance)
Business Plan
A business plan is a written document that describes in detail how a business defines its
objectives and how it is to go about achieving its goals. Lays out a written roadmap for
the firm from marketing, financial, and operational standpoints.
Legal structures for a corporation
1. C Corp:
C Corporation: the owners (shareholders) are taxed separately from the entity. Are also
subject to corporate income taxation. The taxing of profits from the business is at both
Actual Questions and Answers with complete solution
Elements of the Design Thinking Process
Stage 1: Emphasize- Research Your Users' Needs
Stage 2: Define- State Your Users' Needs and Problems
Stage 3: Ideate- Challenge Assumptions and Create Ideas
Stage 4: Prototype- Start to Create Solutions
Stage 5: Test- Try Your Solutions Out
Difference between small businesses and entrepreneurs?
Small businesses are not always interested in taking on new business opportunities.
Entrepreneurs set up a business with the aim to make a profit.
Compensation Types
1. Piece work- compensation on a per-unit basis. EX: an employer can choose to pay
mechanics a fixed rate for each vehicle they repair instead of paying an hourly rate.
2. Salary- employee receives a set amount of pay each month without overtime
compensation for extra hours worked.
3. Hourly- Employees most affected by minimum wage laws are compensated hourly.
4. Commission- An employee who is paid a percentage of a sale.
5. Equity- Non-cash compensations offered to employees in place of or in addition to a
lower salary.
Types of Sales Channel
1. Business-to-Business (B2B): a transaction or business conducted between one
business and another, such as a wholesaler and retailer. Transactions tend to happen
in the supply chain, where one company will purchase raw materials from another to be
used in the manufacturing process.
2. Business-to-Consumer (B2C): process of businesses selling products/services
directly to consumers, with no middle person.
Typically refers to online retailers who sell products/services to consumers through the
Internet.
Online B2C became a threat to traditional retailers, who profited from adding a markup
to the price.
3. Retail: sell items or services to customers. They typically sell items in-store or may be
sold online.
4. Wholesale: the act of buying goods in bulk from a manufacturer at a discounted price
and selling to a retailer for a higher price, for them to repackage and in turn resell in
smaller quantities at an even higher price to consumers.
Acquisition Costs
, These costs include shipping, sales taxes, and customs fees, as well as the costs of site
preparation, installation, and testing. When acquiring property, acquisition costs can
include surveying, closing fees, and paying off liens.
Angel Investor
a wealthy private investor who provides capital for a business start-up for a stake in the
business in return.
Asset
A tangible item a business owns. They can generate revenue or be converted into cash.
They can be physical items, such as machinery, or intangible, such as intellectual
property.
Balance Sheet
A financial statement used for evaluating the performance of a business. It compares
ASSETS to LIABILITIES plus owner's EQUITY on a specific date.
EX:
Equipment- Long term assets
Bank loans- Current liabilities
Inventory- Current assets
Mortgage payments- Long term liabilities
Bootstrapping
A TYPE OF FUNDING. A business owner that uses their own money to fund their
business.
Break-Even Point
The point where a business's revenue matches its expenses over a given period. AKA
there is no loss or gain for your small business; you've reached the level of production
at which the costs of production equals the revenues for a product.
Break-Even Point = Fixed Cost / (selling price per unit - variable cost per unit)
Budget
The amount of money a business plans on spending during a given period.
Burn Rate
A calculation used to measure a business's monthly cash flow. AKA the amount of $
your business needs in a certain period (usually a month) to cover all expenses. In other
words, burn rate tells you how quickly your business "burns through" capital. This
calculation helps business owners understand how long they can continue to operate at
this rate before running out of money.
Burn Rate = (Month starting Balance - Month ending Balance)
Business Plan
A business plan is a written document that describes in detail how a business defines its
objectives and how it is to go about achieving its goals. Lays out a written roadmap for
the firm from marketing, financial, and operational standpoints.
Legal structures for a corporation
1. C Corp:
C Corporation: the owners (shareholders) are taxed separately from the entity. Are also
subject to corporate income taxation. The taxing of profits from the business is at both
