ESB Certification Exam Prep Notes

These flashcards cover key concepts from the ESB Certification Exam prep notes, focusing on small business principles, entrepreneurial definitions, financial management, marketing strategies, and operational frameworks.

What is the primary objective of small business owners?

To generate profits and maintain their current business operations.

What distinguishes entrepreneurs from small business owners?

Entrepreneurs are interested in taking on new business opportunities and actively seek to grow their business.

Define franchising in the context of small businesses.

Franchising involves license agreements to operate under a brand, which includes ongoing support and a fee based on sales revenue.

What are physical products?

Tangible items that are perceived to be of higher value because they can be seen and touched.

What does e-commerce refer to?

The selling of items over the internet, which can include both physical and digital products.

What is a Business-to-Consumer (B2C) transaction?

A transaction where a customer purchases an item directly from a business.

Differentiate between an S Corporation and a C Corporation.

An S Corporation has pass-through taxation while a C Corporation is taxed separately from its owners.

What is the main advantage of a Limited Liability Company (LLC)?

It offers limited liability protection similar to a corporation but with less complexity and cost.

What is a Sole Proprietorship?

A simple business structure where the owner is personally responsible for all debts and liabilities.

What role does the Chief Executive Officer (CEO) play in a company?

The CEO is the highest-ranking employee responsible for major decisions and overseeing operations.

What are the two key financial statements a business typically uses?

The Balance Sheet and the Income Statement.

Define 'break-even point' in business finance.

The level of sales at which total revenues equal total costs, meaning the business makes neither profit nor loss.

What does SWOT analysis stand for?

Strengths, Weaknesses, Opportunities, and Threats.

What is the formula for Customer Acquisition Cost (CAC)?

CAC = (Marketing Expenses + Sales Expenses) / Number of new customers acquired.

What is a Pitch Deck?

A brief presentation summarizing the business plan, products, funding needed, and financial projections aimed at attracting investors.

What is the purpose of a Business Plan?

To outline how a business will be structured, managed, operated, and grown, including financial forecasts and goals.

How does an investor differ from a venture capitalist?

Investors provide general funding whereas venture capitalists usually invest in businesses with high growth potential for equity stake.

What is meant by 'Quality Control Testing'?

A process to ensure that products and services delivered meet a consistent standard and required quality.

What are the four P's of the marketing mix?

Product, Price, Place, and Promotion.

What is the significance of the Lean Canvas?

A one-page document used to brainstorm key components of a business plan, concise for feedback without needing a full plan.

Define the significance of Customer Retention Rate.

It measures the percentage of customers a company retains over a period, highlighting long-term customer loyalty.