U.S. Entrepreneurship Certification Examination Practice Exam

Vocab flashcards derived from the U.S. Entrepreneurship Certification Practice Examination questions and answer key.

Nonprofit businesses

Businesses that typically invest net profits back into business activities that support social and charitable causes.

Intrapreneurship

When employees are encouraged to be innovative and take risks in the workplace to solve problems.

Social entrepreneurs

Entrepreneurs who are passionate about improving the quality of life for people.

Adaptability

An entrepreneurial mindset that allows an entrepreneur to adjust to changing circumstances in a positive way.

Competitive advantage

When products have more or better features and benefits than those of competitors.

External threats

Components in a SWOT analysis that might include competitors, business regulations, and industry trends.

Industry analysis

An examination of secondary data on overall trends regarding competition, growth, and technology across a category of products.

Primary market research

Research conducted using sources such as surveys and focus groups.

Internal business communication

Communication practices such as online employee meetings, emails to employees, and handling employee conflicts in-person.

External business communication

Communication that includes talking with supply chain management, updating websites, and asking for customer feedback.

Pain point

A frustration that customers have with a product that might be solved by creating a new and improved version of the product.

Empathize

The first step in the design thinking process, which means to understand frustrations.

Minimum Viable Product (MVP)

A lean startup concept where an entrepreneur makes a small sample of a new product to get feedback from potential customers using as few resources as possible.

Customer discovery

The first step in a lean startup process.

Pivoting

The act of making significant changes to a product or creating a new product altogether based on customer feedback from the build-test-learn loop.

Iterating

The process of making small or incremental improvements to a product based on build-test-learn loop data.

Revenue streams

The component of the business model canvas that determines how a business will make money and how much customers are willing to pay.

Value proposition

A convincing statement that summarizes how a product solves customer problems in a unique way.

Mission statement

A statement that is specific in terms of achieving daily business goals.

Vision statement

A philosophical statement that reflects what a business will hopefully become in the future.

Sole proprietor

An entrepreneur who owns a business and is personally responsible for its obligations and failure.

Franchise

A business opportunity that allows a person to start a business by legally using someone else’s expertise, ideas, and processes.

Corporation

A business structure that operates as a separate legal entity from the owners and raises money by selling stocks.

LLC (Limited Liability Company)

A hybrid form of business that offers owners limited personal liability benefits of a corporation and decreased taxation benefits of a partnership.

Wholesale business

A business that purchases products in bulk directly from manufacturers and then resells them to retailers.

Channel of distribution

An economic channel that moves a product from the producer to the consumer, commonly involving manufacturers, wholesalers, and retailers.

Economics of one unit (EOU)

A formula for calculating unit profitability: $\text{sales price} - \text{cost}$.

Estimated tax payments

Payments on business income that sole proprietors must pay to state and federal governments four times annually to avoid penalties.

Bootstrapping

The practice of being resourceful by using one's own money and resources to start a business.

Equity financing

Money borrowed from an source, such as a venture capitalist, in return for partial ownership of a business.

Collateral

A personal guarantee, such as a house, car, or jewelry, that a loan will be paid back with interest even if the business fails.

Crowdfunding

A method of raising a small amount of money from many people to start a business, typically via the Internet.

Pro forma financial statements

Projected financial statements used by entrepreneurs to assess business performance against actual financial statements.

Break-even point

The number of units a business must sell to pay its business expenses and not incur a loss.

Market segmentation

The process of dividing customers into groups based on shared characteristics to create an effective marketing plan.

Marketing mix

Traditional decisions regarding product, price, place, and promotion used to identify and reach a target market.

Market penetration pricing

A strategy that sets a low price to enter a competitive market and then raises the price after enough people become customers.

Bundling pricing

Pricing multiple services or products together at a lower price than if purchased individually.

Product positioning

Strategies used to market products and set them apart from competition based on price, quality, features, and benefits.

Shared economy

An economic system where individuals repurpose their personal assets, such as cars, to make money through platforms like Grubhub.

Opportunity cost

The money or value not earned from an alternative choice when resources like time are scarce.

Product life cycle

The stages of a product's existence: introduction, growth, maturity, and decline.

Equilibrium price

The price reached when the price and quantity demanded by customers equals the price and quantity supplied by entrepreneurs.

Environmental responsibility

The requirement for an entrepreneur to balance business profit with the welfare of the natural environment.

Liability insurance

Insurance that protects a business if it is sued for causing harm, such as creating a faulty product that injures a customer.

Workers compensation insurance

Insurance that pays medical bills and lost wages for employees due to workplace injury or illness.

Patent

A legal protection for an entrepreneur’s invention that prevents others from making or selling it for a limited period of time.

SCORE

A resource that pairs entrepreneurs with retired business owners and executives for networking and mentoring opportunities at no cost.

Measurable (SMART goal)

A characteristic of a goal that requires the use of numbers, such as dollar amounts or percentages, to track progress.

Exit strategy

A plan for leaving a business, which may include selling to managers, liquidating assets, or selling stock via an initial public offering (IPO).