ESB Certification Exam Study Guide

The key objective of a small business owner is to generate ____

profits

Entrepreneurs are willing to take on new opportunities and unknown ____ to grow their businesses rapidly

risks

Tangible items that require pick-up or delivery are ____ products

physical

When a ____ purchases an item from a business, it is a business-to-consumer transaction

customer

____ are for-profit corporations with limited liability

S corporations

____ are ideal for international businesses

C corporations

The ____ oversees daily operational and administrative functions

Chief Operating Officer

A ____ votes on the management of a company

stockholder

____ employees are paid a fixed amount each pay period

Salary

Businesses can compensate employees for work they produce when being paid by ____

piece work

Businesses can offer ____ in addition to a lower salary

equity

During the ____ stage of the business life cycle, a company is regularly taking on new customers and starting to generate a consistent income

survival

The owner may decide to sell their ownership in the company during the ____ stage

exit plan

The five elements of the design thinking process are ____

empathize, define, ideate, prototype , and test

____ allows one to see and experience a customer's perspective

Empathy

The design team creates multiple inexpensive versions of a product, known as ____

Minimum Viable Products

Name benefits of a franchise

less risk involved, tested operational processes, or recognized brands

No ownership, no US federal taxes

Non-profit

Best for international business even with being double-taxed

C corporation

Easy to create but comes with unlimited liability

Sole proprietorship

Lower tax rate that prevents the company from being double-taxed

S corporation

Ideal for a single owner seeking low risk

LLC (limited liability company)

Shared financial backing

Partnership

Creates the company

Founder

Oversees company finances

CFO

Owns stock in the company

Stockholder

Reports to the board of directors

CEO

Oversees daily operational and administrative functions Stakeholder Has a vested interest in the success of the company

COO

Has a vested interest in the success of the company

Stakeholder

Non-cash compensation

Equity

Set rate of pay for hours worked

Hourly

Usually found in sales roles

Commission

Set amount of pay in a given period

Salary

List the correct order of the business life cycle stages

Existence, Survival, Success, Take-off, Resource maturity, Pivot or persist, Exit plan

Michael owns a small but profitable tech company. He has been approached by a larger company that wants to purchase his business. In which business life cycle stage is Michael?

Exit Plan

Bill just started a new graphic design business. He is advertising online and trying to gain customers. He just finished working with his first client. In which business life cycle stage is Bill?

Existence

Stephanie started a new flower shop last year. She has a good customer base and money coming in. In which business life cycle stage is Stephanie?

Survival

List the correct order of the design thinking process

Empathize, Define, Ideate, Prototype, Test

During which stage of the design thinking process will the design team create multiple inexpensive product versions?

Prototype

During which stage of the design thinking process is a problem statement formed?

Define

Which stage of the design thinking process involves learning about customers' challenges?

Empathize

____ is the amount of loss one is willing to take when making an investment decision

Risk tolerance

Having a ____ mindset means believing that one can accomplish anything through hard work

growth

An example of an ____ risk is a natural disaster

environmental

A business opportunity is an ____ that lets a buyer start a business

investment

A ____ needs to be obtained to use a brand name on products

license

The five factors that determine the viability of a business opportunity are ____, relationships, cash flow management, management skillsets, and passion

market size

A business plan helps a business achieve short-term and long-term ____

goals

A lean canvas should only be ____ long

one page

The ____ summary creates the first impression of a business plan

executive

The ____ plan should specifically be directed to investors and lenders

financial

A pitch deck is most commonly presented in the form of a ____ presentation

slide

A ____ provides a brief overview of a business where one talks about the company's mission and the value provided to customers

vision and value proposition

A patent protects an ____ from being copied

invention

Trade secrets protect a company's formulas from being shared with ____

competitors

To license a product, one must obtain ____ from the author or creator

authorization

Confidentiality or ____ agreements are signed by employees, agreeing not to share trade secrets

non-disclosure

Name a characteristic of a successful entrepreneur and explain why that skill would be helpful when starting a business

a large variety of characteristics because entrepreneurs recognize opportunities and tolerate risks so they have growth mindsets and use critical thinking to overcome obstacles, they also collaborate with others to solve problems; these characteristics help entrepreneurs be successful

Name one example of a political risk that an entrepreneur might face

increased tax rates or large tariffs

Name one example of an environmental risk that an entrepreneur might face

natural disasters, poor food supplies, or inflation

Name one example of a financial risk that an entrepreneur might face

bankruptcy or no promise of income

Which business opportunity involves recruiting marketers to join a team?

Network marketing

Which business opportunity involves higher start-up costs?

Franchise

Which business opportunity obtains licenses to use a brand name?

Licensing

Which viability factor involves the potential funding of a business opportunity?

Managing cash flow

Which viability factor involves building relationships with experienced professionals?

Relationships

Which viability factor can help an entrepreneur make up for a lack of skills?

Passion

Which viability factor analyzes the skills of employees?

Management skillset

Which viability factor researches the demand for products or services?

Market size

What is the purpose of a pitch deck?

attracting investors, getting them excited, and getting another meeting with them

What is the purpose of a lean canvas?

allowing feedback from others and brainstorming ideas

Which section of a business plan determines if there is a large enough customer pool?

Marketing plan

Which section of a business plan briefly explains everything in the business plan?

Executive summary

Which section of a business plan includes roles that have not yet been filled?

Organizational structure

Which section of a business plan includes things like a budget and profit and loss projection?

Financial plan

Jessica is composing a song and wants to protect it from being copied. Which intellectual property law would best protect Jessica's song?

Copyright

George came up with a secret banana bread recipe that he sells in his bakery. Which intellectual property law would best protect his recipe?

Trade secret

Mary works for a tech company and is designing a new style of headphones. Which intellectual property lawwould best protect Mary's design?

Patent

Will designed a company logo for his new gym. Which intellectual property law would best protect his logo?

Trademark

A target market identifies the ____ to which a company markets its products and services

customer group

A ____ is a statement that explains why a customer should do business with a company

value proposition

____ is more accurate and reliable compared to secondary data

Primary data

Secondary data often contains ____

personal bias

A ____ competitor is a business that sells similar products or services as another business

direct

An ____ competitor is a business that sells different products or services but is similar enough to be competitive with another business

indirect

A ____ analysis documents a company's strengths, weaknesses, opportunities , and threats

SWOT

Financial limitations would be an example of a ____ in a SWOT analysis

weakness

Mark designs logos for businesses in his city. He mostly works with local bakeries. What is Mark's target market?

A. Females, ages 13-19 B. Males, ages 20-40 C. Kids, ages 2-12 D. Adults, ages 25-60

D. Adults, ages 25-60

Josie is a teenage girl who wants to start a jewelry-making business. Her target market is females, ages 10-14. What price should she charge per necklace that she sells?

A. Between one- and ten dollars B. Between ten- and twenty dollars C. Between twenty- and thirty dollars D. Between thirty- and forty dollars

A. Between one- and ten-dollars

A focus group was formed to provide opinions for a target market. What type of data is being collected from thefocus group?

Primary

An internet article about fashion trends seen in Europe was used to select inventory for a small boutique. What type of data was used in this scenario?

Secondary

Cheerleading and gymnastics

Direct competition

Martial arts center

Indirect competition

Trampoline park

Indirect competition

Gymnast training center

Direct competition

Dependable employees

Strength

Increased customers

Opportunity

Repair shop competitors

Threat

Small budget

Weakness

A marketing method that uses customized newsletters to engage with customers is ____

email