ESB EXAM Study Guide Questions And Answers

ESB EXAM Study Guide Questions And Answers Flexibility - ANS Ability to adapt, willingness to change Courage - ANS Takes risks in spite of possible losses Empathy - ANS Sensitive to thoughts and feelings of others What are three characteristics of entrepreneurs? - ANS Creativity, Determination, Enthusiasm After a self-assessment, a potential entrepreneur has learned that she has a very low risk tolerance. Based upon this finding, which approach might be less stressful for the entrepreneur to have her own business? - ANS Buy an existing business that is already successful. An entrepreneur moves into a small town and notices several stores selling guns and ammunition. The entrepreneur loves to compete in competitive shooting events. Based on the scenario provided, what should be emphasized in marketing to attract customers? - ANS Location An entrepreneur has been working for a flooring business in a neighboring town. He feels he is ready to open his own flooring business in his local community. Which should be emphasized in marketing to attract customers to his new business? - ANS Lower Prices Which is one of the greatest benefits of entrepreneurship? - ANS Being your own boss Which are three risks of entrepreneurship? - ANS Long hours, potential business failure, financial insecurity Gabe has worked as a journeyman electrician for an employer for the past 16 years. He is paid a good salary. His only dissatisfaction is the hours are long and often when he requests time off he is denied because of customer workload. Which benefit of entrepreneurship will Gabe most enjoy? - ANS Autonomy What is a primary benefit of starting a new business without purchasing a franchise or buying an existing business? - ANS Developing your own rules A mechanic just graduated from motorcycle repair school and wants to start a business because there is a lack of motorcycle repair shops in the local town. Given the facts provided, which opportunity would be the best choice for the motorcycle mechanic to open a business? - ANS Start a new business and invest $50,000 in modern diagnostic tools. An entrepreneur who has a hobby in leathercraft wants to turn it into a business. She wants to sell purses, belts, and other leathercrafts from her home. Which opportunity for starting a leathercraft business would have the highest probability of success? - ANS Build an online storefront Based upon the education and skills gained from the years of vocational training as an auto mechanic, as well as having grown up in a family of entrepreneurs, a young adult decides to open an auto mechanic shop. Which customer group will this new auto mechanic business support? - ANS Businesses The owner of a pizza delivery business is seeking new customers. The owner has identified a group of potential customers that have moved into some new housing within reaches of his drivers. Which method of segmentation is the owner using? - ANS Geographic A child daycare center needs to identify a value of proposition that will help parents feel secure about using their services. Which two initiatives meets this objective? - ANS Providing live web cams parents can access from the Internet by using a secure logon. Offering a list of references from other parents The owner of a pet daycare is presenting a plan to investors to expand the facility and promises the center will meet the needs of customers with a variety of schedules. What is a legitimate value proposition for potential customers? - ANS Providing extended hours to pickup and drop off pets before and after work Which two groups benefit most from a well-written business plan? - ANS Business owner Investors Which of the following should be addressed in the description section of a business plan? - ANS Target Markets Easy to setup, but has unlimited liability. - ANS Sole Proprietorship Terminates upon death of a partner - ANS General or Limited Partnership Double-taxed, but best for international businesses - ANS C Corporation Similar to a C Corporation, but taxed at a lower rate - ANS S Corporation Owned by no one; pays no U.S federal tax - ANS Nonprofit Corporation Best for a single member seeking low risk - ANS Limited Liability Company The partners of an awning repair shop are assessing the amount of money needed to start a business at a new location. The partners have calculating that the business will generate more than enough revenue to cover monthly expenses after its second month in operation. What is the amount of start-up capital the partners will need to open the new awning repair business? - ANS $84,920 The owner of a mobile food truck plans to sell tacos, hamburgers, and other foods to employees in a large office complex. Before opening his business, the owner will most likely need to obtain which of the following documents from each employee to verify they have completed a course in food handling safety? - ANS Certificate An individual starts a babysitting business with a loan of $1000. The loan is for 2 years at a 5% COMPOUND interest rate. How much will the individual owe by the end of the loan assuming nothing is paid until the end of the 2 years term. - ANS $1,102.50 A carpenter wants to start his own business building custom cabinets. Unfortunately, he has no business training and needs assistance writing a business plan, finding funding, and obtaining general advice. Which agency should the carpenter utilize? - ANS SBA A software development consultant works with several clients. Some of the clients are competitors. What is a consequence if the consultant violates confidentiality by discussing a client's project with another client? - ANS Loss of clients and possible lawsuit Exchanging ownership for cash, either by acquisition or merger - ANS Harvesting Transferring ownership to people who already operate the business - ANS Management Buyout A business owner sells ownership to a retirement fund for the employees - ANS Employee Stock Ownership Plan (ESOP) Dividing ownership of a privately held company into shares sold to the public - ANS Initial Public Offering (IPO) The owner of a popular seafood restaurant needs to hire a new chef - ANS 1. Identify the skills required of the new chef 2. Write the job description, including minimum and desired requirements 3. Post an ad in places most likely to be viewed by qualified candidates 4. Accept and review applications to assess the most qualified candidate A successful software trainer has decided to open a corporate training business. The software trainer is putting together an organizational chair and assessing what job roles will be needed. What are some of the expected roles of those employees on the highest level of the organizational chart? - ANS Developing succession plans and building a board of advisors An interior designer has learned the she must pay-self employment tax on her individual earnings. Which type of legal structure must pay self-employment tax? - ANS Sole proprietorship An entrepreneur was building a website for a new dog grooming business. Through internet searches, the entrepreneur found many pictures to use on the new business's website. Which type of intellectual property protection is at issue in this example? - ANS Copyright An entrepreneur notices new demand for products featuring characters from a recent movie. The entrepreneur finds a manufacturer of kitchen products featuring these character. Based on the scenario provided, what should be a primary concern of this entrepreneur? - ANS Reliability of supply A family owns a tractor sales and supply store. Over the past decade sales of large tractors and implements have decreased as many of the old farms in the community have sold and been subdivided into smaller residential hobby farms. Given the facts provided, which action would be most likely to increase the sustainability of the business? - ANS Add a line of small lawn and garden tractors The owner of a new landscaping company has set a number of milestones for the first year of his business. Achieving which of the following goals will show that the business has broken even or better? - ANS Profitable operations A property care business provides landscaping maintenance, debris cleanup, and snow removal. The owner is reviewing several requests for its services. Which potential new customer will generate the highest gross revenue over the next year? - ANS Apartment complex paying $175 weekly A local bakery wants to develop close relationships with its customers to encourage return business. What is the best option for the bakery to accomplish this goal? - ANS Provide a free baked good each quarter to customers who signup to receive a monthly newsletter The owner of a tire shop in a large city wants to reach the largest number of people with promotional efforts. Which method should be used? - ANS TV advertising The owner of a computer training center wants to know the book value of all the equipment in the center at the end of the year. Which financial statement provides this information? - ANS Balance sheet The owner of Reliable Appliance Repairs is analyzing financial parts of the income statement including Net Sales, Total Cost of Goods Sold, Gross Profit, Total Expenses, Pre-Tax Profit and Net Profit. Match each figure to correct location in the Income Statement worksheet. - ANS A.$45,144 B.$18,500 C.$26,644 D.$9,325 A business owner is applying for a loan with a bank. The bank uses a standard credit application form that asks the business owner about her personal income, bank accounts, credit cards, current balances outstanding, whether she rents or owns her house and other personal information. Which three are factors that affect credit scores? - ANS Payment history on existing loans Amounts owed on existing loans Types of credit already in use by the applicant The owner of an online retail business dropships merchandise from her wholesale suppliers directly to her retail customers. Which expense of her business is variable? - ANS Cost of Shipping A law is passed increasing the minimum wage from $10 to $15 per hour. A gourmet pizza restaurant is popular for obtaining its ingredients locally. Which two factors are most responsible for the price increase? - ANS Increased raw material costs Increased labor costs