ESB Certification 3

What should happen after one determines a company's quality control process meets the company's quality standards?

"An internal team should review the results of product testing and look for ways to refine and improve upon the quality control process."

Kelly has decided to purchase a new rug for her home. She visits a local home decor store and purchases a rug there. What type of transaction is this?

"Business-to-consumer."

What are the benefits of physical sales channels?

"Customers can interact with the product" and "customers can often receive the purchased product at the time of purchase."

What are two examples of direct distribution channels?

"Door-to-door sales" and "e-commerce sales."

Tommy was hired to help boost a startup company's sales and marketing strategies. The startup company does not have enough cash to continue paying Tommy his full salary. Tommy is passionate about the company's vision and has agreed to receive some of his pay in company stocks. Which two forms of compensation is Tommy receiving for his work?

"Equity" and "salary."

In what region should this company focus future sales efforts to improve sales in the area with low sales numbers based on this data?

"In the Midwest.

When considering the reliability of the management for a business opportunity, what else should one consider at this time?

"One's own skillset."

Which are options for determining what a customer's service needs are?

"Talk with individuals interested in the service," "survey customers in the area," and "place phone calls."

A company's _________ may play a role in pricing.

"Target market"

Which two aspects of a company's customers could a high customer acquisition cost (CAC) indicate?

"The marketing is ineffective" and "the demographic has shifted."

Which are eligibility requirements for a Small Business Administration (SBA) grant?

"The owners must have responsible owner equity to investment," "the company must do business within the United States or its territories," and "the company must do business within the United States or its territories."

Larry owns a shoe store. His starting balance last month was $17,300. His ending balance was $14,700. What is Larry's burn rate?

$2,600 $17,300 - $14,700 = $2,600

James owns a sporting goods store. He just manufactured his own bicycle brand and needs to figure out what the selling price should be. The manufacturing cost per bike is $65, and his desired profit margin is 15%. What is James's selling price?

$74.75 $65 x .14 = $9.75, and $9.75 + $65 = $74.75

When must real estate loans through the Small Business Administration (SBA) be paid back?

25 years

What is the formula for determining burn rate?

Burn rate = Month starting balance - Month ending balance

A key example of a prebuilt _________ service many companies use is a Software as a Service (SaaS) platform.

Digital.

Arrange the stages of a business life cycle in the correct order.

First stage is "existence" Second stage is "survival" Third stage is "success" Fourth stage is "take-off" Fifth stage is "resource maturity" Sixth stage is "pivot or persist" Seventh stage is "exit plan"

What is the formula for determining gross profit?

Gross profit = Income - Cost of goods

A lean canvas should only be _______ page long, discussing key information, without all the details one would see in a business plan.

One.

Investors use customer acquisition costs (CAC) to determine if a company is _______.

Profitable.

Factors that aid in determining whether or not a business opportunity is viable include market size, _____, management of cash flow, management skill sets, and passions.

Relationships.

An operating budget is a projection of _______ and expenses for a specified period such as a quarter or a year.

Revenues.

Demetri is implementing the design thinking process into his business. In what order should the steps be taken?

Stage 1 - "Empathize" Stage 2 - "Define" Stage 3 - "Ideate" Stage 4 - "Prototype" Stage 5 - "Test"

With _________ it is easy to target a specific geographic location.

"Newspaper marketing"

Companies run the risk of employee's sharing trade secrets. Which two documents do many companies have their employees sign to help mitigate this risk?

"Non-disclosure agreement (NDA)" and "confidentiality agreement."

It is becoming more and more common to sell products and services _________.

"Online"

Match the legal structure to its description.

An "S-corporation" is a for-profit corporation with a lower tax rate that prevents the company from being double taxed S corporation. A "C-corporation" has its profits are taxed when earned, and then the shareholders' dividends are taxed after they are distributed. This legal structure is best for international businesses. A "limited liability company (LLC)" allows the owner to pay taxes on their profits or losses through their own taxes using a personal tax rate. This legal structure is ideal for a single owner seeking low risk. A "sole proprietorship" is easy to create, but comes with unlimited liability. A "partnership" has shared financial backing. A "non-profit" has no ownership and pays no US federal taxes.

Match the business plan component to its description.

An "executive summary" summarizes what one wants to accomplish with a business, the products and services one sells, financial outlook, the funding needed, one's goals, and one's achievements. A "marketing plan" determines the size of a market with marketing analysis and describes potential customers to provide a customized plan to reach them. "Organizational structure/management bios" provides an overview of the employees and others that are part of a business. A "financial plan" includes a budget, a 12-month profit and loss projection, cash flow statements, a breakeven analysis, and capital requirements to show investors how their money will be spent.

What is the formula for determining income tax expense?

Income tax expense = Gross profit x Tax rate

Match the characteristic with its definition.

"Critical thinking" - Solving problems in the best way by considering a variety of potential solutions to the problem "Creativity and innovation" - Bringing new and unconventional ideas to the table and finding creative and new solutions to the way things are done. "Collaboration" - Working with others towards a common goal. "Problem-solving" - Coming up with solutions to solve a problem "Personal agency" - Working toward achieving a goal without someone directing and ensuring it is being done. "Ethical practices" - Decision-making based on morals and doing the right thing Ethical practices. "Social responsibilities" - Preventing and removing any corruption and unethical behavior that could harm a business, the community, or the environment"could harm a business, the community, or the environment.

Match the design thinking stage to its description.

"Empathize" stage: Spend time gaining an understanding by observing, engaging, and empathizing with customers to understand their experiences and their needs better. "Define" stage: Analyze observations and information to identify the core problem "Ideation" stage: The design team comes up with solution ideas "Prototype" stage: The design team creates multiple inexpensive versions of the product, known as minimum viable products (MVPs) "Test" stage: The design team identifies any additional problems and refines the final solution before the final product is produced and released to customers

Korryn works at a convenience store. When she was hired, she was told that she would be working 40 hours per week and receive $15 per hour of work. In addition to this, the company gives all employees partial ownership of the company in the form of shares. Which two forms of compensation does Korryn receive for her work?

"Equity" and "hourly"

Match the compensation type to its description.

"Hourly pay" - Payment for the hours an employee has worked. "Salary" - Fixed payment amount for each pay period. "Commission" - A fee paid to an employee for completing a task. "Piece work" - Compensation for the number of units an employee produces. "Equity" - Non-cash compensation, including an investment vehicle, ownership in the company, restricted stocks, or shares.

What are the two advantage of selling digital products?

"Not needing physical storage, inventory, or additional employees" and "delivery is instantaneous and inexpensive."

_________ marketing lets marketers place ads on websites within search engines.

"Pay-per-click (PPC)"

Jeff works for Green Grass Mowing Company. He is paid a fixed amount for each lawn he completes during the day. In addition to mowing lawns, Green Grass Mowing Company offers its customers a fertilization treatment for an additional cost. For every fertilization treatment Jeff secures, he receives an additional $7 in pay. Which two forms of compensation does Jeff receive for his work?

"Piece work" and "commission."

Dylan owns a small grocery store. The store has not been receiving a lot of business during the last few months and has been making a low profit. Dylan has a meeting scheduled to discuss these issues with other employees of the grocery store. In which business life cycle is Dylan?

"Pivot or persist."

Match the pitch deck component to its description.

"Problem"; Discuss what customer problem the products or services solve. "Vision and value proposition"; A brief overview of a business that talks about the company's mission and the value provided to its customers "Team"; Highlight key team members' skills, expertise, and experience and how these qualities work together to contribute to the management and growth of the company. "Milestones"; Talk about the traction that a company has gained, such as crowdfunding. "Business model"; Discuss how a business works, how it makes money, and talk about some of the marketing strategies. "Competition"; Discuss what the competition is doing and how a company could improve upon what the competition is doing without being disrespectful toward the competing companies. "Ask"; Specify how the investors' money will be used and why the funds are necessary to grow the company while using data to back up the stated information.

_______ is measured by how well the product or service successfully serves its users' purpose.

"Quality."

Which two types of information can be found on a profit and loss statement?

"Revenues" and "expenses."

What might the design team need to do during the design thinking process?

"Revisit previous stages."

franchises will generally have higher _________, but they offer ongoing support and training.

"Start-up costs."

Which is a disadvantage of S-corporations?

"There are very strict qualification requirements for becoming an S-corporation."

What is the main drawback of a sole proprietorship?

"They have unlimited personal liability."

What must happen before one can use someone else's patent?

"They must obtain ownership of the patent."

Which two channels are examples of physical sales channels?

"Wholesalers" and "retail stores."

Linda's company acquired 6,000 new customers last year. They spent $40,000 in marketing costs and $20,000 in sales costs. What is Linda's customer acquisition cost (CAC)?

$10 $40,000 + $20,000 = $60,000 / $6,000 = $10

John's company acquired 5,000 new customers last year. They spent $20,000 in marketing costs and $15,000 in sales costs. What is John's customer acquisition cost (CAC)?

$8 $20,000 + $15,000 = $35,000 $35,000 / 5,000 = $7

Terri owns a computer repair shop. Her revenue at the end of last month was $7,450. What is Terri's run rate?

$89,400 $7,450 x 12 = S89,400

Danny sells skateboards. One skateboard sells for $55, and the cost to produce a skateboard is $35. What is Danny's return on investment (RO)?

57% $55 - $35 = $20. $20/$53 = .57 x 100 = 57%

Match the business element to its description.

A "business plan" is a written document that details how a business will be structured, managed, run, and grown. A "pitch deck" is a brief overview of a business plan, the products and services that will be provided, the funding needed, and financial projections. A "lean canvas" croblems and solutions, value propositions, marketing channels, key metrics, costs, and revenue without all of the business plan details.

Which corporation uses a double layer of taxation?

"C-corporation"

Including ________ in a sales strategy is important.

"Customer support."

Which features are drawbacks of digital sales channels?

"Customers must rely on images, reviews, and product descriptions to determine whether or not they will purchase a product" and "some products will have shipping costs to have the product delivered."

What are two characteristics of direct distribution that differ from fulfillment centers?

"Direct distribution is also known as a zero level channel" and "the manufacturer controls all aspects of distribution."

Match the distribution type to its description.

A "distribution center' has temporary storage. A "fulfillment center" has long-term storage.

What is the formula for determining a break-even point?

Break-even point = Total cost / Product or service sales price

True or False A value hypothesis explains why a customer may not choose to use a product.

False.

True or False: Fixed costs change depending on the volume of production.

False.

A minimum viable product is a prototype used to test ease-of-use and _________.

Functionality.

When it comes to setting one's own quality standards, one must ensure they are...?

Measurable.

Rose ordered a package of macaroons from an out-of-state bakery. She received the cookies the following week. What type of e-commerce product did rose order?

Physical.

What is the formula for determining selling prices?

Selling price = (Cost x Desired profit margin) + Cost

True or False: Product/market fit occurs when a business continues to grow due to customer demand.

True

An executive summary should briefly explain everything in a business plan in how many pages?

Two pages.

When must equipment and inventory loans through the Small Business Administration (SBA) be paid back>

Within 10 years.

What might one have to do when listening to feedback from customers?

"Change markets" and "create completely new products."

Match the legal protection to its description.

A "copyright" is used to protect creative works. A "patent" is used to protect an invention from being copied for a limited time. A "trademark" is used to protect brand names, logos, and business names. A "trade secret" is used to protect a company's practice, process, or formulas from being shared with other competitors. All "entrepreneurs" should legally protect their intellectual property..

Ben owns a print shop. Last quarter's income was $8,000, his cost of goods was $650, and his total expenses were $4,300. What are Ben's net income and gross income for the last quarter? Net income = $3,050 and Gross income = $7,530 Net income = $7,350 and Gross income = $3,050 Net income = $3,050 and Gross income = $7,350 Net income = $3,500 and Gross income = $7,350

Net income = $3,500 and Gross income = $7,350 $8,000 - $650 - $4,300 = $3,050 $8,000 - $650 = $7,350

One value of using _____ material is that they are usually well-recognized, which may help to boost sales.

Trademarked.

Match the data type to its description.

"Behavioral data" allows companies to anticipate their customer's needs and behaviors and is collected by observing customers' behaviors to understand their buying habits. "Geographical data" provides companies with their customers' locations to see the areas with high or low sales volumes.

Which two sources are considered secondary data?

"Company newsletters" and "internet articles."

Match the funding option to its description.

"Bootstrapping" is where an owner uses their own savings to fund the business. "Small Business Administration (SBA) loans" must be paid back with interest. The maturity terms differ depending on the type of loan. "Small Business Administration (SBA) grants" is free money given to small business owners to help with the launching and development of their business. They do not have to be paid back. An "investor" helps fund a business or a specific project, usually for some kind of stake in the company. "Crowdfunding" is sharing a startup business on an online platform where one can pre-sell products. The money from the pre-sale orders can be used as capital to build the products.

Match the business life cycle stage to its description.

"Existence" - A business owner gets a business up and running. "Survival" - Having a reliable amount of customers to stay open. "Success" - A business owner is generating a consistent income, and the business is economically healthy. "Take-off" - The business owner needs to decide if they want their company to become a big business and, if so, how they will create rapid growth and finance it. "Resource maturity" - The owner has separated financially and operationally. "Pivot or persist" - Exhausting all efforts and avenues with the current strategy before deciding to change strategy. "Exit plan" - The business owner decides to sell their ownership of the company.

Joey has opened a restaurant. He paid a large amount of money up front to get the business started. He only sells products that are licensed by someone else. What type of business opportunity is Joey part of>

"Franchise"

What are twos characteristic of fulfillment centers that differ from direct distribution?

"Fulfillment centers pack and ship for a manufacturer" and "the manufacturer controls all aspects of distribution."

What is the difference between small business and entrepreneurs?

"Small business owners are not always interested in taking on new business opportunities."

Jonas owns a pizza shop. He had 300 customers at the end of June, 310 customers at the beginning of June, and 20 new customers in June. What is his customer retention rate for June?

90% 300 - 20 = 280 280/310 = .90 .90 x 100 = 90%

Match the marketing plan element to its description.

An "executive summary and business description" is an overview and summary of the marketing plan. It should cover what is going to be discussed in greater detail later in the plan. A "situation analysis" details a company's marketing efforts and the factors that sway marketing strategies. "Define the target market"; Details a company's marketing efforts and the factors that sway marketing strategies. A "delivery plan" outlines how the products and services will be sold and delivered to customers. "The marketing mix" discusses a company's four Ps: product, price, place, and promotion in-depth. "Strategies and tactics"; Discusses the approaches a company plans to use and the actions that need to occur during the execution. An "offer or message" details an offer or message a company is sending to customers. A "budget" outlines how much a company has to spend on marketing costs and how it plans on spending the money.

Indirect distribution channels use _________ to sell their products to the end customers.

Middlemen.

Deidre owns a pet store. Last month, her income was $5,500, her cost of goods was $800, and her total expenses were $2,600. What are Deidre's net income and gross income for last month? Net income = $2,100 and Gross income = $4,200 Net income = $3.100 and Gross income = $4.700 Net income = $2,100 and Gross income = $4,700 Net income = $4,700 and Gross income = $2,100

Net income = $2,100 and Gross income = $4,700

Arrange the phases of product/market fit in the correct order.

Position 1: "Idea" Position 2: "Prototype" Position 3: "Launch" Position 4: "Traction" Position 5: "Monetization" Position 6: "Growth"

Match the sales process steps to their description.

Prospecting: "Finding potential customers." Preparation: "Developing a presentation tailored to a potential client and their specific needs." Approach: "Contacting a client or potential client." Objection: "Alleviating concerns presented by the customer." Closing: "Getting a client's decision to purchase or not to move forward." Follow-up: "Maintaining a relationship with customers to obtain repeat business and potential referrals."

Match the product/market fit stage to its description.

Traction: "Sales gain momentum and a business starts to grow." Prototype: "Identify how a product or service solves customers' problems." Monetization: "A business starts to earn revenue." Idea: "Develop an idea for a product or service." Growth: "See growth and continue to grow the business." Launch: "The business is legally formed, and sales start to occur."

For each statement about Direct Distribution and Indirect distribution

True: "Direct competition is a company that offers the same thing you offer," "indirect competition is a business whose services are different from yours but satisfy the same need," and "when your target audience buys products from a competitor instate of from you, that is indirect competition." False" All companies that sell goods and services are indirect competitors."

What is a value proposition?

"A statement that explains to customers why they should do business with a company."

What should marketing plans include?

"Actions that need to occur to reach the desired marketing results."

In addition to identifying the problem a product or service solves, a value hypothesis should promote things like product features, pricing, and the _______ as a means of enticing potential customers to purchase the product.

"Business model."

Which three tips are suggested for dealing with negative customer feedback?

"Empathize with the customer," "address the customer by name," and "apologize to the customer."

Which channels are examples of digital sales channels?

"General marketplaces" and "auction marketplaces."

One should know if there is _________ for a product before taking on a business opportunity.

"High demand."

Match the characteristic with its definition.

"Self-reliance" is trusting one's self, one's goals, and one's progress. A "forward-thinking mentality" is thinking about and planning for the future. "Opportunity recognition" is the way one approaches new ideas and ventures. Having "initiative" is turning one's ideas into action or bringing in new ideas to generate more or better business. "Resiliency" is adapting to change, loss, and disappointment. "Risk tolerance" is the amount of loss one is willing to take when making investment decisions. Having a "growth mindset" means believing that one can accomplish anything if one works hard.

To use materials that have a copyright or a trademark, one must get permission. Which two things are required to do before legally using the material?

"Sign a licensing agreement" and "pay a licensing fee."

_________, which are used in digital advertising, are heavily used to market and sometimes utilize influencers.

"Social media platforms."

What do fulfillment centers do?

"Strategically store a company's products so that the product can be quickly picked up and sent out."

What is value engineering?

"Substituting high-quality components with low-cost components that still meet the product's lifetime duration and basic purpose."

Knowing a process has been tested and works well is valuable to companies as they can assume it would work just as successfully in their company. As a result, companies may want to use _______ materials.

"Trade secret."

Ronda owns a food truck where she is known for her hot sauce. Which intellectual property law best protects Ronda's recipe from being stolen or replicated by other competitors?

"Trade secret."

Devin owns a clothing store. He recently purchased jeans to sell in his store. He paid $23 for each pair of jeans, and his desired profit margin is 18%. What is Devin's selling price?

$27.14 $23 x .18 = $4.14, and $4.14 + $23 = $27.14.

Match the business role to its description.

A "Chief Executive Officer (CEO)" makes major decisions for the company, oversees operations and resources, comes up with the company's vision, strategies, and mission, and reports to the board of directors. A "Chief Financial Officer (CFO)" manages and plans the cash flow, creates budgets, and forecasts whether the company will meet the set budget requirements. A "Chief Operating Officer (COO)" oversees the business's day-to-day operational and administrative functions. The "founder" is the individual that developed or created the company or organization. "Stakeholder"; The individuals or groups that have an interest in the success of a company A "partnership" is where one or more people share the business's financial responsibility, including record keeping, paying taxes, distributing profits, marketing, and the company's day-to-day function. A "stockholder" votes on the management of the company and whether to remove the CEO should the occasion arise. An "employee" is responsible for completing specific assigned tasks while adhering to the company's safety and ethical guidelines and policies.

Dave owns a soda and cookie shop. Match the businesses to the correct competition type.

Direct Competition: "Bakery" and "convenience store" Indirect Competition: "Shaved ice truck" and "fast-food restaurant"

What is the formula for determining a return on investment (ROI)?

ROI = (Net profit/cost of investment) x 100