Entrepreneurship and Small Business Certification Exam Questions and Answers(A+ Solution guide)

Elements of the Design Thinking Process - Stage 1: Emphasize- Research Your Users' Needs Stage 2: Define- State Your Users' Needs and Problems Stage 3: Ideate- Challenge Assumptions and Create Ideas Stage 4: Prototype- Start to Create Solutions Stage 5: Test- Try Your Solutions Out Difference between small businesses and entrepreneurs? - Small businesses are not always interested in taking on new business opportunities. Entrepreneurs set up a business with the aim to make a profit. Compensation Types - 1. Piece work- compensation on a per-unit basis. EX: an employer can choose to pay mechanics a fixed rate for each vehicle they repair instead of paying an hourly rate. 2. Salary- employee receives a set amount of pay each month without overtime compensation for extra hours worked. 3. Hourly- Employees most affected by minimum wage laws are compensated hourly. 4. Commission- An employee who is paid a percentage of a sale. 5. Equity- Non-cash compensations offered to employees in place of or in addition to a lower salary. Types of Sales Channel - 1. Business-to-Business (B2B): a transaction or business conducted between one business and another, such as a wholesaler and retailer. Transactions tend to happen in the supply chain, where one company will purchase raw materials from another to be used in the manufacturing process.2. Business-to-Consumer (B2C): process of businesses selling products/services directly to consumers, with no middle person. Typically refers to online retailers who sell products/services to consumers through the Internet. Online B2C became a threat to traditional retailers, who profited from adding a markup to the price. 3. Retail: sell items or services to customers. They typically sell items in-store or may be sold online. 4. Wholesale: the act of buying goods in bulk from a manufacturer at a discounted price and selling to a retailer for a higher price, for them to repackage and in turn resell in smaller quantities at an even higher price to consumers. Acquisition Costs - These costs include shipping, sales taxes, and customs fees, as well as the costs of site preparation, installation, and testing. When acquiring property, acquisition costs can include surveying, closing fees, and paying off liens. Angel Investor - a wealthy private investor who provides capital for a business start-up for a stake in the business in return. Asset - A tangible item a business owns. They can generate revenue or be converted into cash. They can be physical items, such as machinery, or intangible, such as intellectual property. Balance Sheet - A financial statement used for evaluating the performance of a business. It compares ASSETS to LIABILITIES plus owner's EQUITY on a specific date. EX: Equipment- Long term assets Bank loans- Current liabilities Inventory- Current assets Mortgage payments- Long term liabilities Bootstrapping - A TYPE OF FUNDING. A business owner that uses their own money to fund their business.Break-Even Point - The point where a business's revenue matches its expenses over a given period. AKA there is no loss or gain for your small business; you've reached the level of production at which the costs of production equals the revenues for a product. Break-Even Point = Fixed Cost / (selling price per unit - variable cost per unit) Budget - The amount of money a business plans on spending during a given period. Burn Rate - A calculation used to measure a business's monthly cash flow. AKA the amount of $ your business needs in a certain period (usually a month) to cover all expenses. In other words, burn rate tells you how quickly your business "burns through" capital. This calculation helps business owners understand how long they can continue to operate at this rate before running out of money.