ESB Certification Exam Study Guide
with Complete Solution 2025
Domain 1 Lesson 1 - CORRECT ANSWER-
The key objective of a small business owner is to generate ____ - CORRECT
ANSWER-profits
Entrepreneurs are willing to take on new opportunities and unknown ____ to grow their
businesses rapidly - CORRECT ANSWER-risks
Tangible items that require pick-up or delivery are ____ products - CORRECT
ANSWER-physical
When a ____ purchases an item from a business, it is a business-to-consumer
transaction - CORRECT ANSWER-customer
____ are for-profit corporations with limited liability - CORRECT ANSWER-S
corporations
____ are ideal for international businesses - CORRECT ANSWER-C corporations
The ____ oversees daily operational and administrative functions - CORRECT
ANSWER-Chief Operating Officer
A ____ votes on the management of a company - CORRECT ANSWER-stockholder
____ employees are paid a fixed amount each pay period - CORRECT ANSWER-
Salary
Businesses can compensate employees for work they produce when being paid by
____ - CORRECT ANSWER-piece work
Businesses can offer ____ in addition to a lower salary - CORRECT ANSWER-equity
During the ____ stage of the business life cycle, a company is regularly taking on new
customers and starting to generate a consistent income - CORRECT ANSWER-survival
The owner may decide to sell their ownership in the company during the ____ stage -
CORRECT ANSWER-exit plan
,The five elements of the design thinking process are ____ - CORRECT ANSWER-
empathize, define, ideate, prototype , and test
____ allows one to see and experience a customer's perspective - CORRECT
ANSWER-Empathy
The design team creates multiple inexpensive versions of a product, known as ____ -
CORRECT ANSWER-Minimum Viable Products
Name benefits of a franchise - CORRECT ANSWER-less risk involved, tested
operational processes, or recognized brands
No ownership, no US federal taxes - CORRECT ANSWER-Non-profit
Best for international business even with being double-taxed - CORRECT ANSWER-C
corporation
Easy to create but comes with unlimited liability - CORRECT ANSWER-Sole
proprietorship
Lower tax rate that prevents the company from being double-taxed - CORRECT
ANSWER-S corporation
Ideal for a single owner seeking low risk - CORRECT ANSWER-LLC (limited liability
company)
Shared financial backing - CORRECT ANSWER-Partnership
Creates the company - CORRECT ANSWER-Founder
Oversees company finances - CORRECT ANSWER-CFO
Owns stock in the company - CORRECT ANSWER-Stockholder
Reports to the board of directors - CORRECT ANSWER-CEO
Oversees daily operational and administrative functions Stakeholder Has a vested
interest in the success of the company - CORRECT ANSWER-COO
Has a vested interest in the success of the company - CORRECT ANSWER-
Stakeholder
Non-cash compensation - CORRECT ANSWER-Equity
Set rate of pay for hours worked - CORRECT ANSWER-Hourly
, Usually found in sales roles - CORRECT ANSWER-Commission
Set amount of pay in a given period - CORRECT ANSWER-Salary
List the correct order of the business life cycle stages - CORRECT ANSWER-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? - CORRECT ANSWER-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? - CORRECT ANSWER-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? - CORRECT
ANSWER-Survival
List the correct order of the design thinking process - CORRECT ANSWER-Empathize,
Define, Ideate, Prototype, Test
During which stage of the design thinking process will the design team create multiple
inexpensive product versions? - CORRECT ANSWER-Prototype
During which stage of the design thinking process is a problem statement formed? -
CORRECT ANSWER-Define
Which stage of the design thinking process involves learning about customers'
challenges? - CORRECT ANSWER-Empathize
Domain 1 Lesson 2 - CORRECT ANSWER-
____ is the amount of loss one is willing to take when making an investment decision -
CORRECT ANSWER-Risk tolerance
Having a ____ mindset means believing that one can accomplish anything through hard
work - CORRECT ANSWER-growth
An example of an ____ risk is a natural disaster - CORRECT ANSWER-environmental
A business opportunity is an ____ that lets a buyer start a business - CORRECT
ANSWER-investment
with Complete Solution 2025
Domain 1 Lesson 1 - CORRECT ANSWER-
The key objective of a small business owner is to generate ____ - CORRECT
ANSWER-profits
Entrepreneurs are willing to take on new opportunities and unknown ____ to grow their
businesses rapidly - CORRECT ANSWER-risks
Tangible items that require pick-up or delivery are ____ products - CORRECT
ANSWER-physical
When a ____ purchases an item from a business, it is a business-to-consumer
transaction - CORRECT ANSWER-customer
____ are for-profit corporations with limited liability - CORRECT ANSWER-S
corporations
____ are ideal for international businesses - CORRECT ANSWER-C corporations
The ____ oversees daily operational and administrative functions - CORRECT
ANSWER-Chief Operating Officer
A ____ votes on the management of a company - CORRECT ANSWER-stockholder
____ employees are paid a fixed amount each pay period - CORRECT ANSWER-
Salary
Businesses can compensate employees for work they produce when being paid by
____ - CORRECT ANSWER-piece work
Businesses can offer ____ in addition to a lower salary - CORRECT ANSWER-equity
During the ____ stage of the business life cycle, a company is regularly taking on new
customers and starting to generate a consistent income - CORRECT ANSWER-survival
The owner may decide to sell their ownership in the company during the ____ stage -
CORRECT ANSWER-exit plan
,The five elements of the design thinking process are ____ - CORRECT ANSWER-
empathize, define, ideate, prototype , and test
____ allows one to see and experience a customer's perspective - CORRECT
ANSWER-Empathy
The design team creates multiple inexpensive versions of a product, known as ____ -
CORRECT ANSWER-Minimum Viable Products
Name benefits of a franchise - CORRECT ANSWER-less risk involved, tested
operational processes, or recognized brands
No ownership, no US federal taxes - CORRECT ANSWER-Non-profit
Best for international business even with being double-taxed - CORRECT ANSWER-C
corporation
Easy to create but comes with unlimited liability - CORRECT ANSWER-Sole
proprietorship
Lower tax rate that prevents the company from being double-taxed - CORRECT
ANSWER-S corporation
Ideal for a single owner seeking low risk - CORRECT ANSWER-LLC (limited liability
company)
Shared financial backing - CORRECT ANSWER-Partnership
Creates the company - CORRECT ANSWER-Founder
Oversees company finances - CORRECT ANSWER-CFO
Owns stock in the company - CORRECT ANSWER-Stockholder
Reports to the board of directors - CORRECT ANSWER-CEO
Oversees daily operational and administrative functions Stakeholder Has a vested
interest in the success of the company - CORRECT ANSWER-COO
Has a vested interest in the success of the company - CORRECT ANSWER-
Stakeholder
Non-cash compensation - CORRECT ANSWER-Equity
Set rate of pay for hours worked - CORRECT ANSWER-Hourly
, Usually found in sales roles - CORRECT ANSWER-Commission
Set amount of pay in a given period - CORRECT ANSWER-Salary
List the correct order of the business life cycle stages - CORRECT ANSWER-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? - CORRECT ANSWER-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? - CORRECT ANSWER-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? - CORRECT
ANSWER-Survival
List the correct order of the design thinking process - CORRECT ANSWER-Empathize,
Define, Ideate, Prototype, Test
During which stage of the design thinking process will the design team create multiple
inexpensive product versions? - CORRECT ANSWER-Prototype
During which stage of the design thinking process is a problem statement formed? -
CORRECT ANSWER-Define
Which stage of the design thinking process involves learning about customers'
challenges? - CORRECT ANSWER-Empathize
Domain 1 Lesson 2 - CORRECT ANSWER-
____ is the amount of loss one is willing to take when making an investment decision -
CORRECT ANSWER-Risk tolerance
Having a ____ mindset means believing that one can accomplish anything through hard
work - CORRECT ANSWER-growth
An example of an ____ risk is a natural disaster - CORRECT ANSWER-environmental
A business opportunity is an ____ that lets a buyer start a business - CORRECT
ANSWER-investment
