ESB Certification Exam Study Guide
with Complete Solutions
Domain 1 Lesson 1 - ANSWER-
The key objective of a small business owner is to generate ____ - ANSWER-profits
Entrepreneurs are willing to take on new opportunities and unknown ____ to grow their
businesses rapidly - ANSWER-risks
Tangible items that require pick-up or delivery are ____ products - ANSWER-physical
When a ____ purchases an item from a business, it is a business-to-consumer
transaction - ANSWER-customer
____ are for-profit corporations with limited liability - ANSWER-S corporations
____ are ideal for international businesses - ANSWER-C corporations
The ____ oversees daily operational and administrative functions - ANSWER-Chief
Operating Officer
A ____ votes on the management of a company - ANSWER-stockholder
____ employees are paid a fixed amount each pay period - ANSWER-Salary
Businesses can compensate employees for work they produce when being paid by
____ - ANSWER-piece work
Businesses can offer ____ in addition to a lower salary - 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 - ANSWER-survival
The owner may decide to sell their ownership in the company during the ____ stage -
ANSWER-exit plan
The five elements of the design thinking process are ____ - ANSWER-empathize,
define, ideate, prototype , and test
, ____ allows one to see and experience a customer's perspective - ANSWER-Empathy
The design team creates multiple inexpensive versions of a product, known as ____ -
ANSWER-Minimum Viable Products
Name benefits of a franchise - ANSWER-less risk involved, tested operational
processes, or recognized brands
No ownership, no US federal taxes - ANSWER-Non-profit
Best for international business even with being double-taxed - ANSWER-C corporation
Easy to create but comes with unlimited liability - ANSWER-Sole proprietorship
Lower tax rate that prevents the company from being double-taxed - ANSWER-S
corporation
Ideal for a single owner seeking low risk - ANSWER-LLC (limited liability company)
Shared financial backing - ANSWER-Partnership
Creates the company - ANSWER-Founder
Oversees company finances - ANSWER-CFO
Owns stock in the company - ANSWER-Stockholder
Reports to the board of directors - ANSWER-CEO
Oversees daily operational and administrative functions Stakeholder Has a vested
interest in the success of the company - ANSWER-COO
Has a vested interest in the success of the company - ANSWER-Stakeholder
Non-cash compensation - ANSWER-Equity
Set rate of pay for hours worked - ANSWER-Hourly
Usually found in sales roles - ANSWER-Commission
Set amount of pay in a given period - ANSWER-Salary
List the correct order of the business life cycle stages - ANSWER-Existence, Survival,
Success, Take-off, Resource maturity, Pivot or persist, Exit plan
with Complete Solutions
Domain 1 Lesson 1 - ANSWER-
The key objective of a small business owner is to generate ____ - ANSWER-profits
Entrepreneurs are willing to take on new opportunities and unknown ____ to grow their
businesses rapidly - ANSWER-risks
Tangible items that require pick-up or delivery are ____ products - ANSWER-physical
When a ____ purchases an item from a business, it is a business-to-consumer
transaction - ANSWER-customer
____ are for-profit corporations with limited liability - ANSWER-S corporations
____ are ideal for international businesses - ANSWER-C corporations
The ____ oversees daily operational and administrative functions - ANSWER-Chief
Operating Officer
A ____ votes on the management of a company - ANSWER-stockholder
____ employees are paid a fixed amount each pay period - ANSWER-Salary
Businesses can compensate employees for work they produce when being paid by
____ - ANSWER-piece work
Businesses can offer ____ in addition to a lower salary - 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 - ANSWER-survival
The owner may decide to sell their ownership in the company during the ____ stage -
ANSWER-exit plan
The five elements of the design thinking process are ____ - ANSWER-empathize,
define, ideate, prototype , and test
, ____ allows one to see and experience a customer's perspective - ANSWER-Empathy
The design team creates multiple inexpensive versions of a product, known as ____ -
ANSWER-Minimum Viable Products
Name benefits of a franchise - ANSWER-less risk involved, tested operational
processes, or recognized brands
No ownership, no US federal taxes - ANSWER-Non-profit
Best for international business even with being double-taxed - ANSWER-C corporation
Easy to create but comes with unlimited liability - ANSWER-Sole proprietorship
Lower tax rate that prevents the company from being double-taxed - ANSWER-S
corporation
Ideal for a single owner seeking low risk - ANSWER-LLC (limited liability company)
Shared financial backing - ANSWER-Partnership
Creates the company - ANSWER-Founder
Oversees company finances - ANSWER-CFO
Owns stock in the company - ANSWER-Stockholder
Reports to the board of directors - ANSWER-CEO
Oversees daily operational and administrative functions Stakeholder Has a vested
interest in the success of the company - ANSWER-COO
Has a vested interest in the success of the company - ANSWER-Stakeholder
Non-cash compensation - ANSWER-Equity
Set rate of pay for hours worked - ANSWER-Hourly
Usually found in sales roles - ANSWER-Commission
Set amount of pay in a given period - ANSWER-Salary
List the correct order of the business life cycle stages - ANSWER-Existence, Survival,
Success, Take-off, Resource maturity, Pivot or persist, Exit plan
