Entrepreneurship and Business Types
What is the primary objective of a small business owner?
To generate profits.
Which legal structure is easy to create but gives the owner unlimited liability for business debts?
Sole proprietorship.
What is the first stage of the business life cycle?
Existence.
What term describes the amount of loss someone is willing to accept when making an investment decision?
Risk tolerance.
What is the main difference between an entrepreneur and a small business owner regarding risk and growth?
A small business owner generally deals with known risks and focuses on steady profits, while an entrepreneur pursues rapid growth and accepts new opportunities and unknown risks.
Which legal structure is ideal for a single owner seeking low risk because the owner is generally not personally liable for company debt?
Limited liability company, or LLC.
During which business life cycle stage does a company begin gaining customers and generating consistent income?
Survival.
What type of mindset involves believing that skills and success can develop through hard work?
A growth mindset.
A customer purchases a shirt from a clothing store. Is this a business-to-consumer or business-to-business transaction?
Business-to-consumer, or B2C.
Which corporate structure is often best for an international business, even though it may involve double taxation?
C corporation.
Put these business life cycle stages in order: success, exit plan, existence, resource maturity, survival, pivot or persist, and take-off
Existence, survival, success, take-off, resource maturity, pivot or persist, exit plan.
Identify the risk type: A new law increases taxes on a small business, reducing its profits.
Political risk.
Classify each item as a product or service: online guitar lessons, a couch, and computer repairs.
Online guitar lessons and computer repairs are services; a couch is a product.
Identify the role: This person oversees daily operational and administrative functions
Chief Operating Officer, or COO.
In the design thinking process, which stage involves learning about customers’ challenges and perspectives?
Empathize.
Which business opportunity involves obtaining permission to use another company’s brand name, product, or intellectual property?
Licensing.
Compare physical and digital products. Include one advantage or challenge of each.
Physical products require pickup or delivery and involve shipping costs. Digital products are instantly available but may be challenging to show value.
A salesperson receives a percentage of each sale, while another employee receives company ownership instead of part of a cash payment. Identify both compensation structures.
The salesperson receives commission; the employee receives equity.
A design team creates several inexpensive versions of a product, gathers feedback, and improves the final version. Identify the design thinking stages represented.
Prototype and test. The team creates versions during the prototype stage and evaluates or refines them during the test stage.
Compare a franchise, licensing, and network marketing opportunity.
A franchise uses an established brand and operating system, usually with higher start-up costs. Licensing provides authorization to use a brand or product. Network marketing involves recruiting marketers to join a team.