Fundamentals of Starting a Business

1. What is the first step in starting a business?

• Buying an office

• Coming up with a business idea

• Hiring employees

• Making a logo

Answer explanation

The first step in starting a business is coming up with a business idea. This foundational concept guides all subsequent actions, such as buying an office, hiring employees, and creating a logo.

What is a “customer"?

• Someone who works at your business

• Someone who buys your product or service

• A person who delivers mail to your business

• A partner in your business

Answer explanation

A "customer" is defined as someone who buys your product or service. This distinguishes them from employees, delivery personnel, or business partners, who have different roles within or related to the business.

Why is it important to have a “business plan”?

• To get free money

• To help organize your ideas and goals

• To show off to friends

• To spend less time working

Answer explanation

A business plan is crucial as it helps organize your ideas and goals, providing a clear roadmap for your business. This structure is essential for strategic planning and achieving success.

What is the main purpose of advertising?

• To make your business look cool

• To let people know about your product or service

• To give away free stuff

• To hire employees

Answer explanation

The main purpose of advertising is to let people know about your product or service. It aims to inform potential customers and generate interest, which is essential for business growth.

What is the word for the money a business earns after paying its expenses?

• Income

• Debt

• Profit

• Savings

Answer explanation

The correct term for the money a business earns after paying its expenses is 'Profit'. This represents the financial gain, while 'Income' refers to total earnings, and 'Debt' and 'Savings' are unrelated to earnings after expenses.

Which of these is an example of a product?

• A haircut

• A video game console

• A car wash

• Tutoring services

Answer explanation

A video game console is a tangible product that can be bought and sold, unlike services such as haircuts, car washes, or tutoring, which are experiences rather than physical items.

Why do businesses need to think about their “target audience”?

• To know what games to play

• To understand who might buy their product or service

• To decide where to open a store

• To pick their favorite colors

Answer explanation

Businesses need to understand their target audience to identify who is likely to purchase their products or services. This knowledge helps tailor marketing strategies and product offerings effectively.

What is a budget?

• A list of products to sell

• A plan for how to spend and save money

• A tool to advertise a business

• A way to get customers

Answer explanation

A budget is specifically defined as a plan for how to spend and save money, making it essential for managing finances effectively. The other options do not accurately describe what a budget is.

What is an entrepreneur?

• A person who starts and runs a business

• A person who only shops online

• Someone who always follows others’ ideas

• A person who only works for big companies

Answer explanation

An entrepreneur is defined as a person who starts and runs a business, taking on financial risks in the hope of profit. The other options do not accurately describe the role of an entrepreneur.

What is one reason businesses fail?

• Too many customers

• Not enough planning or money

• Hiring too many employees

• Choosing a fun name

Answer explanation

One major reason businesses fail is due to insufficient planning or lack of funds. Without a solid plan and adequate financial resources, businesses struggle to sustain operations and grow, leading to failure.