Entrepreneurship – Exam 2 Chapters 6 – 10 – Flashcards
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If you decide to pay yourself a commission from your business, you will be earning ________.
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a percentage of each sale
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When you sell, you should always listen carefully to customer complaints, because ________.
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they provide invaluable information about how to improve the product or service
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During each sales call you make, focus on this question.
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What does the customer need?
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The most important thing to do during a sales call is ________.
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listen, in order to learn what the customer needs
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What should you do when a customer raises objections during a sales call?
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Acknowledge objections as they arise and respond to them
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Successful business are built on ________.
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repeat business
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When is an entrepreneur done collecting market research for his/her business?
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NEVER
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Everything that a business does to keep its customers happy is called _______.
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customer service
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Information such as customers' e-mail address and purchasing history can be stored in a simple computer ________.
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Database
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Customer complaints should be ________.
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acknowledged and responded to politely
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Telling the truth about any negative aspect of a product or service usually _______.
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gains your customer's trust
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Customer service after a sale is an investment of time, money, and energy ________.
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that can have a very high return on investment
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When you are starting out and cannot afford to pay sales representatives full-time salaries, you can offer ________ instead.
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Commissions
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An appointment with a potential customer to explain or demonstrate your product or service is called a ________.
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sales call
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People you think might be receptive to your sales presentation are called ______.
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prospects
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Objectives during a sales call are to make the customer ________.
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All of the above
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The best sales people ________.
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All of the above
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Every sales call is an opportunity to ________.
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improve your selling skills
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Using technology to sell ________.
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can be useful in helping you communicate your product to the customer and to stay in touch with the customer
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You will do best if you keep your sales call under _________.
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One Minute
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Once you make a sale do not forget to ________.
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All of the above
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Losing a customer can hurt by ________.
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All of the above
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An angry customer can make you angry too. However, it is crucial that _________.
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you stay calm, ask the customer to explain the situation, and do not interrupt the customer as she speaks.
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As your database grows, you can make it more sophisticated by organizing it by region or ________.
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Customer Interest
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The bedrock principle of business is that it should _________.
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earn a profit
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There are two categories of variable costs ________.
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cost of goods sold and other variable costs
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Overhead is another term for ________.
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fixed operating costs
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Start-up investment is the one-time expense of opening a business. It is also called _______.
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seed capital
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If you sell $2500 worth of product, pay COGS of $800 and other variable costs of $360, what is your gross profit?
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$1340
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The percentage of value an asset subtracted each year until the value becomes zero; To reflect wear and tear on the asset is called _______.
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Depreciation
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If a business has total gross profit of $14,720 and total operating costs of $11,500, what is its total profit?
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$3220
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Total Revenue divided by ________ = units sold.
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Selling Price
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Using the information from the exercise above, what is Carla's monthly cost of goods sold?
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$800
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In the acronym USAIIRD, IRD stand for ______.
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Interest, Rent, Depreciation
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Fixed Operating Costs _______.
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All of the above
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Business start-up cost information can be obtained from ________.
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All of the above
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You should keep reserves of at least ________.
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one half of the start-up investment
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Nothing you learn as an entrepreneur will be more important than keeping accurate records of the money flow your business. Keeping numerical records is called _______.
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Accounting
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Entrepreneurs use the following financial statements to run their business:
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All of the above
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Money that is spent on business equipment that is expected to last a year or more is called _______.
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Capital Equipment
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Entrepreneurs use a ________ to track assets and liabilities.
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Balance Sheet
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In the income statement, EBIT minus interest costs equals _______.
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pre-tax profit
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In a business formula such as Return on Investment, "on" means _________.
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"divided by"
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To see how costs are affecting net profit, try analyzing the income statement by expressing each
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as a percentage of sales
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The return on sales ration is ______.
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net income/sales
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Successful entrepreneurs use their financial records to prepare ______ income statements that show sales and costs for the previous period.
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All of the above
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Income statements can be represented visually as ________ charts.
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Pie
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Because different types of assets depreciate at different rates, and because they are purchased at various points in time businesses keep a ________ to track the valuation of each asset that is being depreciated.
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Depreciation schedule
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How would you express a ratio as a percentage?
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multiply it by 100
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Cash itself or items that could be quickly turned into cash or will be used within 1 year are called ______.
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Current assets
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In the United Kingdom the income statement is called the _______.
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profit and loss statement
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Liabilities that will be paid over a period of more than one year are ________.
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long-term liabilities
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Return on Sales (ROS) is also called a(n) _________.
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Profit margin
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Examining the _________ monthly can help determine what is doing well or poorly in a business.
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all of the above
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The expression, "What you made over what you paid, times one hundred", is a device to remember how to compute _______.
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ROI
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Which of the three financial statements an entrepreneur prepares is used to guide the day-to-day operations of the business?
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The cash flow statement
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Which business below is most likely to have cash flow that is cyclical?
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tax return preparation business
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If the amount of cash that flows in and out of your business changes significantly during certain times of the year, include the following in your business plan _______.
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a seasonality scenario
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A(n) ________ rate of return means that interest is earned on the base amount plus any interest previously earned.
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compound
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Which of the following is the bottom line on a cash flow statement?
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ending cash balance
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Entrepreneurs should always ______.
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keep records, file returns, and pay taxes on time.
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Failure to file and pay income tax is a criminal offense called tax _______.
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evasion
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_________ is the amount an investment is worth discounted back to the present.
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Present value of money
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Corporate, partnership, individual income tax, and ________ tax returns must be filed on time with the U.S. Internal Revenue Service.
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self-employment
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Every time an entrepreneur spend cash, she or he takes a risk. If one buys _______, then the entrepreneur faces the risk of storage costs and pilfering.
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inventory
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Once a business begins to grow, an entrepreneur needs to keep an eye on ________, which is defined as "Current Assets minus Current Liabilities".
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working capital
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As a sole proprietorship, you sell tangible products to the public at retail. You will need to pay _______.
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Both A and B
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A _______ is a legal structure for your business which separates the owners/partners from personal liability and provides a more flexible allocation of profit and loss.
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limited liability company (LLC)
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To manage cash flow, you should ________ and then subtract expenses you expect to incur.
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project cash receipts
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Statistics indicated that more than half of all small businesses _______.
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survive eight or more years
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The greater the potential reward, _________.
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the riskier the investment is likely to be.
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The amount of risk or threat of loss that an entrepreneur is willing to sustain is _______.
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risk tolerance
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What do you have to do before you can sell stock in your business.
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incorporate
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If you take out a loan for $2,000 at an annual interest rate of 10%, how much interest will you pay each year?
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$200.00
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________ are forms of gifts or grants to businesses.
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all of the above
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Land or building that are bought are sold represent a class of investment called ________.
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real estate
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A rule of investment is that you always want to have your money now. If you cannot have it now, you want to be compensated with a ______.
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return
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Which of the following is not a type of community development loan fund?
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venture capital
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If $5,000 is borrowed at 9 percent to be paid back over one year, the interest on the loan is ______.
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$450
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Raising money for a business is an aspect of _______, which is the use of money for a purpose.
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financing
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Bonds are a form of _______.
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debt financing
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If you are a small business owner looking for a loan, a bank will expect you to _________.
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personally guarantee that you will be responsible for the business loan.
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Venture capitalists can make their money by _______.
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Either of the above
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No matter what way you approach raising money for your business, you will need a _________.
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written business plan
