Business Startup Basics

Business Startup Basics

Are you ready to test your knowledge about starting a business? This ten-question multiple-choice quiz will explore some fundamentals regarding funding, business plans, and general business knowledge. After completing all ten questions, click "Grade Me!" at the end of the quiz to see how you did.

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What are the most common sources for start up funding?
Most start-up funding comes in the form of personal equity: coming from tapping personal credit cards, home equity and savings. Excess revenue generated from the business is another method to fund additional growth, through re-investment of profits. Equity is when you sell shares in your venture in exchange for money. Debt in the form of loans and credit cards is also another way to fund start-ups.

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For companies in the 'pre-seed' start-up phase, which of these is NOT a common source of funding?
Most start-up companies rely on their personal savings, and investments or loans from family and friends for initial funding. Additionally, crowdfunding sites such as Kickstarter and Indiegogo have innovative ways for start-ups to raise money. Initial public offerings occur once a company has become well-established.

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What two main purposes does a business plan have?
A business plan's two main purposes are to be a roadmap for your business and help you obtain outside funding. A business plan lays out the framework for your business provides a roadmap to profitability and continuing operation.

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What does a business plan consist of?
A business plan consists of a business concept, a strategy, a market analysis, a competitive analysis, and financial analysis. A business concept summarizes your company in a few concise and simple sentences that communicate the idea, design, or value proposition behind your business. A business strategy will detail how you will execute the business concept and focus on your product or service and the critical factors that will make your business successful. The final three pieces focus on analyzing the market, competition, and finances.

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What benefit does a market analysis provide?
A market analysis will explore how you will profitably meet the needs of your target customer. Specifically, you will be focusing on the basic demographics for your potential customer or market. You will be defining who your customer is, where they are located, what motives them to buy, etc.

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What does a competitive analysis provide?
The competitive analysis provides information regarding how your business will succeed in a market already being sufficiently served by another business in your industry. It asks the question if there is sufficient demand to bring another business into a market.

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Why is location so important for a business?
There are multiple factors to consider when selecting a location for your business. One of the most important factors deals with accessibility. Every brick and mortar business needs customers, inventory to bring in, and products to deliver out. That means customers, salespeople, employees, and suppliers need to be able to find you. They need easy access, which may require nearby parking or closeness to public transit.

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What should you consider when choosing a name for your business?
When choosing a name for your business, the main goal is to find a name that arouses genuinely positive feelings when customers encounter it for the first time. It needs to be web-friendly and attention-getting as well. Your business's name should express the essence of it, what it does, what it produces, and what its purpose is.

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What are some benefits of having a partnership in your business venture?
Having a partnership can be extremely beneficial in your business venture. It allows you to share the workload, decision-making, expenses, and emotional rollercoaster of starting a business. A partnership can broaden the business' available skillset. It can lead to shared accountability for both parties, and it can widen the pool of options for financing.

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What are the three types of legal partnerships?
The three types of legal partnerships are general partnerships, limited partnerships, and joint ventures. General partnerships have each partner share equally in the profits, liability, and responsibilities involved in running the business. Limited partnerships, also known as partnerships with limited liability, give each partner limited liability and limited input on running the company. Limits are based on the percentage each partner has invested. Joint ventures are similar to general partnerships but only last for a particular period or the duration of a single project.

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