Micro-Enterprise Credential Test Prep #3

Consuelo's gift store has an opportunity that will disappear if they don't move quickly. A competitor is moving to another state and they've offered to sell Consuelo their inventory at 25% of retail value. Consuelo has inspected the inventory-it's in perfect condition and includes all of the most popular items that Consuelo's store sells every day. In the upcoming holiday season 60 days away Consuelo is sure the store can sell pretty much all of this inventory.Unfortunately this offer is only open for 48 hours. - after that the competitor will sell to another buyer. What type of financing should Consuelo seek?

• Online Credit

• Mortgage

• Bank Credit

• None

One critical difference between bank loans and online loans is:

• applicants only have to be completely truthful on a bank application

• none-pretty much the same

• the amount of information the application must provide

• the amount of money the applicant can request

To determine whether a business opportunity is realistic, the entrepreneur must:

• determine how much capital is required to launch the business

• determine the corporate officers of the competitors

• determine the color scheme of the company's proposed logo

• determine how the company will advertise

The fixed cost of a business:

• must be different each month

• include the cost of production materials

• are the same no matter how many customers the business serves

• must exceed variable costs

A business plan has the following purpose:

• serves as collateral that a company can take to a bank to secure guaranteed loans

• serves as a required filing with the Internal Revenue Service

• describes in detail how the company's product or service will be differentiated versus its competition

• describes in detail how the company will set up its headquarters office

Businesses should always set their prices:

• lower than their competitors' prices

• low enough so that the revenues are below variable expenses

• to reflect the value of their goods or services, not just their costs

• higher than their competitors' prices

Pricing strategies may include:

• maximizing revenues for different products using different price points

• maximizing debt through effective loan applictions

• maximizing units sold through effective advertising themes

• completing audited financial statements

Advertising can be important for a new business because it:

• is a free form of promotion

• allows the new business to set up a network of distributors

• communicates a differentiated message to your target customers

• is a low-cost method to increase revenues

An employee:

• owns a business venture

• works for someone else

• takes primary responsibility for the risk of the business venture

• is responsible for contributing equity to the business

When launching a business, which is NOT a critical consideration?

• how the new company's product or service is different from or better than the competitor products or services

• identifying team members with important skills the new business can hire

• what type of bank account the company will use

• physical or virtual location