How can a company predict future cash flow problems? Select one:
  • Trend of sales
  • Level of inventory
  • Monthly updates of cash flow projection spreadsheet
It is in your best interest to have incentive compensation for employee to be paid:
  • Annually
  • More frequently than annually
  • Not at all
Annual debt service is generally three or more times the cash flow.  True or false?
  • True
  • False
It is a good idea to have the same person handling payables and receivables.  True or false?
  • True
  • False
Rapid delivery firms are a good tool to minimize your inventories.  True or false?
  • True
  • False
You will be required to have a compiled financial statement before going public.  True or false?
  • True
  • False
It is a good idea to create separate profit and loss statements for individual profit centers within the company.  True or false?
  • True
  • False
If you operate a cold store warehouse which of the following options are acceptable as a back-up for a potential loss of electricity?
  • Back-up generator
  • A lawsuit
A reviewed financial statement meets the most rigid requirements of GAAP (Generally Accepted Accounting Principles).  True or false?
  • True
  • False
You should have at least two or three employees who are authorized to make changes to your Website.  True or false?
  • True
  • False
It is a better idea to compensate managers based on sales growth rather than on earnings.  True or false?
  • True
  • False
Most good managers prefer to be paid their incentive compensation based on overall company earnings rather than their individual efforts.  True or false?
  • True
  • False
When a manager's profit center is successful in reducing costs, the manager's bonus is:
  • Increased
  • Decreased
Operating manuals become key building blocks of growth.
  • Yes
  • No
Face-to-face contact with your customers can be digitalized on the internet.  True or false?
  • True
  • False
Which of the following people would be good candidates for a standing advisory board:
  • Key managers
  • Family members
  • Mentors
  • All of the above
Sometimes a risk is so attractive that it is worth taking, even though it could jeopardize your cash liquidity.  True or false?
  • True
  • False
A board of advisors should be only called upon in emergency situations.  True or false?
  • True
  • False
The best source of training for a new office worker is a co-worker doing the same or similar job.  True or false?
  • True
  • False
It is not a good idea to take along governing manuals to management meetings.  True or false?
  • True
  • False
Since complaining is not pleasant, it's hard to get feedback from restaurant customers.  True or false?
  • True
  • False
The red star cash register tape is used to assess product quality.  True or false?
  • True
  • False
What are some methods a business can use to get feedback?
  • Ask your customer
  • Have a suggestion box
  • Company shoppers
  • Surveys
  • All of the above
Which is the better business?
  • The transportation business
  • The diesel locomotive business
Customer feedback can help you make decisions based on:
  • Gut feelings
  • Intuition
  • Pure judgement
  • Seasonal sales
  • The marketplace
Should you look at competitors or other businesses for ideas?
  • Yes
  • No
An online business is not a good resource for getting feedback.  True or false?
  • True
  • False
Adults give better feedback than children.  True or false?
  • True
  • False
Feedback consists of positive, negative or neutral ratings. Which is the most helpful?
  • Positive
  • Negative
  • Neutral
  • All of the above
A feedback program should be conducted every 3 to 5 years.  True or false?
  • True
  • False
Accumulating wealth depends solely on making money.  True or false?
  • True
  • False
Your company's wealth will grow based on:
  • Compounding of your retained earnings
  • Outspending your competitors on advertising
Walmart's lowest expenses resulted from:
  • Sacrifices made in product quality
  • Sacrifices made in cutting operating costs
You can motivate your managers by:
  • Sharing profits and treating them as partners
  • Recognition will be more important than reward
Which firm provides an example of cost cutting that resulted in problems?
  • Toyota
  • See's Candy
The Millionaire Next Door refers to someone living in the biggest house on the block.  True or false?
  • True
  • False
Research and product development are optional costs of doing business.  True or false?
  • True
  • False
You need to travel first class and live well to impress people with your success.  True or false?
  • True
  • False
Which of the following statements is the better business option?
  • To accumulate wealth by living within your means.
  • To build recognition by giving the impression you are wealthy.
Following the financial collapse of 2008, cost reductions made proved to be only temporary.  True or false?
  • True
  • False
Good negotiators are born that way.  True or false?
  • True
  • False
Negotiation skills can be enhanced by daily practice.  True or false?
  • True
  • False
Overconfidence can upset a profitable transaction because:
  • The situation has not been evaluated sufficiently
  • You are not a good listener
  • You overlook the other side's deal points
  • All of the above
Actually, all negotiations are win or lose situations.  True or false?
  • True
  • False
Which business has the most pricing power?
  • An airline
  • A veterinarian
A "deal point" is?
  • A non-negotiable condition
  • An issue to be negotiated
An escape provision is an important negotiable issue.  True or false?
  • True
  • False
Examples of an escape provision include:
  • An expiration date of the offer
  • A "subject to financing" clause
  • Both of the above
Pricing power means:
  • Having to compete with your competitor's price
  • Having a unique product or service
It is a good idea to state what you will pay before asking the price.  True or false?
  • True
  • False
Which is the definition of retained earnings?
  • Money reserved for income taxes
  • Accumulated funds after all expenses are paid
  • Earnings reserved to pay for financial audits and legal expenses
Another term for retained earnings is:
  • Annual profit and loss
  • Unrestricted earnings
  • Balance sheet
When should retained earnings be invested back into the business?
  • When $1.00 invested will produce at least $.50 in value
  • Upon the recommendation of the chief financial officer or investment council
  • When $1.00 invested will produce more than $1.00 in value
Retained losses or retained earnings are always carried over to the next year.
  • Yes
  • No
Which is not a good investment example for applying your retained earnings?
  • Expand your business
  • Buy a new business
  • Start flying first class
What is the term used if over time you have lost money?
  • Retained losses
  • Depreciation
  • Dividends
  • Feedback
Retained earnings are funds remaining after:
  • Maintenance costs
  • Depreciation
  • Taxes
  • Research and development
  • All of the above
It is a good idea for new companies to invest in their own real estate.  True or false?
  • True
  • False
Some businesses inherently need to invest more money into their business than others.  True or false?
  • True
  • False
Historically, shopping center landlords expected what return on their investment?
  • 6%
  • 16%
  • 12%
A digital marketing funnel helps identify which marketing activities to plan and execute in order to lead a customer to conversion.  True or false?
  • True
  • False
In the Awareness stage you should invest in advertising on all social media platforms.  True or false?
  • True
  • False
It is a good SEO practice to update the following content on your site:
  • Log posts, internal & external links.
  • Your bio photo.
  • Your domain url.
The goal of an email split test is to compare which email variant drives more conversions.  True or false?
  • False
  • True
What is the engagement rate formula used for social media?
  • Total Likes / Total Comments x 100
  • Total Engagement / Total Followers x 100
  • Total Followers / Total Comments + Likes x 100
What stage would you apply retargeting ads?
  • Discovery Stage
  • Awareness Stage
  • Consideration Stage
What are the four content types?
  • Convince, Persuade, Educate, Inspire
  • Educate, Convince, Inspire, Entertain
  • Humor, Sell, Serve, Inspire
Which keyword would be less competitive?
  • Mens wallet with coin case compartment
  • Mens wallet
In the Discovery stage, it is good practice to structure content around presenting a problem and offering a solution.  True or false?
  • True
  • False
“Social Proof” is achieved through positive engagements on social media such as likes, comments, or engagements on your posts, or unofficial endorsements through experts, influencers, or followers.  True or false?
  • True
  • False
What is another name for Growth by Duplication?
  • Cookie cutter
  • Pilot operation
What are the goals you can accomplish by duplicating your successful business?
  • Double your sales
  • Greater purchasing power
  • Spread some of the fixed costs over all the stores
  • All of the above
Creating profit centers means combining all sources of earnings into a single overall total.  True or false?
  • True
  • False
If you have a good business concept, you should open several stores at the same time.  True or false?
  • True
  • False
Which is the best lease agreement?
  • Ten year lease with a ten year option
  • 20 year lease
Which is the best incentive plan to offer an outstanding manager?
  • 10% of the company stock
  • 10% of the manager's profit center
Signing a lease is likely to be your largest liability.  True or false?
  • True
  • False
It is important to have a real estate lawyer involved when signing a lease agreement.  True or false?
  • True
  • False
It is necessary to have an intellectual property attorney check your name, logo and slogan to find out if they are available.  True or false?
  • True
  • False
Which management skill is important when you start your chain of stores?
  • Financing
  • Accounting
  • Supervision
  • All of the above
Vertical integration means buying out a competitor to gain market share.  True or false?
  • True
  • False
Vertical integration means a merger somewhere up or down in the marketing chain.  True or false?
  • True
  • False
Walmart eliminated which part of the chain?
  • Grower
  • Retailer
  • Distributor
Which of these businesses are usually 100% integrated?
  • Restaurants
  • Wholesale department stores
  • Oil companies
A home business making costume jewelry and selling on the internet is vertically integrated.  True or false?
  • True
  • False
In some businesses vertical integration is inherent.  True or false?
  • True
  • False
When your business builds up cash, is vertical integration the next step?
  • Yes
  • No
  • Not always
Which part of the chain is the "supply side"?
  • Producer and refiner
  • Distributor and retailer
Competing with your established customers is a risk of vertical integration.  True or false?
  • True
  • False
There is usually less risk in vertical expansion than there is in expanding within your own business.  True or false?
  • True
  • False
The advantage of franchising is it will provide investors to accelerate your expansion.  True or false?
  • True
  • False
There are advantages and disadvantages in franchising. Which of the following are advantages for the franchisor?
  • Franchisees provide expansion capital and more rapid expansion over a wider area
  • Sharing profits with the franchisee
  • Loss of absolute control
  • Lawsuits and difficult franchisees
  • Less rapid expansion over a wider area
How long should you run a profitable business before you franchise?
  • One month
  • One to five years
  • Start with several stores
Federal laws have basic jurisdiction over franchisors.  True or false?
  • True
  • False
The best place for a franchisee to learn the business is from another franchisee.  True or false?
  • True
  • False
Franchisees should have the authority to select their own locations.  True or false?
  • True
  • False
As a franchisor you must provide:
  • Design and working drawings of the stores
  • Create a site evaluation model
  • Negotiate and approve the suitable location
  • Hire and train the franchisee's employees
  • All of the above
What percentage of franchisees filing lawsuits indicates a faulty franchise concept?
  • 2%
  • 5%
  • 10%
Why should the franchise fee be put into an escrow account and disbursed to franchisor upon opening of the store?
  • To protect the franchisee against fraudulent franchisors
  • To avoid any misappropriation of funds
  • To protect the franchisee in event of bankruptcy of the franchisor
  • All of the above
In a franchisee operated store the employees are on the franchisor's payroll.  True or false?
  • True
  • False
Which of the following statements is true:
  • Expansion into international trade is relatively risk free
  • Expansion into international trade requires a major commitment of resources
A hollow corporation is:
  • A franchised business
  • A profit center within a business
  • A business without a factory and minimum employees
Modifications in packaging or products is not commonly required to expand into international trade.  True or false?
  • True
  • False
The U.S. government, and most other governments, is reluctant to provide resources to facilitate international trade.  True or false?
  • True
  • False
Expansion into international trade will usually require setting up an export department.  True or false?
  • True
  • False
A distributor can contractually bind the company producing the goods.  True or false?
  • True
  • False
International franchising is discouraged by most countries.  True or false?
  • True
  • False
Expanding globally will take a lot of research and expertise.  True or false?
  • True
  • False
International trade can be accomplished without significant international travel.  True or false?
  • True
  • False
International trade can:
  • Help sell excess manufacturing capacity
  • Reduce dependence on domestic markets
  • Maintain competitiveness in domestic market
  • All of the above
The biggest risk in acquiring a business is:
  • Marketing products under the seller's label
  • Integrating accounting and reporting controls
  • Over leveraging: acquiring too high a debt load
  • Retaining the existing management
Starting from scratch is inherently less risky than acquiring a business.  True or false?
  • True
  • False
It is a good idea to always change the name of a business as soon as you purchase it.  True or false?
  • True
  • False
One of the greatest risks is not being aware of all the seller's liabilities and problems.  True or false?
  • True
  • False
Who is your number one source of financing when buying a business is?
  • Banker
  • The seller
  • Investors
  • Retained earnings
One of the greatest advantages of purchasing a related business?
  • You know the business
  • Your controls are in place
  • Your buying power will be stronger
  • All of the above
The definition of Intrinsic Value is measuring value based on your industry's average price-earnings ratio.  True or false?
  • True
  • False
Which method should not be used to establish the value of a business?
  • Intrinsic value
  • Sales, earning, return on capital
  • Growth potential
  • Unaudited financial records of the seller
What are some of the risks in purchasing a business?
  • The seller's suppliers may not want to sell to you
  • The labor force may not be compatible with yours
  • You may be buying problems you are unaware of
  • All of the above
An acquired business should be provided with ongoing funding in order to keep it competitive.  True or false?
  • True
  • False
What does IPO stand for?
  • Independent Procedure Offering
  • Initial Public Offering
  • Investor Private Offerings
What is the main reason a private company would go public?
  • To raise capital
  • To have greater control over operations
  • To cut accounting cost
How is the value of a publicly owned company established?
  • Sales
  • Earnings
  • Stock value
Which type of ownership can raise cash more readily?
  • A privately owned company
  • A publicly owned company
Sarbanes-Oxley Act mandates:
  • All directors must be people outside the company
  • Patents need to be disclosed and made public
  • Strong internal control provisions
A disadvantage of public ownership is:
  • Your books are open to the public and your competitors
  • Intellectual property and patents become public property
Going public is realistic for most business.  True or false?
  • True
  • False
To go public you will need to:
  • Do more research
  • Hire a going-public team
  • Successfully pass all IPO conditions
  • All of the above
Going public will require that your financial statement has been reviewed by a C.P.A.  True or false?
  • True
  • False
It is possible for a business to be asset rich and cash poor.  True or false?
  • True
  • False
The percentage of businesses sold for all cash is:
  • 60%
  • 10%
  • 40%
How many years of audited accounting should you have?
  • 5 years
  • 3 years
  • 10 years
It is not a good idea to disclose what inventory is obsolete.  True or false?
  • True
  • False
Who is the best advisor to recommend whether to include the real estate?
  • Your C.P.A.
  • Your lawyer
  • Your lawyer and your C.P.A.
Taxes owed by the seller will be the same regardless of the structuring of the sale.  True or false?
  • True
  • False
The C.P.A. is important because they:
  • Furnish your audited financial statement
  • Evaluate the financial records of the buyer
  • Advise on tax matters
  • All of the above
Your competitors are not good prospects for buying your business.  True or false?
  • True
  • False
Your business broker should be responsible for locating prospective buyers.  True or false?
  • True
  • False
Goodwill can be a factor in establishing the selling price.  True or false?
  • True
  • False
What is the most common mistake people make when selling their business?
  • Setting the price too high
  • A lack of audited financial statement
  • Difficulty of verifying sales in a cash business
  • All of the above
What percentage of family businesses ever make it to the second generation?
  • 15%
  • 30%
  • 60%
  • 80%
What percentage of businesses have put together a succession plan?
  • More than 40%
  • Fewer than 40%
To implement a succession plan you will find it:
  • Will take time away from running the business
  • Can be deferred until children are out of school
Life insurance matters should not be mixed with succession planning.  True or false?
  • True
  • False
It is a common and wise practice to separate business assets from family assets.  True or false?
  • True
  • False
When dealing with family members it is wise to:
  • Hire a lawyer with estate planning skills
  • Settle all problems within the family
It is not a good idea to have family members on the succession advisory board.  True or false?
  • True
  • False
It could be fair for family members not active in the business to receive family assets if those in the company received shares.  True or false?
  • True
  • False
It is not a good idea to keep children from working in the business until they graduate from high school.  True or false?
  • True
  • False
It would be a good idea for you to depend on the business for ongoing income after turning the business over to your children.  True or false?
  • True
  • False