1. True or false? A business budget is significantly different from a personal budget.
True
False
a) Try again. A budget is a budget, whether you're managing your personal finances or your business. And every budget has two parts, the money that's coming in and the money you're spending.
b) Exactly. A budget is a budget, whether you're managing your personal finances or your business. And every budget has two parts, the money that's coming in and the money you're spending. A business budget might be much more complicated, but the concept is the same.
2. The best reason for starting a business is to
Stop going to school
Earn a living
Fill a need in the community and do something you love
a) Not so. The more education you have, the better you'll be able to advance in your career and do what you love, whether you're an employee at someone else's company or your own boss. School can even help you become a better boss, as many colleges and universities offer courses on entrepreneurship.
b) Not really. Starting your own business is hard work, and many new businesses fail. For these reasons, you should start a business because it's something you feel passionate about and because you have a good idea — not just because you want to make money.
c) Exactly. Feeling passionate about running your own company and knowing how to meet a need in your community are great reasons for starting your own company. Don't forget that starting a company is hard work and risky. But, if you feel passionate about what you're doing, have a good idea and create a well thought-out business plan, you'll be in a better position to succeed.
3. True or false? You won't have an idea how much income you'll make until you start running the business.
True
False
a) Nope. In creating a budget and business plan, the first step is to estimate income, or revenue. Then you can estimate expenses and see if income will cover expenses. You should never start a business unless you have reason to believe it is going to work out financially. Reality may differ from your plan, but the plan should give you a good idea of how much money you'll make.
b) You're right. In creating a budget and business plan, the first step is to estimate income, or revenue. Then you can estimate expenses to see if income will cover expenses.
4. Which of the following is likely to be the biggest risk you face when you start a business?
Financial (making enough money)
Emotional (feeling stressed)
Environmental (natural disasters, such as hurricanes or earthquakes)
a) On target. The biggest risks you face when you start a business are financial. These include making enough money to succeed and being able to pay back any loans you took to start the company. But, the stronger your business plan, the greater chance you'll have of succeeding.
b) Not so. While you do face the risks of being under stress, this isn't the biggest risk. The greatest risks you face when you start a business are financial. These include making enough money to succeed and being able to pay back any loans you took to start the company. But, the stronger your business plan, the greater chance you'll have of succeeding.
c) Not always. While you do face environmental and emotional risks when you start your own business, these aren't the biggest issues. The greatest risks you face when you start a business are financial. These include making enough money to succeed and being able to pay back any loans you took to start the company. But, the stronger your business plan, the greater chance you'll have of succeeding.
5. True or false? Every company has the same start-up costs.
True
False
a) Try again. Because all companies are unique — selling different products or services to all types of customers — their start-up costs are different too. For example, while a start-up Internet company might need to make big investments in software and other technology, a landscaping business might need to invest in big power tools and lawnmowers. That's why it's so important to create a well thought-out business plan and know exactly what you'll be getting into before you start your own company.
b) You're right. All companies are unique — selling different products or services to all types of customers — their start-up costs are different too. For example, while a start-up Internet company might need to make big investments in software and other technology, a landscaping business might need to invest in big power tools and lawnmowers. That's why it's so important to create a well thought-out business plan and know exactly what you'll be getting into before you start your own company.
