Overview Guide Flashcards
7 cards from real Entrepreneurship practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Overview Guide flashcards as text
What is the 'lean startup' methodology's core principle?
Answer: Build-measure-learn cycles using a minimum viable product to reduce waste
The lean startup approach uses rapid experimentation with an MVP to test hypotheses, gather real customer data, and iterate quickly before committing large resources.
An entrepreneur notices that her company is consistently profitable but is struggling to pay bills on time. This problem is most likely caused by:
Answer: Cash flow mismanagement despite positive net income
A company can be profitable on paper while experiencing cash flow problems if revenue is collected slowly or expenses are due before customers pay.
Which of the following BEST describes 'disruptive innovation' as defined by Clayton Christensen?
Answer: An innovation that initially targets overlooked segments before displacing established players
Disruptive innovation starts in low-end or new market footholds and gradually moves upmarket, eventually displacing incumbent products that are over-engineered for average customers.
What is the primary risk of taking on venture capital funding for an entrepreneur?
Answer: The entrepreneur must give up equity and some control over business decisions
Accepting venture capital means selling ownership stakes, which dilutes the founder's control and requires alignment with investors on strategy, milestones, and exit timelines.
What does 'due diligence' mean when an investor is considering funding a startup?
Answer: A thorough investigation of the startup's financials, team, market, and legal standing before investing
Due diligence is the comprehensive review process investors conduct to verify a startup's claims and assess risks before committing capital.
A founder who holds 60% of her company's equity after multiple funding rounds has experienced:
Answer: Equity dilution
Equity dilution occurs when new shares are issued to investors, reducing the original founder's percentage ownership even if her total share count stays the same.
Which of the following BEST describes a franchise business model?
Answer: A licensing arrangement where a franchisor lets franchisees operate under its brand and system for a fee
In franchising, the franchisor grants franchisees the right to use its brand, systems, and support in exchange for upfront fees and ongoing royalties.