SBA SBA Business Operations & Management 1 — Questions and Answers
Question 1: What is the primary purpose of an SBA resource partner called a SCORE mentor?
- Provide SBA loans
- Offer free business mentoring and workshops to small business owners (Correct answer)
- Certify businesses for government contracts
- Inspect businesses for compliance
Correct answer: Offer free business mentoring and workshops to small business owners
SCORE is an SBA resource partner that provides free, confidential business mentoring and workshops to entrepreneurs and small business owners.
Question 2: Which SBA resource provides free consulting, market research, and business plan assistance to small businesses in local communities?
- SCORE
- Small Business Development Center (SBDC) (Correct answer)
- Women's Business Center (WBC)
- Veteran Business Outreach Center (VBOC)
Correct answer: Small Business Development Center (SBDC)
Small Business Development Centers (SBDCs) provide free one-on-one consulting and low-cost training including help with business plans and market research.
Question 3: What does cash flow management primarily involve for a small business?
- Maximizing annual profit
- Monitoring and controlling the timing of money coming in and going out (Correct answer)
- Reducing inventory levels
- Increasing marketing spend
Correct answer: Monitoring and controlling the timing of money coming in and going out
Cash flow management involves tracking and optimizing the timing of cash inflows and outflows to ensure a business can meet its financial obligations.
Question 4: Which legal structure provides owners with personal liability protection while allowing profits to pass through to personal tax returns?
- Sole proprietorship
- General partnership
- Limited Liability Company (LLC) (Correct answer)
- C-Corporation
Correct answer: Limited Liability Company (LLC)
An LLC (Limited Liability Company) offers personal liability protection for owners while allowing business profits and losses to pass through to personal income tax returns.
Question 5: What is the primary advantage of a sole proprietorship for a small business owner?
- Personal liability protection
- Easiest and least expensive to form and operate (Correct answer)
- Ability to issue stock
- Unlimited number of owners allowed
Correct answer: Easiest and least expensive to form and operate
A sole proprietorship is the simplest and least costly business structure to establish, with minimal regulatory requirements.
Question 6: What does an operating agreement define in an LLC?
- The business's tax identification number
- The ownership structure, member roles, and operating procedures of the LLC (Correct answer)
- The business's marketing strategy
- The loan terms for SBA financing
Correct answer: The ownership structure, member roles, and operating procedures of the LLC
An LLC operating agreement is an internal document that outlines the ownership percentages, management roles, voting rights, and operating procedures of the company.
SBA SBA Business Operations & Management 1
What is the primary purpose of an SBA resource partner called a SCORE mentor?