Entrepreneurship and Small Business (ESB) V2 Certification Practice Exam

What is a major concern during the survival of the fittest phase of a business?

1. Brand recognition

2. Cash flow

3. Employee retention

4. Market saturation

The correct answer is: Cash flow

During the survival of the fittest phase of a business, cash flow is a major concern because it directly impacts the ability of the business to sustain operations. In this critical period, businesses often face challenges in managing their expenses and ensuring that they have enough cash coming in to meet their financial obligations. Positive cash flow is vital for purchasing inventory, paying employees, and covering rent and utilities. Without sufficient cash flow, even a business with strong potential can struggle to survive. In contrast, while brand recognition, employee retention, and market saturation are important factors for long-term success, they may not be the primary concern during this initial survival phase. Businesses in survival mode prioritize immediate financial stability and operational continuity over building brand equity or retaining talent, as the focus is primarily on staying afloat and establishing a foundational presence in the market.