Entrepreneurship and Small Business (ESB) Certification Practice Exam

In which stage of the business life cycle does a company start to generate a consistent income?

1. Startup

2. Survival

3. Maturity

4. Growth

The correct answer is: Survival

The survival stage of the business life cycle is characterized by a company's ability to generate a consistent income after navigating through the initial challenges of the startup phase. During this period, a business typically focuses on stabilizing its operations, understanding its market, and establishing a customer base that supports regular revenue flow. In the survival stage, businesses work on building a sustainable model, often requiring efforts to maintain cash flow and manage expenses effectively. Successful transitions through this stage indicate that the business has managed to overcome significant early challenges, setting the foundation for future growth. In contrast, the startup phase primarily involves establishing the business and experimenting with products and services, often leading to variability in income and profitability. The growth stage is when a business expands its market share and revenues significantly, while the maturity stage typically signifies a period of stabilized income, often accompanied by market saturation. Therefore, the survival stage accurately reflects the point at which a company starts to generate stable and consistent income.