Entrepreneurship and Small Business (ESB) Certification Practice Exam

What viability factor pertains to the potential funding of a business opportunity?

1. Market size

2. Managing cash flow

3. Relationships

4. Financial forecasting

The correct answer is: Managing cash flow

The viability factor that pertains specifically to the potential funding of a business opportunity is managing cash flow. Cash flow management is crucial for a business because it ensures that there are sufficient funds available to cover operating expenses and invest in growth opportunities. Effective cash flow management helps a business assess its funding needs, identify potential shortfalls, and arrange for financing before issues arise. Understanding cash flow can attract investors and lenders, as it reflects a business's ability to sustain operations and profitability. While other factors like market size, relationships, and financial forecasting are important in their own right, they do not directly address how a business will secure funding. Market size indicates potential demand, relationships can affect networking and support, and financial forecasting helps in predicting future performance. However, managing cash flow is the most relevant factor when considering the actual funding capabilities of a business opportunity.