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Quiz: Startup Needs & Cost Planning

Test your understanding of startup needs, cost structure, and lean budgeting with these review questions.

1. According to the chapter, what is the best definition of a venture's startup needs?

  1. The recurring expenses a venture pays for as long as it keeps operating
  2. The one-time resources a venture must acquire before it can begin operating at all
  3. The total revenue a venture expects to earn in its first year
  4. The portion of a founder's personal savings set aside for emergencies
Show Answer

The correct answer is B. Startup needs are the canvas's second-to-last block: one-time resources — equipment, a license, an initial batch of supplies — that a venture must acquire before it can begin operating at all. This is distinct from the ongoing costs covered by the chapter's final canvas block, which recur for as long as the venture keeps running.

Concept Tested: Startup Needs

See: Glossary

2. Jordan's grooming kit and the shampoo it uses up each session illustrate a distinction the chapter draws. Which statement correctly explains that distinction?

  1. The grooming kit is a fixed cost and the shampoo is a variable cost
  2. The grooming kit is an ongoing cost and the shampoo is a one-time need
  3. Both the grooming kit and the shampoo are examples of ongoing costs
  4. The grooming kit is a one-time need and the shampoo is an ongoing cost because it gets repurchased
Show Answer

The correct answer is D. The chapter uses this exact pair to separate the two ideas: Jordan's grooming kit is purchased once with no expectation of repeating the expense, making it a one-time need, while the shampoo it uses up every session must be repurchased regularly, making it an ongoing cost. One-time needs sit inside the startup needs block; ongoing costs are their own canvas block.

Concept Tested: One-Time Needs

See: Glossary

3. Which of the following best defines ongoing costs, as used in this chapter?

  1. Expenses that recur regularly for as long as the venture keeps operating
  2. Resources a venture purchases only once, with no expectation of repeating the expense
  3. The funds a founder personally contributes to avoid taking on debt
  4. The estimated dollar figure assigned to each item in a cost structure
Show Answer

The correct answer is A. Ongoing costs are the canvas's final block — expenses that recur regularly for as long as the venture keeps operating, such as insurance or grooming supplies. The chapter pairs this concept with startup needs specifically because the two are so often confused, even though startup needs are one-time and ongoing costs repeat.

Concept Tested: Ongoing Costs

See: Glossary

4. Why does the chapter say it matters whether an ongoing cost is fixed or variable, in the context of the break-even thinking from Chapter 14?

  1. Fixed costs are always more expensive than variable costs over a year
  2. Variable costs, like insurance, stay the same no matter how much a venture sells
  3. Fixed costs set the amount a venture must clear every period, while variable costs shrink or grow with each sale
  4. Fixed costs only apply to ventures that have taken on outside investment
Show Answer

The correct answer is C. Fixed costs, like insurance or a storage unit rental, stay the same regardless of sales volume and set the bar a venture has to clear every period. Variable costs, like grooming supplies used per session, rise and fall directly with sales. Knowing which is which connects directly to the break-even thinking introduced in Chapter 14.

Concept Tested: Fixed Costs

See: Glossary

5. Jordan pays a flat monthly fee for a storage unit and also buys grooming supplies that get used up per session. Applying the chapter's definitions, which item is the variable cost?

  1. The storage unit rental, because it is billed every month
  2. The grooming supplies, because the amount used rises and falls with how many sessions Jordan books
  3. The storage unit rental, because its price could change if the landlord raises rent
  4. The grooming supplies, because they were purchased only once during setup
Show Answer

The correct answer is B. Variable costs rise and fall directly with sales volume — grooming supplies used per session are the chapter's own example. The storage unit rental is a fixed cost instead, since it stays the same each month regardless of how many driveway sessions Jordan actually completes.

Concept Tested: Variable Costs

See: Glossary

6. How does the chapter describe bootstrapped funding for a venture like Jordan's?

  1. Financing startup needs using the founder's own resources — savings, existing equipment, personal effort — rather than outside investment or loans
  2. Raising money from investors in exchange for equity in the venture
  3. Taking out a small business loan specifically to cover ongoing costs
  4. Applying for a grant designated for first-time entrepreneurs
Show Answer

The correct answer is A. Bootstrapped funding means financing a venture's startup needs using the founder's own resources — savings, existing equipment, personal effort — rather than outside investment or loans. The chapter notes this course deliberately doesn't cover fundraising or investment pitching, so bootstrapped funding is the default path for a lean venture like Jordan's.

Concept Tested: Bootstrapped Funding

See: Glossary

7. Jordan lists every startup need alongside its estimated cost and checks the total against the money available to spend. Which concept from the chapter is Jordan applying?

  1. Cash flow awareness
  2. Cost structure
  3. Financial baseline
  4. Startup budget
Show Answer

The correct answer is D. A startup budget is the complete financial plan listing every startup need and its estimated cost, checked against available startup capital. It brings together the cost structure and the founder's startup capital into a single plan the venture can be launched against.

Concept Tested: Startup Budget

See: Glossary

8. What umbrella term does the chapter use for anything a venture requires to operate, before it is broken into three specific kinds?

  1. Cost structure
  2. Startup budget
  3. Resource needs
  4. Financial baseline
Show Answer

The correct answer is C. Resource needs is the umbrella term for anything a venture requires to operate. The chapter then splits it into three specific kinds — people resource needs, technology resource needs, and activity resource needs — each covering a different type of requirement a founder has to plan for.

Concept Tested: Resource Needs

See: Glossary

9. Jordan hires an occasional helper to keep up with driveway sessions on a busy Saturday. Which category of resource need does this illustrate?

  1. Technology resource needs
  2. People resource needs
  3. Activity resource needs
  4. Ongoing costs
Show Answer

The correct answer is B. People resource needs cover any labor, skill, or assistance required beyond the founder alone — the chapter's own example is exactly an occasional helper for a busy Saturday. This is distinct from technology resource needs (tools and equipment) and activity resource needs (actions or processes that must happen before launch).

Concept Tested: People Resource Needs

See: Glossary

10. A booking app and a set of clippers appear in the chapter as examples of one resource category, while completing a pet-first-aid certification appears as an example of a different one. What distinguishes technology resource needs from activity resource needs?

  1. Technology resource needs are always more expensive than activity resource needs
  2. Activity resource needs only apply after the venture has already launched
  3. Technology resource needs require people resource needs to be met first
  4. Technology resource needs are tools, software, or equipment, while activity resource needs are actions or processes that must happen before launch
Show Answer

The correct answer is D. Technology resource needs cover tools, software, or equipment required to operate — a booking app, a set of clippers. Activity resource needs cover an action or process that has to happen before launch, distinct from a physical item — getting a business license approved, completing a certification. The two categories are separated by what kind of thing is actually needed, not by cost or timing.

Concept Tested: Technology Resource Needs

See: Glossary

11. Getting a local business license approved is used in the chapter as an example of which kind of resource need?

  1. Activity resource needs
  2. People resource needs
  3. Technology resource needs
  4. Fixed costs
Show Answer

The correct answer is A. Activity resource needs cover any action or process that has to happen before launch, distinct from a physical item — the chapter's own examples are getting a local business license approved and completing a pet-first-aid certification. Neither involves hiring help or acquiring equipment, which is what separates this category from the other two resource needs.

Concept Tested: Activity Resource Needs

See: Glossary

12. What does building a cost structure accomplish for a founder, according to the chapter?

  1. It replaces the need to estimate real dollar figures for each item
  2. It converts variable costs into fixed costs so they are easier to plan
  3. It organizes all of a venture's costs by category so the full financial picture can be seen at once
  4. It guarantees the venture will have enough startup capital to launch
Show Answer

The correct answer is C. A cost structure is the organized breakdown of all of a venture's costs, grouped by category — startup needs, fixed costs, variable costs — so the full financial picture can be seen at once rather than scattered across memory and receipts. It does not itself estimate dollar amounts or guarantee funding; that comes from cost estimation and startup capital.

Concept Tested: Cost Structure

See: Glossary

13. Instead of guessing that grooming supplies will "probably cost around $100," Jordan looks up actual supplier prices and totals them. What is Jordan doing?

  1. Cost estimation
  2. Cash flow awareness
  3. Needs vs. wants assessment
  4. Cost tracking
Show Answer

The correct answer is A. Cost estimation means researching or calculating a realistic dollar figure for each item, using actual prices rather than rough guesses. Looking up real supplier prices instead of estimating "around $100" is exactly the discipline the chapter describes, and it's what turns a cost structure into real, usable numbers.

Concept Tested: Cost Estimation

See: Glossary

14. After Jordan finishes cost estimation and settles on a minimal viable budget, what do those two steps together establish, according to the chapter?

  1. A cost structure
  2. A financial baseline
  3. Startup capital
  4. Cash flow awareness
Show Answer

The correct answer is B. The chapter states that cost estimation and a minimal viable budget together establish a venture's financial baseline: the starting financial position a founder can measure every future month against. The cost structure and startup capital feed into this process but are not themselves the baseline.

Concept Tested: Financial Baseline

See: Glossary

15. Two versions of Jordan's startup budget are on the table: one includes a custom-branded van wrap and a backup set of premium clippers "just in case," and the other includes only the items needed to run the first lean test. Which version best reflects a minimal viable budget, and why?

  1. The version with the van wrap and backup clippers, because more equipment reduces the risk of a bad first impression
  2. Neither version, because a minimal viable budget should exclude even the basic grooming kit
  3. Both versions equally, since a minimal viable budget is really about the total dollar amount rather than which items are included
  4. The version without the van wrap or backup clippers, because it covers every genuine need identified through needs-vs-wants assessment with no padding
Show Answer

The correct answer is D. A minimal viable budget is the smallest budget that still covers every genuine need identified through needs-vs-wants assessment — no padding, no "just in case" purchases. The van wrap and backup clippers are exactly the kind of "want relabeled as a need" the chapter warns against, since the lean test doesn't require either one.

Concept Tested: Minimal Viable Budget

See: Glossary

16. Jordan's books show more revenue than costs for the month, yet the checking account is nearly empty because a big supply bill came due before a client's payment arrived. Which concept explains why Jordan's venture can look fine on paper but still be in danger?

  1. Cost structure
  2. Minimal viable budget
  3. Cash flow awareness
  4. Bootstrapped funding
Show Answer

The correct answer is C. Cash flow awareness is understanding not just how much money comes in and goes out, but exactly when — a venture can be profitable on paper and still run out of cash if expenses land before revenue does. The chapter's own warning states this trap directly: being profitable on paper doesn't mean cash is in the bank.

Concept Tested: Cash Flow Awareness

See: Glossary

17. Jordan has $1,200 in personal savings, a car that could be sold for parts, and no outside investors. Which figure represents Jordan's startup capital?

  1. The $1,200 in savings, since it is what Jordan can actually access to cover startup needs before the venture earns its own revenue
  2. The total estimated cost of every item on the startup budget
  3. The value of the car, because vehicles count as fixed costs
  4. Whatever amount a bank would approve Jordan for in a small business loan
Show Answer

The correct answer is A. Startup capital is whatever funds a founder can access to cover startup needs before the venture generates its own revenue. That is the $1,200 in accessible savings, not a hypothetical loan amount, an unsold asset's value, or the total the startup budget adds up to.

Concept Tested: Startup Capital

See: Glossary

18. Jordan wants to catch spending surprises in week one instead of month three, as the chapter recommends. How would Jordan best design an effective cost-tracking habit for a lean grooming venture?

  1. Reviewing the original startup budget once, at the end of the first year, to see how close the estimate came
  2. Recording every actual expense each week against the startup budget's line items and flagging anything that runs ahead of estimate
  3. Waiting until cash flow feels tight before checking any numbers at all
  4. Asking a bank to send a quarterly statement summarizing total spending
Show Answer

The correct answer is B. Cost tracking is the ongoing habit of recording actual spending against the startup budget as it happens, so surprises get caught in week one instead of month three. A weekly recording habit against the budget's own line items directly builds that ongoing check, unlike an annual review or a quarterly bank statement.

Concept Tested: Cost Tracking

See: Glossary

19. The chapter's sorter activity asks whether a professional booking website with online payments is a genuine need or a want that can wait. Which judgment best applies the needs-vs-wants assessment to this item?

  1. It is a genuine need, because every venture eventually needs a professional website
  2. It is a genuine need, because online payments reduce the risk of a client forgetting to pay
  3. It is a want that can wait, because text-message booking already lets the current lean test happen without it
  4. It cannot be assessed until the venture has a finalized cost structure
Show Answer

The correct answer is C. Needs-vs-wants assessment asks whether the venture can actually launch and run its first lean test without an item. A professional booking website is a want for now, since text-message booking from Chapter 6 already supports the current lean test — "eventually needed" is exactly the kind of reasoning the chapter warns turns wants into false needs.

Concept Tested: Needs Vs Wants Assessment

See: Glossary