Deck 7: The Business Planning Process

Question 1

It's a common misperception that a business plan is primarily used for raising capital.

Answer 1

True

Question 2

Your business plan should be designed to be flexible, to allow for rapid adjustments as more information becomes available.

Answer 2

True

Question 3

As mentioned in earlier chapters and reiterated in this chapter, "cost plus" pricing is the best strategy, because it wastes the least amount of time.

Answer 3

False

Question 4

An important end result of the business planning process is that it allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner.

Question 5

An 'A' entrepreneur with a 'B' idea is better than a 'B' entrepreneur with an 'A' idea."

Question 6

A development strategy includes a schedule that highlights major milestones for the venture.

Question 7

Business planning, in a literal sense, begins when you start to look for external funds.

Question 8

Since the executive summary is the most important part of the finished plan, an entrepreneur should write that section first, in order to frame the rest of the plan.

Question 9

Market analysis looks at current trends in the market; anticipating future trends is reserved for later steps in the business planning process.

Question 10

Examining how customers currently acquire similar products is a poor use of time for an entrepreneur launching an innovative, new product.

Question 11

The business plan must establish that there is an opportunity worth exploiting and must detail how to take advantage of it.

Question 12

The chapter takes the view that the self-examination required to develop a tight, well written business plan is more important than the plan itself.

Question 13

Both positive and negative trends will help shape the businesses.

Question 14

Competitive profile matrices can aid in identifying undeserved or vulnerable parts of the market susceptible to a new entrant.

Question 15

New ventures will have better chances for success in an emerging market, on the verge of rapid growth.

Question 16

A simple, flat organization chart is often useful to visualize what roles you have filled and what gaps remain.

Question 17

It is appropriate to discuss the geographic location of production facilities and how this enhances your firm's competitive advantage.

Question 18

The Scope of Operations section should discuss partnerships with vendors, suppliers, and partners.

Question 19

Your distribution strategy can define your company's fortune as much as the product itself.

Question 20

The biggest risk any new venture faces is dilution of equity.

Question 21

The Board of Directors' primary role is to oversee the company on behalf of the employees, and to that end the board has the power to replace top executives if it feels doing so would be in the best interests of the staff.

Question 22

Detailed information which expands upon main areas of your business plan should be included in which portion of the plan?

A)Operations
B)Appendices
C)Financial Plan
D)Market Plan
E)None of the Above

Question 23

Advantages of a price skimming are;

A)You can gauge what price the customer is willing to pay
B)You'll gain increased market penetration
C)It's easier to lower prices than to raise them
D)A and B
E)A and C

Question 24

Which of the following subsections is traditionally NOT placed in the executive summary?

A)Description of opportunity
B)Industry overview
C)Critical risks
D)Competitive advantage
E)Team and offering

Question 25

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan.

Question 26

Which of the following is not a reason that business planning can help entrepreneurs to articulate the business opportunity to stakeholders?

A)The plan provides background information that enables the entrepreneur to communicate the upside potential to investors.
B)It provides the validation needed to convince potential employees to leave their current jobs for the uncertain future of a new venture.
C)It can help secure a strategic partner,
D)It can help secure a key customer, or supplier.
E)All of the above.

Question 27

A three-ring binder filled with initial intelligence can be a good starting point in the business planning process.

Question 28

Entrepreneurs often enter markets and find, to their surprise, either that direct competition does not exist, or that it is complacent and slow to react.

Question 29

Strategic partners are required by law to be offered seats on your Board of Directors.

Question 30

When an entrepreneur understands who his customers are, he can assess _____:

A)what compels them to make purchases.
B)how his company can sell to them.
C)the cost of sales.
D)how his company can retain customers.
E)All of the above.

Question 31

Which of the following is NOT a common category in the critical risks section?

A)Market Interest and Growth Potential
B)Competitor Actions and Retaliation
C)Time and Cost of Development
D)Operating Expenses
E)Offering of Financing

Question 32

Which of the following is the most important part of the business plan?

A)Executive Summary
B)Operations
C)Team
D)Critical Risks
E)Financial Plan

Question 33

All plans have risks, and a solid business plan should acknowledge critical assumptions made, the risk of those assumptions proving false, and a plan to confirm/deny those assumptions in a timely manner.

Question 34

The biggest difference between an internal operation plan and the one that you might present to a potential investor is the level of detail, which tends to be greater in the disclosure to the investor.

Question 35

If business planning predicts that your gross margins will be 5%, you would be best advised to:

A)redesign your concept or abandon your concept.
B)keep your business small so that you can manage costs.
C)focus on guerilla marketing to target a niche.
D)All of the above
E)None of the above

Question 36

It is important to explain why the team's compensation is appropriate.

Question 37

When presenting your plan, you should tailor the information, style, and format of the presentation to the information needs and formatting preferences of your audience.

Question 38

A company's sales channels can include all of the following except:

A)Internal sales stream
B)Retail
C)Internet
D)Cost reduction
E)Direct mail

Question 39

What are the two methods of forecasting future revenues, as stated in the chapter?

A)The comparable method and the build-up method;
B)The comparable method and the distributed method;
C)The distributed method and the precise method;
D)The random method and the precise method;
E)None of the above.

Question 40

A proper organization is critical to making a business plan easy to read.Thus, it should include which of the following?

A)Major sections
B)Sub-sections
C)Exhibits
D)Appendices
E)All of the above

Question 41

Inexperienced entrepreneurs often believe the misconception that a business plan is solely designed as a brochure for investors.The financial benefits of using a business plan to raise capital are well known.What are some additional benefits?

Question 42

Considering competitor actions and reactions, which of the following would be dangerous for entrepreneurs?

A)Assuming that competitors will be the same tomorrow as they are today.
B)Identifying future competitors that might enter the market.
C)Considering when and how your technology might become obsolete.
D)None of the above;
E)All of the above.

Question 43

What factors should be kept in mind when we are preparing the cover of the business plan?

Question 44

Which of the following is a common subsection of an Operations plan?

A)Operations strategy;
B)Scope of operations;
C)Ongoing operations;
D)All of the above;
E)None of the above.

Question 45

When writing a business plan it is best to:

A)Use a creative format to capture the investor's attention.
B)Lead the plan with the TEAM section because investors often focus on the team members, rather than the idea.
C)Follow a common outline because it helps spot reading.
D)Avoid appendices because nobody reads them.
E)All of the above.

Question 46

Which of the following is not a goal of business planning?

A)To attract various stakeholders;
B)To help entrepreneurs gain a deeper understanding of the opportunity;
C)To convince stakeholders of the business potential;
D)To inform competitors of your intentions
E)To convince potential employees to join.

Question 47

Generally speaking, what is the greatest benefit of the business planning process?

Question 48

Many of the big names in retail revolutionized and unified fragmented markets.Which of the following should NOT be on such a list?

A)Microsoft;
B)Walmart;
C)Staples;
D)Home Depot;
E)All should be on the list

Question 49

How can entrepreneurs minimize risk?

A)Market research;
B)Focus groups;
C)Beta testing;
D)All of the above;
E)None of the above.

Question 50

The best way to develop a winning business plan is to:

A)Have an accountant develop your financials;
B)Hire your professor to write the plan;
C)Go through several iterations to refine the strategy and business model;
D)Don't bother writing a plan, it is not an efficient use of time;
E)All of the above.

Question 51

Which of the following is not a standard subsection of a marketing plan?

A)Product strategy;
B)Market strategy of the competitors;
C)Pricing strategy;
D)Distribution strategy;
E)Sales strategy.

Question 52

Which of the following should NOT appear in the compensation section

A)Salary previously earned from prior employment
B)Salary due to employees
C)A fixed schedule for increasing the entrepreneurs salary
D)None of the above.

Question 53

If you are thinking about venturing into a market and cannot find any competitors, what should you do as an entrepreneur?

A)Begin raising capital.
B)Examine additional opportunities within the same competitive arena.
C)Focus on product quality.
D)Expand your definition of the market.
E)None of the above.

Question 54

Entrepreneurs should focus on the key success factors that often lead a customer to buy one product over another, such as___.

A)Price
B)Quality
C)Speed
D)All of the above;
E)None of the above.

Question 55

To truly understand your customers, you MUST ___

A)tell them why they need your product.
B)hire the best marketing research firm available.
C)listen carefully and adapt based upon what they say.
D)advertise in multiple media forms, like the Internet.
E)All of the above

Question 56

Which of the following is NOT in the operations plan?

A)Locations
B)Insurance
C)Employees
D)Suppliers
E)Customers.

Question 57

In the development plan, which issue should be the focus?

A)Development strategy;
B)Development timeline;
C)Development segments;
D)Both A and B;
E)None of the above.

Question 58

Which of the following is not in the contents of marketing plan?

A)Marketing communications;
B)Growth strategy.
C)Product mix
D)Pricing;
E)Customer analysis.

Question 59

Which of the following is the key to creating visual catch-points in a business plan?

A)Write long, descriptive paragraphs
B)Use clearly marked headers and sub-headers throughout the document.
C)Maintain 1 inch margins on the sides and top and ½ inch on bottom.Single spaced text.
D)None of the above.
E)All of the above.

Question 60

Considerations to include in your Financing plan should include

A)Options to slow the "burn rate" if needed.
B)Financing requirements by phase of growth
C)Milestones to be met between rounds of financing
D)None of the above
E)All of the above.

Question 61

Why should entrepreneurs go out and interview potential customers, especially in the early conceptualization stages?

Question 62

Explain the importance of finding an entry point in the market analysis that holds a substantial (30-40%)gross margin for a new venture.

Question 63

Discuss the criticality of the financing portion and its connection to the offering section of the business plan.

Question 64

What would be a counter-argument to the critique that business plans are obsolete soon after they are finished?

Question 65

What are the key issues in the Industry Section?

Question 66

What kind of information in a business plan do entrepreneurs need to provide?

Question 67

How should entrepreneurs introduce the basic details of their company, before moving on to a more detailed analysis of the marketing and operations plans?

Question 68

Discuss the importance of critical risks management in your business plan.

Question 69

What are some of the critical outcomes of competitive profile and product attribute analysis in terms of your initial business plan.

Question 70

What slides are useful in oral presentations of your business?

Question 71

What are the critical risks entrepreneurs need to identify in the business plan?

Question 72

What are the primary components of marketing plan section in a business plan? Describe them.