Deck 12: Developing an Effective Business Plan

Question 1

Financial sources benefit from the prospective financial statements found in a business plan because it allows them to locate any miscalculations.

Answer 1

False

Question 2

In preparing a business plan for oral presentation, the entrepreneur should scan the outline once or twice.

Answer 2

False

Question 3

A business plan must illustrate the current status of the venture, not the projected results.

Answer 3

False

Question 4

A lack of demonstrated experience, no clear market niche, a failure to anticipate roadblocks, no realistic goals set, and a lack of commitment are all potential pitfalls or common points of failure that can occur before an entrepreneur even gets a plan reviewed.

Question 5

The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources.

Question 6

Every business plan should provide information about future harvest strategies.

Question 7

The business plan is the entrepreneur's road map for a successful enterprise.

Question 8

A market niche is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service).

Question 9

An entrepreneur should include a three- to five-year financial projection so that the financial source can adequately evaluate the venture.

Question 10

A business plan is the written document that details the proposed venture.

Question 11

After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.

Question 12

An investment prospectus is the same as a business plan.

Question 13

There are only two viewpoints from which a business plan should be written: the entrepreneur's and the financial source.

Question 14

The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim.

Question 15

Lack of any time frame to accomplish things is an indicator of the pitfall known as no realistic goals.

Question 16

The entrepreneur's professionalism and how well he or she handles the venture capitalist is far more important than being well organized and prepared.

Question 17

One suggestion for helping to recall key examples, visual aids, and other details when presenting the business plan is to utilize keywords in the outline.

Question 18

Because of the competition for funding, an entrepreneur's business plan needs to capture the reader's interest right away by stating the uniqueness of the venture.

Question 19

An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it.

Question 20

The manufacturing segment of the business plan should identify key personnel, their responsibilities and positions, and career experience that qualifies them for those particular roles.

Question 21

Which of the following questions should an entrepreneur ask when a business plan is turned down?

A)Can't you recognize a good plan when you see one?
B)Can you identify friends who would like this kind of deal?
C)If you were in my position, how would you proceed?
D)Can I ask you why you didn't like me?

Question 22

A business plan should be no more than 150 pages.

Question 23

An indicator of the planning pitfall of "failure to anticipate roadblocks" is

A)ignoring opinions of investors.
B)not recognizing future problems.
C)lacking action steps.
D)pursuing a good workforce.

Question 24

Which of the following is not one of the steps in reading a business plan?

A)establishment of the unique feature in this venture
B)reading of the latest balance sheet
C)thorough reading of each section
D)brief review of the history of the company

Question 25

A business plan _____ potential financial backers.

A)indicates the exact sum to be borrowed from
B)establishes a first impression of the company and its principals on
C)provides an accurate sales forecast for
D)purposefully underestimates financial need for

Question 26

The comprehensive business plan should be the result of

A)reflections on the direction of the venture.
B)continuous operations of the venture.
C)investors' promises of capital.
D)the entrepreneur's best guesses.

Question 27

Planning is not essential to the success of an undertaking.

Question 28

The pro forma balance sheet is used in the critical risk segment of the business plan.

Question 29

Competitive analysis, advertising plan, and pricing policy are all part of the _____ segment.

A)research, design, and development
B)marketing
C)milestone schedule
D)financial plan

Question 30

An indicator of the planning pitfall of "no commitment or dedication" is

A)no experience in the business.
B)no interest in researching the idea.
C)no recognition of future problems.
D)not understanding the industry.

Question 31

The executive summary gives a brief overview of what is to follow, helps put all of the information into perspective, and should be no longer than three pages.

Question 32

The major purpose of a business plan is its utilization as a working document.

Question 33

Which of the following is an advantage of the business plan for financial sources?

A)The plan identifies critical risks.
B)The plan helps assess the entrepreneur's market niche.
C)The plan identifies sources of capital.
D)The plan helps investors learn about the future fixed and variable costs.

Question 34

Copying the latest social media craze is an indication of not having realistic goals.

Question 35

The financial segment includes the

A)pro forma balance sheet.
B)profit statement.
C)cost statement.
D)R&D statement.

Question 36

The entrepreneur must be

A)able to handle questions from the evaluators.
B)interesting and humorous.
C)able to criticize the evaluators.
D)able to deftly avoid answering certain questions.

Question 37

Sometimes a business plan is referred to as a(n)

A)loan proposal.
B)encyclopedia.
C)novelization.
D)receivables exchange.

Question 38

A common mistake in business planning is using acronyms and technical jargon without clearly explaining them early in the business plan.

Question 39

The most common viewpoint in business plans is viewpoint of the

A)entrepreneur.
B)marketplace.
C)financial source.
D)competitor.

Question 40

Blueprints, sketches, drawings, and models are often important features to be placed in which of the following sections of the business plan?

A)research, design and development
B)marketing
C)manufacturing
D)critical risks

Question 41

If a business plan/venture is turned down the first time, the entrepreneur should

A)feel defeated.
B)revise, rework, and improve the plan.
C)take it personally.
D)change careers.

Question 42

Which of the following is part of the marketing segment?

A)plans for specific TV ads
B)the competitive analysis
C)plans for gaining shelf space
D)entry barriers

Question 43

The text discusses all of the following important guidelines to follow when putting the plan together except

A)keeping the plan respectably short.
B)highlighting critical risks.
C)avoiding exaggeration.
D)impressing with excessive detail.

Question 44

Which of the following statements would not be an appropriate guideline for successful business plan development?

A)Avoid exaggeration.
B)Write the plan in first person.
C)Highlight critical risks.
D)Do not over-diversify.

Question 45

Which of the following is not a pitfall that should be addressed in planning a venture?

A)milestones
B)flexibility
C)specific profit goals
D)realistic goals

Question 46

Which of the following is a critical factor that should be discussed in the management segment?

A)unfavorable trends in the industry
B)board of directors and consultants
C)competitive analysis
D)size of manufacturing operation

Question 47

The completed business plan provides the entrepreneur with a

A)tool for communicating with financial sources.
B)sense of well-being.
C)product-launch timetable.
D)nicely designed booklet.

Question 48

Which of the following would be appropriate to include in an appendix to a business plan?

A)niche market analysis
B)capital funding requirements
C)management team vitae
D)projected first-year sales

Question 49

The textbook recommends which of the following devices to help in the oral presentation of a business plan?

A)mnemonics
B)index cards
C)rote memorization cues
D)an outline

Question 50

An indicator of the planning pitfall of "no realistic goals" is

A)lack of timetable to accomplish things.
B)missed appointments.
C)excessive procrastination.
D)lack of desire to invest personal money.

Question 51

A business plan is

A)a written document that details the proposed venture.
B)an instance of entrepreneurial passion.
C)the result of the new business.
D)a blueprint of the product.

Question 52

The second section of a business plan is

A)the summary.
B)the business description.
C)a statement of purpose and goals.
D)a statement of financing goals.

Question 53

It is important for the entrepreneur to have a harvest strategy segment in a business plan in order to

A)plan for a liquidity event as an exit strategy.
B)know how to buy up troubled companies.
C)indicate how the business will increase in value.
D)designate how the business will recruit new talent to the enterprise.

Question 54

It is recommended that the final copy of the business plan be

A)paper clipped.
B)spiral bound.
C)professionally typeset and bound.
D)stapled.

Question 55

The major thrust of the business plan, as defined in the textbook, is to

A)provide a working document for the venture.
B)encapsulate the strategic development of the project in a comprehensive document.
C)serve as a communication tool for the entrepreneur.
D)outline capital needs for the new venture.

Question 56

The day before the presentation, the entrepreneur should

A)have snacks delivered to attendees.
B)arrange to have breakfast and coffee catered in.
C)read the paper to relieve nervousness.
D)practice the complete presentation by moving through each slide.

Question 57

In some professional areas, the business plan is referred to as a(n)

A)proposal for economic development.
B)investment prospectus.
C)strategic development project.
D)proposal for organizational growth.

Question 58

A business plan

A)forces the venture capitalist to prepare an effective strategy to use in case of trouble.
B)provides a foolproof "blueprint" for a small business.
C)may help an entrepreneur avoid a project that is "doomed" from the start.
D)is a loan application.

Question 59

Which of the following statements about a business plan is true?

A)It is the entrepreneur's road map for profits.
B)It is the minimum document required by any financial source.
C)It allows the entrepreneur to avoid pitfalls in starting a new venture.
D)It describes the entrepreneur's ideas and thoughts.

Question 60

Which of the following statements is not part of the "five-minute reading" by venture capitalists?

A)Determine the characteristics of the venture and industry.
B)Determine the strengths and weaknesses of the entrepreneur.
C)Determine the financial structure of the plan.
D)Read the latest balance sheet.

Question 61

Which of the following should be done to avoid the pitfall of "no market niche" (segment)?

A)Conduct a market analysis.
B)Analyze the expected needs of the new business.
C)Clearly target a niche.
D)Create a market niche.

Question 62

How should an entrepreneur prepare to present his or her business plan?

Question 63

Which of the following should be included in the business description?

A)the name of each investor
B)industry background
C)potential disadvantages of the venture
D)a list of suppliers

Question 64

The recommended length of a business plan is

A)about 100 pages.
B)about 25 pages.
C)no more than 150 pages.
D)10 pages, at the maximum.

Question 65

Which of the following is a critical factor to be considered in the management segment?

A)suppliers
B)location of the plant
C)organizational structure
D)product design

Question 66

It is important that an entrepreneur

A)seek the assistance of outside professionals to prepare a business plan.
B)develop an entrepreneurial team to organize the plan.
C)prepare his or her own plan.
D)develop a rough business plan and then seek outside professional assistance.

Question 67

According to the textbook author, a pitfall to avoid in planning is lack of

A)priorities.
B)profit orientation.
C)future vision.
D)illustrations.

Question 68

Which of the following is not an important aspect of an entrepreneurial venture that must be described in a business plan?

A)current status
B)expected needs
C)family support
D)projected results

Question 69

To an entrepreneur, one of the benefits of a business plan is that it identifies

A)profit strategies.
B)benchmarking measures for comparing forecasts with actual results.
C)critical risks.
D)potential sources of financing.

Question 70

A critical point to be included in the business description is

A)sales projections.
B)the business cycle.
C)key personnel.
D)potential market advantages.

Question 71

Which of the following helps an entrepreneur avoid the pitfall of not having realistic goals?

A)identifying a niche market
B)setting up a timetable of specific steps
C)following up on professional appointments
D)developing employee zeal

Question 72

Entrepreneurs can best orient their plans toward the future by

A)informing investors of how wealthy they will be in five years.
B)developing trends and forecasts that describe what the venture intends to do.
C)identifying opportunities for future investment
D)planning 20 years ahead.

Question 73

A business plan should illustrate

A)the current status of a related enterprise.
B)the projected results of the new business.
C)the desires of competitors.
D)changes in borrowing practices.

Question 74

How does a business plan benefit the entrepreneur?

Question 75

Surprisingly, entrepreneurs frequently forget to include _____ in the business plan.

A)the name of the company
B)the return address or phone number
C)the month and year the plan is issued
D)a customer endorsement

Question 76

Which of the following is something an entrepreneur should not do when preparing for the oral presentation of a business plan?

A)Organize the presentation.
B)Develop an outline of the plan.
C)Memorize the presentation.
D)Practice the presentation.

Question 77

What are some of the errors made in the preparation of a business plan that minimize an entrepreneur's chance for success?

Question 78

The business plan provides the details of the _____ potential of a business.

A)market
B)product growth
C)financial growth
D)entrepreneurial

Question 79

A financial source that reads a business plan derives which of the following beneficial information?

A)the venture's ability to service debt or provide an adequate return on equity
B)favorable lease terms
C)opinions about proposed business regulations
D)probability of future employment with the business

Question 80

Which of the following statements may be the most important in new venture creation?

A)pro forma balance sheet
B)income statement
C)cash-flow statement
D)profit statement