Deck 15: Pulling the Plan Together

Question 1

Which of the following best describes a business plan?

A) it is a vital part of the proposal for venture capital
B) it is not necessary if your business has low capital needs
C) it is of little use to anyone except an investment broker
D) it is often a waste of time because most events cannot be anticipated by a new firm

Answer 1

it is a vital part of the proposal for venture capital

Question 2

How many sections does a business plan contain?

A) 8
B) 6
C) 4
D) 2

Answer 2

2

Question 3

Which of the following tools is recommended for the person who tries to do everything at once?

A) time series
B) mind map
C) PERT
D) Gantt

Answer 3

PERT

Question 4

What is covered in the fourth part (part D) of Section 1 of the business plan?

A) financial strategy
B) human resources strategy
C) location strategy
D) marketing strategy

Question 5

Which of the following functions does a projected balance sheet perform?

A) balances inventory with accounts receivable
B) exhibits a detailed cash flow projection
C) shows anticipated owner's equity
D) discloses cost of goods sold

Question 6

According to the textbook, what is Action Step 74?

A) write a cover letter
B) describe your competition
C) project your balance sheet
D) introduce your personnel

Question 7

According to the textbook, what is Action Step 64?

A) construct a PERT chart
B) describe the market
C) describe the target market
D) write an executive summary

Question 8

Which of the following is included in a projected cash flow?

A) equity investments
B) disbursements
C) cost of goods sold
D) gross profits

Question 9

Which of the following should be included in the first section of your business plan?

A) discussion of the market and target customer
B) discussion of profit-and-loss projections
C) reprints of current literature, photographs, and letters from vendors and customers
D) the cover letter

Question 10

Which of the following is a possible advantage of using a PERT chart?

A) to overcome being overwhelmed
B) to identify expenses
C) to forecast when you will make a profit
D) to satisfy requirements of the federal government

Question 11

According to the author, which of the following best describes the structure of your business plan?

A) words, numbers, and appendices
B) words and numbers
C) statistics and legal paperwork
D) strategies, management, and profit

Question 12

Which of the following is usually of interest to investors?

A) proven, mature industries
B) both opportunities and risks
C) a low and conservative return on their investment
D) weaknesses and opportunities

Question 13

According to the author, what is the purpose of a cover letter?

A) to demonstrate the best and most effective market strategy
B) to encourage the reader to look at the business plan in detail
C) to communicate with your banker/financial investors
D) to estimate profit in the first year

Question 14

What is the first question an entrepreneur should ask when researching the market?

A) What is my targeted return on investment?
B) Who are my target customers?
C) Who are my potential investors?
D) What pricing structure should I use?

Question 15

Which of the following best describes a business plan?

A) It should never be altered or modified.
B) It should be at least 50 pages long.
C) It should give the reader confidence in you and your business.
D) It is not required by most venture capital firms.

Question 16

According to the author, which section of the business plan could be the most important of all?

A) cover letter
B) executive summary
C) financial section
D) marketing section

Question 17

According to the text, what does Section 2 of your business plan focus on?

A) good numbers
B) personnel and management
C) marketing and competition
D) PERT chart

Question 18

Which of the following is key to a good executive summary?

A) it addresses when a loan is required
B) it is quantifiable
C) it refers to the appendices
D) it is five pages long

Question 19

According to the text, what does Section 1 of your business plan focus on?

A) numbers
B) words
C) ROI
D) PERT

Question 20

Which of the following is used to calculate return on owner investment?

A) income statement
B) cash flow
C) balance sheet
D) other important financial information

Question 21

According to the text, which of the following statements best describes the purpose of the cover letter?

A) to introduce the excitement of your plan and tell the reader why you are sending the plan
B) to adhere to a standard content and format
C) to open the door gently and prepare the way for further negotiations
D) to provide the reader with at least three comprehensive, word-processed pages

Question 22

Which of the following should you start with when writing a business plan?

A) the table of contents
B) the material you feel comfortable with
C) the cover sheet
D) the PERT chart

Question 23

Which part of the business plan will most likely be prepared last?

A) human resources section
B) appendices
C) financial section
D) table of contents

Question 24

As described in the Chapter 15 case study, why was the business description section for The Software School Inc. effective?

A) it made brief and general claims
B) it "puffed" the product
C) it avoided hard-sell tactics
D) it included the income statement

Question 25

Which of the following statements about your business plan audience is the most accurate?

A) The reader of your business plan is a special kind of target customer.
B) Major financial institutions are risk avoiders, so your business plan may have to deal with how you will reduce risks.
C) Normally, investors will give you as much time as you need to present your plan.
D) Your business plan presentation will depend on your target audience.

Question 26

According to the author, where in the business plan should you mention numbers and percentages?

A) financial section
B) financial and marketing section
C) financial and location analysis
D) wherever you can

Question 27

Which of the following will the business plan reader usually want to see in the competition section of the plan?

A) an analysis of both your direct and indirect competitors
B) assurance that you have no competitors
C) assurance that your prices are lower than those of your competitors
D) an action plan for eliminating your competition

Question 28

According to the textbook, when should the executive summary be written?

A) throughout the business plan process
B) after you have written the plan
C) at the very beginning
D) after you have written the marketing section

Question 29

According to the text, which of the following is a defining characteristic of a business plan?

A) You should begin your business plan by writing a cover letter.
B) It is a road map for operating your business start-up and measuring progress.
C) In the appendices, you should add new but supportive information.
D) It is prepared mainly to get financing.

Question 30

Which of the following statements best describes information in the financial section of a business plan?

A) Cash flow provides the information to prepare a balance sheet.
B) The first section of your business plan should contain the financial results.
C) Return on owner's investment is calculated by dividing net profit by investment dollars.
D) The financial section of your business plan begins with a net worth statement.

Question 31

Which of the following roles should a business consultant have in the creation of your business plan?

A) write it
B) outsource it
C) refine it
D) co-author it

Question 32

Which of the following describes the best type of conclusion for your business plan?

A) leaves the reader hanging on
B) is very clear and concise
C) includes a survey for the reader to complete
D) informs the reader that more of the plan is to follow

Question 33

What is the return on investment if business profits are $100,000, expenses are $50,000, and the amount invested into the business is $300,000?

A) 3.33
B) 33.33
C) 16.66
D) 166.66

Question 34

By using data from secondary sources, you lend credibility to your description of the market and the target customer.

Question 35

The text recommends that your business plan should be divided into two major sections, supported by appendices.

Question 36

According to the textbook, an entrepreneur is usually better off preparing his or her own business plan rather than hiring someone else to prepare it.

Question 37

According to the textbook, the best way to begin a business plan is to start with the financial section.

Question 38

The contents of your business plan will depend on the needs of your target audience.

Question 39

You pay your bills and your payroll out of profit.

Question 40

Your plan should shout passion and confidence.

Question 41

The business plan needs to capture the reader's interest right away by stating the uniqueness of the venture.

Question 42

It is not necessary to profile the businesses that compete indirectly against you.

Question 43

Lenders are professional skeptics by nature.

Question 44

The reader of a business plan needs to be convinced that you understand the market and are capable of success.

Question 45

Return on owner's investment is calculated by dividing investing dollars by the net assets.

Question 46

The financial section of your business plan begins with a net worth statement or personal balance sheet.

Question 47

The cover letter is an introduction to your business plan, tailored to a specific reader.

Question 48

The executive summary is of little importance if you plan to contact lenders or investors.

Question 49

A poorly written cover letter may stop your reader from going any further into the plan.

Question 50

The management section of the business plan for The Software School Inc. (Chapter 15 case study) contained comprehensive résumés.

Question 51

A cash flow statement is also called a pro forma income statement.

Question 52

According to the textbook, if your projected statements show items that are not consistent with industry standards, this discrepancy will need to be explained.

Question 53

Contrary to what you may think, investors and lenders have little interest in reading your cover letter, and mistakes may go unnoticed.

Question 54

Balance sheets and income statements are not required in a business plan if you are financing the business yourself.

Question 55

Return on owner's investment means little if you are investing money in bonds.

Question 56

According to the textbook, many lenders first study the notes that accompany income and cash flow projections.

Question 57

With an income statement, the main point you are trying to bring out is the net value of gross sales.

Question 58

According to the textbook, for simplicity, the financial section of most small business plans will require only a year-end cash flow.

Question 59

The executive summary will be one of your first steps when preparing a business plan.

Question 60

Reprints from industry journals should never be placed in the appendix.

Question 61

If you and key members of your team have a clear understanding of the business, then there is no need for a business plan.

Question 62

Most appendices of business plans contain standard types of financial information.

Question 63

The acronym for the management tool used to establish a schedule for the performance of important business tasks is ___________.

Question 64

Section II of the business plan includes income statements, cash flow and __________ __________ .

Question 65

In your business plan, detailed support material belongs in the __________ .

Question 66

The section of your business plan that demonstrates that you know your business and that you are a winner is called the ________________________________________________.

Question 67

The most important section of any business plan, from a professional lender's viewpoint, is the __________ _____________.

Question 68

The competition section of your business plan should contain an analysis of two types of competition: __________ and ___________.

Question 69

Before you begin to write your plan, you need to think about your _____________ _____________.

Question 70

The part of the business plan that puts everything into perspective, and therefore needs to be written after the other sections of the plan have been completed, is the ________________ _____________.

Question 71

How is return on owner's investment calculated?

Question 72

Each business plan is a unique document. Briefly explain.

Question 73

A business plan is enhanced by using hard data. Briefly explain.

Question 74

What is the value to a small-business owner in using a PERT chart?

Question 75

What is the purpose of including appendices in your business plan?

Question 76

The text recommends that your business plan should be divided into two major sections and supported with appendices. Briefly explain the nature and purpose of Section 1.

Question 77

The text recommends that your business plan should be divided into two major sections. Briefly explain the nature and purpose of Section 2.