Deck 7: The Business Plan: Creating and Starting the Venture

Question 1

Venture capitalists demand high rates of return for their investment in the new venture. 

Answer 1

True

Question 2

The four Cs of credit are computers,capital,compromise,and collateral. 

Answer 2

False

Question 3

Planning is a process that never ends and is extremely important in the early stages of any new venture. 

Answer 3

True

Question 4

In building a marketing plan,the entrepreneur should use a process designed as a pyramid,starting with narrow data and working down to broader-based information. 

Question 5

It is recommended that an entrepreneur avoid using the Internet as a resource for finding information to write a business plan because the information found there is often incorrect and unreliable. 

Question 6

The depth and detail in the business plan depend on the size and scope of the proposed new venture. 

Question 7

The process of writing the business plan provides a self-assessment for the entrepreneur. 

Question 8

Most entrepreneurs have little difficulty with gathering market information. 

Question 9

The business plan does not help an entrepreneur to obtain financing. 

Question 10

To maintain objectivity,the business plan should not be written by the entrepreneur. 

Question 11

The business plan addresses only short-term decision making. 

Question 12

Keep the goals and objectives as general as possible to make the business plan easier to control and implement. 

Question 13

Investors often spend a lot of time conducting background checks. 

Question 14

A quick feasibility study should be conducted before preparing the business plan to uncover possible barriers to success. 

Question 15

The process for contingency planning will depend on the nature of the business,which can be affected by factors such as weather disasters,employee strikes,or new regulations to name a few. 

Question 16

Before writing the business plan,an entrepreneur should conduct an objective self-assessment of his or her abilities,including areas such as planning skills and sales skills. 

Question 17

The digital age is only relevant to new ventures if they sell items online. 

Question 18

The best way to address the concerns of all potential audiences when writing the business plan is to rely exclusively on a computer software package. 

Question 19

In writing the business plan,an entrepreneur should consider four perspectives: the investor,the customer,the employees,and themselves.

Question 20

Plans may differ in function and scope but they all have one important purpose: to provide guidance and structure to management in a rapidly changing market environment. 

Question 21

The executive summary section is only meant to highlight key factors and motivate the person holding the plan to read it in its entirety. 

Question 22

An evaluation of cultural changes is irrelevant to the venture and should not be included in the business plan. 

Question 23

The entrepreneur need not concentrate on environmental analysis since most of the external factors are generally uncontrollable. 

Question 24

Within the business plan,the description of venture section details how the product(s)will be manufactured. 

Question 25

Discussing an exit strategy in the executive summary is not a good idea under any circumstances. 

Question 26

Standard & Poor's and the U.S.government are good sources of industry and market data. 

Question 27

Facebook is a good source of market information on competitors. 

Question 28

The introductory page of the business plan should contain the amount of financing needed. 

Question 29

Bankers agree that most business failures are due to the entrepreneur's inability to obtain financing. 

Question 30

The organizational plan section of the business plan should describe the venture's form of ownership. 

Question 31

When gathering financial information,the entrepreneur should develop a budget that includes expected sales and expense figures for the first year. 

Question 32

An assessment of risk for a new venture describes the form of ownership,the lines of authority,and the responsibilities of members. 

Question 33

Pro forma financial statements should be prepared semi-monthly for the first year of the venture. 

Question 34

To determine the figures in the budget,the entrepreneur should identify benchmarks or norms in the industry. 

Question 35

Letters from customers,distributors,or subcontractors are examples of information that should be included in the executive summary of a business plan. 

Question 36

The Internet is a useful tool to access information but is generally not a good vehicle for marketing goods and services. 

Question 37

The executive summary section of the business plan should be written first,before other sections are developed. 

Question 38

Operations information that may be needed for the business plan include-location,manufacturing operations,raw materials,equipment,labor skills,space,and technology.

Question 39

If a venture is not a manufacturing firm,an operations plan is not necessary. 

Question 40

By 2022 it is projected that online sales will account for 17 percent of all retail sales. 

Question 41

Typically,business plan projections are made in a 36-month schedule. 

Question 42

Which source of financial information is a compilation of 260,000 financial statements of banking customers with ratios and benchmarks  

A) RMA eStatement Studies
B) Market Share Reporter
C) U.S. Census Statistical Abstracts
D) Encyclopedia for American Industries and Mintel Reports

Question 43

________ is not one of the main perspectives an entrepreneur should consider when writing the business plan. 

A) The employee's perspective
B) The marketing perspective
C) The investor's perspective
D) The entrepreneurs own perspective

Question 44

A written document describing all relevant internal and external elements and strategies for starting a new venture,best describes:

A) a feasibility study.
B) a business plan.
C) an executive summary.
D) an environmental analysis.

Question 45

When collecting marketing information the entrepreneur should: 

A) not include general environmental information.
B) start with narrow-based data and work down to a more broader scope of information.
C) identify competitors.
D) not aim to define a specific market.

Question 46

When determining how much help is needed to write the business plan an entrepreneur should conduct a self-assessment.In this self-assessment which skill set would not be considered  

A) Product design
B) Forecasting
C) Venture capital
D) People management

Question 47

Which of the following interested parties should not have access to the venture's business plan  

A) Competitors
B) Lenders
C) Investors
D) Suppliers

Question 48

Which U.S.Census publication gives statistics such as industry outputs,inputs,and operating data on manufacturing activity,by industry groups  

A) Service Annual Survey
B) Current Industrial Report
C) County Business Patterns
D) Annual Survey of Manufacturers

Question 49

Which of the following statements is true  

A) The business plan describes both internal and external elements.
B) The preliminary business plan should be prepared by a lawyer.
C) Most business plan resources on the Internet are too complex and expensive to be of use to the new venture.
D) Once made, a business plan should not be changed.

Question 50

________ are good sources of information for financial and industry operating ratios. 

A) RMA eStatement Studies and BizMiner
B) Market Share Reporter and the SBA report
C) U.S. Census Statistical Abstracts and MarketLine
D) Encyclopedia for American Industries and Mintel Reports

Question 51

When evaluating business plans ________ are primarily concerned with the four Cs of credit. 

A) investors
B) employees
C) vendors
D) lenders

Question 52

The usefulness of the title or introductory page is: 

A) that it provides information about the company.
B) such that it requires several pages.
C) questionable, especially to investors.
D) that it contains backup data.

Question 53

The depth and detail of a business plan depend on: 

A) the target audience.
B) the size and scope of the new venture.
C) the experience of the entrepreneur.
D) the amount of capital needed.

Question 54

Which U.S.Census publication provides information about production and shipments on a wide range of products  

A) Service Annual Survey
B) Current Industrial Report
C) County Business Patterns
D) Annual Survey of Manufacturers

Question 55

Investors often place more emphasis on the entrepreneur's ________ than lenders do. 

A) character
B) experience
C) financial records
D) personal viewpoint

Question 56

All of the following would be an operations information need except: 

A) raw materials.
B) break even numbers.
C) equipment.
D) labor skills.

Question 57

The business plan presentation for potential investors: 

A) should be presented only in writing.
B) should contain no negative projections.
C) should enable the entrepreneur to "sell" his or her business concept in a designated period of time.
D) should provide the entrepreneur's own perspective.

Question 58

To assess the potential profitability of a venture,the entrepreneur needs to ascertain expected sales and expense figures for the first: 

A) month.
B) year.
C) quarter.
D) three years.

Question 59

Which of the following statements on contingency planning issues is not true  

A) It should be a step by step plan and not generalized.
B) To protect the reputation of the company, media should not be contacted during a crisis.
C) Identify managers and or employees responsible for carrying out the contingency plan.
D) In the event of a crisis, the plan should be implemented immediately.

Question 60

Before beginning the business plan,the entrepreneur should define the venture's goals and objectives.These goals should be: 

A) general and broad.
B) feasible.
C) guaranteed.
D) unique.

Question 61

The business plan is designed to guide the entrepreneur: 

A) through the distribution process.
B) through the first year of operations.
C) in the financing process.
D) in case of a change in ownership.

Question 62

Which of the following is not a part of the introductory page  

A) The name and address of the company
B) Statement of confidentiality
C) Amount of financing needed
D) The names and addresses of all managers

Question 63

An assessment of external uncontrollable variables that may impact the business plan is known as: 

A) an environmental analysis.
B) a description of the venture.
C) a trend analysis.
D) an executive summary.

Question 64

All of the following are reasons to enact a contingency plan,except: 

A) changes in fashion.
B) changes in regulations.
C) a technology breach.
D) a tornado or hurricane.

Question 65

Which of the following is not true about the operations plan portion of the business plan  

A) Only service businesses need an operations plan.
B) An operations plan describes the flow of goods and services from production to customer.
C) The role of technology in the business transaction process is discussed.
D) The shipping process and inventory control process can be discussed in this section.

Question 66

The organization plan describes the business': 

A) physical plant and machinery layout.
B) location as well as its plant(s).
C) system of distribution.
D) form of ownership.

Question 67

All of the following are questions that should be considered in the environmental and industry analysis section of the business plan except: 

A) What are total industry sales over the past five years?
B) Who are the nearest competitors?
C) What is my promotional strategy?
D) What is anticipated growth in this industry?

Question 68

Which of the following is not a common reason why business plans fail  

A) Objectives are not measurable
B) No customer need was established
C) The entrepreneur has no experience in the planned business
D) The promotional strategy was not taken seriously

Question 69

Distribution,pricing,and promotion of the product are discussed in which section of the plan  

A) Marketing
B) Production
C) Merchandising
D) Organization

Question 70

The executive summary section should: 

A) be prepared before the total plan is written.
B) be about two to three pages in length.
C) highlight key financial milestones that have been achieved.
D) try to summarize every section of the plan.

Question 71

The part of the plan that describes the location and size of the business,the personnel and office equipment that will be needed,and the history of the venture is called the: 

A) organizational plan.
B) description of the venture.
C) production plan.
D) executive summary.

Question 72

All of the following would be considering part of the description of the venture section of the business plan except: 

A) the business location.
B) the history of the business.
C) what equipment will be purchased.
D) the projected statement of cash flows for the first year.

Question 73

The section of the business plan in which the entrepreneur identifies changes occurring on the national and international level is the: 

A) merchandising plan.
B) description of the venture.
C) executive summary.
D) environmental and industry analysis.

Question 74

If the new venture is not a manufacturing operation,but a retail store or service,a new section of the business plan is required,which is called the: 

A) organizational plan.
B) operational plan.
C) production plan.
D) executive summary.

Question 75

_______ identifies potential hazards and alternative strategies to meet business plan goals and objectives. 

A) Assessment of risk
B) Financial planning
C) Alternative planning analysis
D) The financial plan

Question 76

By controlling ________,the firm can ensure maximum service to the customer. 

A) production
B) sales
C) costs
D) inventory

Question 77

The tendency among many entrepreneurs is to: 

A) avoid planning.
B) not take initiative.
C) not market their product or services.
D) lose focus on the business plan.

Question 78

If the new venture is a manufacturing operation a(n)________ in the business plan is necessary. 

A) ownership plan
B) quality control plan
C) production plan
D) partnership agreement

Question 79

Identify five of the nine skill areas an entrepreneur should review in order to determine whether or not they need help writing parts of the business plan. 

Question 80

Which of the following documents is not usually included in the Financial Plan  

A) Statement of cash flows
B) Income statement
C) Price lists from suppliers
D) Projected balance sheet