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

Question 1

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.

Answer 1

False

Question 2

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.

Answer 2

False

Question 3

In preparing the business plan,entrepreneurs can provide their own perspective and should consider the needs of external sources.

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

Investors often spend a lot of time conducting background checks.

Question 6

Steve Hafner founded Orbitz travel before founding Kayak a company that allows the user to view opportunities from multiple travel sites such as Orbitz,Expedia,and Priceline.

Question 7

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

Question 8

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

Question 9

Most entrepreneurs have little difficulty with gathering market information.

Question 10

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

Question 11

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

Question 12

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

Question 13

Planning the new venture is a process that never ends.

Question 14

The business plan is a private document and should not be read by employees and customers.

Question 15

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

Question 16

In the business plan the entrepreneur should address the needs of the entrepreneur and the needs of the market;the investor's perspective is not important.

Question 17

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

Question 18

The business plan addresses only short term decision making.

Question 19

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

Question 20

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

Question 21

In 2012 online retail sales increased by 15% over sales in 2011.

Question 22

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

Question 23

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

Question 24

Facebook is a good source of market information on competitors.

Question 25

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

Question 26

Revenue sources such as sales and any externally available funds should be included in the budget.

Question 27

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

Question 28

Standard & Poor's and Bloomberg are good sources of industry and market data.

Question 29

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

Question 30

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 31

Since bills have to be paid at different times of the year,cash flow projections should be presented weekly.

Question 32

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

Question 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

European online retail sales are expected to continue to grow by about 10% each year until 2018.

Question 38

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

Question 39

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

Question 40

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

Question 41

Which of the following is not true about Steve Hafner featured in the opening profile of chapter 7?

A)Graduated from Dartmouth College
B)Founded Expedia early in his career
C)Worked for Boston Consulting Group after completing his Masters Degree
D)Founded Kayak Corporation

Question 42

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 43

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 44

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 45

While preparing the first draft of the business plan,the entrepreneur should not:

A)prepare it from his or her personal viewpoint.
B)take into consideration the constituencies that will ultimately read and evaluate the plan's feasibility.
C)prepare it with an aim to identify possible barriers to success.
D)try to define the goals and objectives of the venture.

Question 46

___________ 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 47

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 48

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

Question 49

Which source of financial information is a compilation of 276,000 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 50

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

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

Question 51

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

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

Question 52

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 53

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 54

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 55

Which of the following statements is(are)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 56

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

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

Question 57

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 58

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)organizing
C)venture capital
D)people management

Question 59

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 60

_____________ 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 61

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 62

Identify 5 of the 9 skill areas an entrepreneur should review in order to determine whether or not they need help writing parts of the business plan.

Question 63

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 64

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 65

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 66

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 67

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 68

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 69

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

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

Question 70

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

Question 71

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 72

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 73

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 74

______ control compares the cost figures estimated in the business plan with actual day-to-day operations costs.

A)Production
B)Sales
C)Inventory
D)Costs

Question 75

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 76

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 77

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 78

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 79

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

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

Question 80

_______ 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