Deck 6: Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Question 1

________ are short-term,specific targets which are attainable,measurable,and controllable.

A)Objectives
B)Policies
C)Goals
D)Standard operating procedures

Answer 1

A

Question 2

A business plan:

A)reduces the risk and uncertainty involved in starting a new company.
B)is a guarantee of success for the small company.
C)should be done by professional writers in consultation with the owner.
D)should be kept in outline form to avoid over structuring the company.

Answer 2

A

Question 3

The company's overall direction and answer to the question,"Where do I want the company to be in 3 to 5 years?" is answered in this section of the business plan.

A)executive summary
B)company history
C)business and industry profile
D)marketing strategy

Answer 3

C

Question 4

The ________ becomes the document that summarizes the analysis that has been done to justify a new business.

A)business plan
B)cash budget
C)pro forma
D)financial statement

Question 5

A business plan performs a number of functions including:

A)identifying how many employees will be needed in the business start-up phase.
B)attracting capital for the start-up.
C)providing the entrepreneur with a plan for managing inventory.
D)providing the basis for purchasing property and casualty insurance for the new company.

Question 6

The business and industry profile section of the business plan includes:

A)significant financial and operational events in the life of the company.
B)how the entrepreneur intends to accomplish the company's goals and objectives.
C)the nature and characteristics of the target market.
D)the historical evolution of the market,market size,ease of entry,etc.

Question 7

A solid business plan is marked by a number of characteristics including:

A)broad,general market research on the overall industry and business environment.
B)a description of the management team.
C)a minimum of financial detail.
D)an optimistic financial projection and understandable risk statement.

Question 8

Which one of the following is not a "test" that an entrepreneur's business plan must pass?

A)The reality test
B)The competitive test
C)The value test
D)The ability test

Question 9

The second essential purpose for creating a business plan is:

A)to guide the operation of the company by charting its future course and devising a strategy for following it.
B)to attract lenders and investors.
C)to file with the SEC before making a public stock offering.
D)to attract potential managers and employees to run the new venture.

Question 10

The primary purpose of building a business plan is to:

A)raise capital.
B)attract potential employees.
C)provide direction,to create a "target" to shoot for.
D)meet SEC requirements designed to protect lenders and investors.

Question 11

The real value in preparing a business plan is:

A)in attracting experienced management talent to help grow the business.
B)in the creative process the entrepreneur has to go through.
C)in identifying viable funding sources while "fleshing out" the business concept.
D)None of these

Question 12

The ________ highlights significant financial and operational events in the company's life and should concentrate on the company's accomplishments.

A)executive summary
B)company history
C)business and industry profile
D)marketing strategy

Question 13

A business plan:

A)is developed through an intuitive process by which the entrepreneur records his/her plans for the business in the future.
B)focuses on the internal elements of the business.
C)forces an entrepreneur to think a business idea through,considering both its positive and its negative aspects.
D)is a strategic plan for a business that must be supplemented by operational plans once financing is secured.

Question 14

The ________ is the first part of the business plan.It summarizes all the relevant points of the deal,but it should be the last part written.

A)executive summary
B)mission statement
C)industry analysis
D)marketing strategy

Question 15

The ________ acquaints lenders and investors with the nature of the business and the general goals and objectives of the company.

A)executive summary
B)company history
C)business and industry profile
D)marketing strategy

Question 16

For entrepreneurs,a business plan is:

A)a systematic,realistic evaluation of a venture's chances for success in the market.
B)a way to determine the principal risks facing the venture.
C)a game plan for managing the business successfully.
D)All the above

Question 17

The ________ expresses the entrepreneur's vision for the company and what he/she hopes it will become.

A)executive summary
B)mission statement
C)industry analysis
D)marketing strategy

Question 18

________ are long-range,broad statements of what the company plans to accomplish in the distant future,and they guide the overall direction of the company.

A)Policies
B)Goals
C)Procedures
D)Objectives

Question 19

A well-developed business plan provides the entrepreneur with a number of benefits,such as:

A)a way to identify probable financial backers.
B)a valuable tool for recruiting management to help in running the business.
C)assisting the entrepreneur in going public with his/her new venture on the stock market.
D)determining the principal risks confronting the business.

Question 20

Potential investors tend to believe that if an entrepreneur can't develop a good plan:

A)he/she is probably the action-oriented sort of person they need running a business.
B)he/she needs to hire a consultant to write the plan for him/her.
C)he/she probably lacks the discipline to run a business.
D)then the entrepreneur is just like the majority of entrepreneurs and will probably do quite well.

Question 21

Which of the following statements is true?

A)The useful life of the financed asset must be less than the maturity of the loan.
B)An entrepreneur should try to camouflage any weaknesses in the small business.
C)Projected financial statements should prove the company's ability to repay the loan.
D)Officers' personal assets that can be used as collateral must be included in the financial statement.

Question 22

An external test of a business plan that revolves around proving that a market exists is the:

A)competitive test.
B)consumer test.
C)value test.
D)reality test.

Question 23

In the business strategy of the business plan,the owner needs to explain to investors:

A)significant financial and operational events in the life of the company.
B)how the entrepreneur intends to accomplish the company's goals and objectives.
C)the nature and characteristics of the target market.
D)the historical evolution of the market,market size,ease of entry,etc.

Question 24

An effective market analysis identifies:

A)your product's competitive advantage.
B)how you will achieve your market goals,what methods will be used.
C)the officers'/owners' resumes.
D)how the product will be advertised.

Question 25

The loan proposal portion of the business plan should include:

A)three sets of forecasts: optimistic,realistic,and pessimistic.
B)a realistic time table for repayment or for investors to exit.
C)pro forma for two to three years.
D)a listing of anyone who owns more than 20% of the business.

Question 26

The focus of the competitor analysis section of the business plan is to:

A)demonstrate the existence of the market for your product.
B)show that your experienced management team is better than your competitors'.
C)demonstrate your company's advantage over competitors.
D)describe your overall product line.

Question 27

The C of the five Cs that is a synonym for "cash flow" is:

A)capital.
B)character.
C)collateral.
D)capacity.

Question 28

Discussion of profitability and anticipated profitability of firms in the market segment,along with the entry,exit,and merger of those firms,is all part of the ________ section of the business plan.

A)business strategy
B)company history
C)business and industry profile
D)marketing strategy

Question 29

When dealing with the risks involved in the business start-up,the business plan should:

A)leave them out entirely.
B)only mention them in concept and then only in positive terms.
C)deal with the most significant risks and describe how they will be addressed.
D)show the entrepreneur's resolve to grow the company and follow the plan regardless of potential obstacles.

Question 30

Defining the target market's potential and describing its characteristics is part of the:

A)description of the product line.
B)marketing strategy portion of the business plan.
C)competitive analysis.
D)business strategy section of the business plan.

Question 31

The organization chart is described in which section of the business plan?

A)The plan of operation
B)The resumes of the officers/owners
C)The business strategy
D)The executive summary

Question 32

An explanation of how the product will be distributed is contained within the:

A)description of the product line.
B)marketing strategy portion of the business plan.
C)competitive analysis.
D)business strategy section of the business plan.

Question 33

Investors look for which of the following when reviewing the experience of the management team of a new venture?

A)Assets that can be used as collateral for the loan/investment
B)Experience,talent,and integrity
C)Plans for keeping the management team in place
D)A hiring strategy that has the customer clearly in focus

Question 34

When creating financial forecasts in a business plan for a proposed venture,an entrepreneur should:

A)be sure that all forecasts are realistic.
B)embellish all forecasts to make the numbers look really impressive.
C)include any assets of the officers/owners that can be used as collateral.
D)list all previous loans which are in default.

Question 35

When presenting the business plan it is important to:

A)show enthusiasm for the venture.
B)use visual aids.
C)avoid technical jargon.
D)do all of these.

Question 36

The most common reason cited by banks for rejecting small business loans is:

A)poor credit history.
B)undercapitalization or too much debt.
C)lack of collateral.
D)insufficient cash flow or poor profitability.

Question 37

Proving that a profitable market exists involves:

A)proving that customers in the marketplace have a need for the good or service and are willing to pay for it.
B)honestly comparing your firm's products with a competitor's products,showing your advantages.
C)explaining how you will achieve your business objectives and market share goals.
D)showing the linkage between your plan of operation and your financial profitability.

Question 38

Business plans need to pass three tests:

A)the financial test,the market test,and the management test.
B)the appearance test,the substance test,and the concept test.
C)the reality test,the competitive test,and the value test.
D)the presentation test,the content test,and the application test.

Question 39

The plan of operation of the company within the business plan should detail:

A)the experience of the management team.
B)the production process for the product being sold.
C)the financial assets of each of the officers.
D)plans for keeping the important officers in place with the company.

Question 40

Kyoto is writing a description of her new venture's product line and how it compares to her competitors' product lines.She is writing the ________ portion of her business plan.

A)description of her firm's product
B)marketing strategy
C)competitive analysis
D)business strategy

Question 41

A business plan presentation should cover:

A)the company's background and its products or services with a market analysis and a description of the opportunities it presents.
B)the company's competitive edge and the marketing strategies it will use to promote that edge.
C)the management team and its members' qualifications and experience.
D)All of the above

Question 42

The phrase,"avoid the off-the-shelf,'cookie-cutter' approach that produces look-alike plans" means:

A)avoiding a business plan that looks ordinary.
B)that every business plan is unique.
C)the business plan should reflect the excitement of the entrepreneur.
D)All of the above

Question 43

A description of the key factors that will dictate the success of your business quality,price competitiveness,etc.should be contained in the ________ section of the business plan.

A)market analysis
B)executive summary
C)description of the business
D)competitor analysis

Question 44

An executive summary should be:

A)a snapshot of the entire plan.
B)3 to 5 pages.
C)written first.
D)All of the above

Question 45

The intangible C that lenders examine in evaluating the business plan is that of:

A)capital.
B)character.
C)collateral.
D)capacity.

Question 46

The executive summary should contain which of the following information?

A)A brief statement of the financial needs of the business and what the money would be used for
B)A short description of potential buyers
C)A brief history of the business
D)A complete description of your business

Question 47

Proving that a profitable market exists involves:

A)showing customer interest.
B)documenting market claims.
C)Both A and B
D)Neither A nor B

Question 48

One technique involves ________,in which entrepreneurs test their business models on a small scale before committing serious resources to a business that might not work.

A)test run
B)business prototyping
C)duplicate business models
D)model prototyping

Question 49

What is competitive test?

A)It evaluates the company's relative position to its key competitors.
B)It identifies the competitors only.
C)It finds their address and phone numbers.
D)None of the above

Question 50

Any assets pledged to the bank as security for repayment of the loan are the ________ of the five Cs.

A)collateral
B)capacity
C)capital
D)conditions

Question 51

The form of ownership in your company should be explained in the ________ portion of the business plan.

A)business strategy
B)plan of operation
C)executive summary
D)market analysis

Question 52

You should identify your key people,explain their backgrounds and what they bring to the business,in:

A)the executive summary.
B)the description of the management team.
C)the strategic plan.
D)the business strategy.

Question 53

The C of the five Cs that relates to the circumstances relating to the business,such as potential growth in the market,form of ownership,location,etc. ,is called:

A)capital.
B)capacity.
C)conditions.
D)character.

Question 54

A ________ is what a customer gains from the product or service feature.

A)Feature
B)Bonus
C)Discount
D)Benefit

Question 55

Which statement is correct?

A)Lenders and investors are familiar with industry cost structures.
B)A lender's main consideration in granting a loan is the reassurance that the applicant will repay.
C)An investor's major concern is earning a satisfactory rate of return.
D)All of the above

Question 56

An executive summary should:

A)explain the basic business model and the problem the business will solve for customers.
B)briefly describe the owners and key employees,target market(s),and financial highlights.
C)briefly describe the company's competitive advantage.
D)All of the above

Question 57

What is the synonym for capacity?

A)Capital
B)Cash flow
C)Collateral
D)Credit

Question 58

A great source that profiles a variety of industries and offers projections for the future trends is:

A)the Handbook.
B)encyclopedia.
C)the U.S.Industrial Outlook Handbook.
D)the Blue Book.

Question 59

Your cash budget and an explanation of how much money you need to make your company and product a long-term success are the subject matter of the:

A)financial plan.
B)strategic plan.
C)business strategic plan.
D)strategic action plan.

Question 60

A ________ is a descriptive fact about a product or service.

A)feature
B)product summary
C)benefit
D)None of the above

Question 61

The business plan has two essential functions;it helps the entrepreneur determine if the business will succeed and it helps recruit management talent to run the new company.

Question 62

Often,the presence or absence of a quality business plan is a determining factor in a lender or investor's decision to put money into a business venture.

Question 63

The quality of the entrepreneur's business plan has little impact on the first impression potential lenders and investors have of the company.

Question 64

Which financial forecast should be realistic?

A)Pessimistic
B)Most Likely
C)Optimistic
D)All of the above

Question 65

A well-prepared business plan helps determine the risks facing the venture.

Question 66

General requests for funds are likely to win approval.

Question 67

The business plan should cover key people,the opportunity,provide a business context,and explain the risks and rewards involved.

Question 68

The ideal business plan should be at least 100 pages long and somewhat hard to read in order to demonstrate your thoroughness and to capture the venture capitalist's attention.

Question 69

An executive summary highlights the critical aspects of the plan.

Question 70

Entrepreneurs who apply for loans without having prepared business plans are less likely to get the money they need.

Question 71

Competitor's Analysis should identify:

A)Who are the company's key competitors?
B)What are their strategies?
C)What images do they have in the marketplace?
D)All of the above

Question 72

The primary purpose of building a business plan is to raise capital.

Question 73

Investors read business plans in such detail that the executive summary is nice to have but it is optional.

Question 74

The company history should explain why the company was formed,its past successes,and its image in the marketplace.

Question 75

The executive summary should summarize all of the relevant points of the proposed venture and should be concise - no more than two pages.

Question 76

Objectives are long-range,broad statements of what the company plans to accomplish in the distant future.

Question 77

One effective documentation technique involves ________,in which entrepreneurs test their business models on a small scale before committing serious resources to a business.

A)forecasting
B)business prototyping
C)collateral
D)None of the above

Question 78

The industry analysis should cover existing profitability and anticipated profitability of firms in the targeted market segment,and any significant entry or exit of firms.

Question 79

The executive summary should highlight significant financial and operational events.

Question 80

Company goals address the question,"Why am I in this business?"