Deck 4: Writing a Business Plan

Question 1

According to the textbook, only ________ of the 600 entrepreneurs that participated in a recent Wells Fargo/Gallup Small Business Study indicated that they had started their venture with a business plan.

A) 6 percent
B) 31 percent
C) 22 percent
D) 14 percent
E) 48 percent

Answer 1

B

Question 2

Which of the following is not a recommended guideline for writing a business plan?

A) To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way.
B) A business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture.
C) For most plans, 25 to 35 pages is sufficient.
D) A business plan should look sharp, but not a lot of money should be spent on the physical appearance of the plan.
E) Shy away from using a lot of boldfaced type, italics, clip art, and different font sizes and colors when preparing a business plan.

Answer 2

A

Question 3

Which of the following is not one of the "red flags" listed in the textbook that raises questions about one of more aspects of a company's business plan?

A) founders with none of their own money at risk
B) defining the market size too narrowly
C) a poorly cited plan
D) sloppiness in any area
E) overly aggressive financials

Answer 3

B

Question 4

Which of the following statements is incorrect regarding business plans?

A) A firm's business plan is typically the first aspect of a proposed venture that will be seen by an investor.
B) To make the best impression, a business plan should follow an unconventional structure, so it will stand out.
C) A business plan has both an external and an internal audience.
D) A company's business plan is typically written by its founders.
E) Potential investors are typically keenly interest in a company's business plan.

Question 5

A ________, which is typically 25 to 35 pages long, works best for new ventures who are at the point where they need funding or financing.

A) tactical business plan
B) deliberate business plan
C) summary business plan
D) full business plan
E) operational business plan

Question 6

There are two primary audiences for a business plan:

A) a firm's employees and officials with the SEC
B) a firm's customers and its competitors
C) investors and other external stakeholders and public relations firms
D) officials with the SEC and public relations firms
E) a firm's employees and investors and other external stakeholders

Question 7

A(n) ________, which is intended to be a blueprint for a company's operations, is 40-100 pages long and is meant primarily for an internal audience.

A) operational business plan
B) full business plan
C) deliberate business plan
D) summary business plan
E) tactical business plan

Question 8

The document that does the best job of introducing potential investors and other stakeholders with the business opportunity the firm is pursuing and how it plans to pursue it is the:

A) business plan
B) feasibility analysis
C) opportunity analysis
D) industry analysis
E) marketing plan

Question 9

There are three types of business plans:

A) functional business plan, full business plan, feasibility plan
B) summary business plan, contingency plan, full business plan
C) functional business plan, contingency plan, full business plan
D) opportunity plan, feasibility plan, full business plan
E) summary business plan, full business plan, operational business plan

Question 10

Which of the following is one of the "red flags" listed in the textbook that raises questions about one or more aspects of a company's business plan?

A) It takes several days or weeks to complete.
B) Founders that have their own money at risk.
C) overly aggressive financials
D) It is less than 50 pages long.
E) It is directed towards both an external and an internal audience.

Question 11

According to the textbook, a business plan is best described as a:

A) narrative description of a new business
B) contract
C) budget
D) agreement
E) marketing initiative

Question 12

GroupTable, the company profiled in the opening feature for Chapter 4, was founded to build a group collaboration platform with ________ in mind.

A) non-profit organizations
B) managers
C) college professors
D) government employees
E) college students

Question 13

Cindy Kramer is in the very early stages of putting together a business startup, and is thinking about writing a business plan to request funds to conduct a feasibility analysis and write a more complete business plan. What type of business plan should Cindy write at this point?

A) full business plan
B) tactical business plan
C) summary business plan
D) operational business plan
E) strategic business plan

Question 14

Trevor Combs is thinking about launching a small business consulting company. To get advice on how to proceed, he stopped by his local Small Business Administration (SBA) office. The SBA advisor told Trevor that one of the first things he needs to do is to sit down and write a 25 to 35 page narrative that describes what his new business plans to accomplish and how it plans to accomplish it. The SBA advisor is telling Trevor to write a:

A) tactical plan
B) marketing plan
C) operations plan
D) business plan
E) competitive plan

Question 15

A business plan is important for two reasons: it forces the founding team to systematically think through every aspect of their new venture and:

A) it is a budget
B) it is a public relations document that can be used to promote the firm
C) it is a contract that is signed by the founders of the firm
D) it is a financial analysis
E) it communicates the merits of a new venture to outsiders, such as investors and bankers

Question 16

Which of the following is the main purpose for writing a business plan?

A) The plan helps the company develop a "road map" to follow.
B) The plan introduces potential investors and other stakeholders to the business opportunity.
C) Both A and B are equally important.
D) Neither A nor B captures the true purpose of a business plan.
E) Reason A is the most important for experienced entrepreneurs and reason B is the most important for inexperienced entrepreneur.

Question 17

There are two primary audiences for a business plan: a firm's employees and:

A) officials with the SEC
B) investors and other external stakeholders
C) a firm's competitors
D) a firm's customers
E) public relations firms

Question 18

For most business plans ________ pages are sufficient.

A) 40 to 60
B) 25 to 40
C) 5 to 10
D) 25 to 35
E) 10 to 15

Question 19

Which of the following is not an individual, group or institution that normally reads a company's business plan?

A) board of directors
B) potential alliance partners and major customers
C) state and local government officials
D) key recruits for jobs with the new firm
E) rank-and-file employees

Question 20

Which of the following statement is incorrect about business plans?

A) Writing a business plan forces a firm's founders to systematically think through each aspect of their new venture.
B) For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.
C) A business plan is typically 25 to 35 pages long.
D) A large percentage of entrepreneurs do not write business plans for their new ventures.
E) The business plan should be written while the feasibility analysis is being completed.

Question 21

Match the business plan with its appropriate length:

A) operational business plan, 10-15 pages
B) full business plan, 25-35 pages
C) summary business plan, 25-35 pages
D) full business plan, 40 to 100 pages
E) operational business plan, 25-35 pages

Question 22

A(n) ________ is a graphic representation of how authority and responsibility are distributed within a company.

A) organizational chart
B) personnel chart
C) human resources chart
D) administrative chart
E) directional chart

Question 23

A company's mission statement should be placed in the ________ section of its business plan.

A) marketing plan
B) management team and company structure
C) company description
D) market analysis
E) industry analysis

Question 24

Pam Andrews has decided to write a business plan that is intended to be read primarily by her staff, which will present a blueprint for her company's entire operation and will provide guidance to operational managers. Pam should write an:

A) operational business plan
B) tactical business plan
C) deliberate business plan
D) summary business plan
E) functional business plan

Question 25

A competitor analysis should be included in the ________ section of a business plan.

A) market analysis
B) industry analysis
C) company description
D) management team and company structure
E) operations plan

Question 26

Which of the following statements is incorrect regarding the industry analysis portion of a firm's business plan?

A) It is important to focus simultaneously on a business's industry and its target market.
B) Industry structure refers to how concentrated or fragmented an industry is.
C) Most industries have 6 to 10 key success factors that should be reported in the industry analysis.
D) Industry trends should be discussed, which include both environmental and business trends.
E) The industry trends portion of the industry analysis is arguably the most important section.

Question 27

Paul Hempken just spoke to an investor, who is interested in his business idea. Paul offered to send the investor a copy of his full business plan, but the investor asked for a short overview of the business plan instead. What portion of his business plan should Karen send the investor:

A) marketing plan
B) executive summary
C) elevator pitch
D) company description
E) operations plan

Question 28

Match the business plan with its appropriate emphasis:

A) summary business plan, works best for companies who are at the point where they need funding or financing; serves as a "blueprint" for the company's operations
B) operational business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea
C) full business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in the idea
D) summary business plan, is meant primarily for an internal audience; works best as a tool for creating a blueprint for a company's operations and providing guidance to operational managers
E) summary business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea

Question 29

Which of the following statements is incorrect regarding the executive summary of a business plan?

A) It is a short overview of the entire business plan.
B) In many instances an investor will first ask for a copy of a firm's executive summary and will request a copy of the full business plan only if the executive summary is sufficiently convincing.
C) It is arguably the most important section of the business plan.
D) It should not exceed two single-spaced pages.
E) The executive summary is the first thing that should be written in preparing a business plan.

Question 30

What section of the business plan deals with the day-to-day operations of a company?

A) financial plan
B) marketing plan
C) operations plan
D) industry analysis
E) executive summary

Question 31

The ________ is a short overview of the entire business plan.

A) administrative review
B) executive summary
C) managerial review
D) founder's introduction
E) synopsis

Question 32

The Partnering for Success feature in Chapter 4 focuses on the types of partnerships that are common in business plans. According to the feature, businesses often make partnering an essential part of their business plans because they:

A) want to obtain a key customer
B) want to increase their visibility
C) want to reduce risk
D) what to appear legitimate
E) have limited resources

Question 33

According to the textbook, the ________ is arguably the most important section of a business plan.

A) appendix
B) industry analysis
C) operations plan
D) financial plan
E) executive summary

Question 34

A ________, in a business plan context, is a noteworthy event in the past or future development of a business.

A) aspiration
B) intention
C) signpost
D) milestone
E) target

Question 35

Which of the following statements is incorrect regarding the marketing plan section of a business plan?

A) The marketing plan focuses on how the business will market and sell its product or service.
B) The two most important items to include in a marketing plan are (1) overall marketing strategy and (2) the nuts and bolts of marketing a firm's product in terms of product, price, promotion, and place.
C) The best way to describe a company's marketing plan is to begin by talking about its competitors.
D) A firm's marketing strategy refers to its overall approach for marketing its products and services.
E) A firm's overall approach to marketing typically boils down to how it positions itself in its market and how it differentiates itself from its competitors.

Question 36

A(n) ________ describes why a company exists and what it aspires to become.

A) tactical statement
B) values statement
C) mission statement
D) operations statement
E) strategic statement

Question 37

The ________ section of a business plan breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal to.

A) competitive analysis
B) current status
C) market analysis
D) marketing plan
E) operations plan

Question 38

According to the textbook, many investors and others who read business plans look first at the executive summary and then go directly to the ________ section of the business plan to make their preliminary assessment.

A) management team and company structure
B) product (or service) design and development plan
C) industry analysis
D) marketing plan
E) operations plan

Question 39

The Savvy Entrepreneurial Firm feature for Chapter 4 focuses on three companies: Skullcandy, Zillow, and Riya. The overarching point of the feature is:

A) most business plan require major changes after the business is launched and the founder's start getting customer feedback
B) the degree to which business plans pan out as their founders envisioned varies
C) most business plans require only minor changes after the business is launched and the founders start getting customer feedback
D) the most effective business plans take three to six weeks to complete
E) most business plans are quickly discarded after the business is launched

Question 40

The facilities and equipment that a business needs should be described in the ________ section of its business plan.

A) marketing plan
B) management team and company structure
C) company description
D) market analysis
E) operations plan

Question 41

The executive summary is a lengthy overview of the entire business plan.

Question 42

According to the textbook, the ________ are the heart of the financial section of a business plan.

A) financial ratios
B) pro forma financial statements
C) budgets
D) sources and uses of funds statements
E) break-even analyses

Question 43

According to the textbook, in the first meeting investors typically focus on whether the management team has the skills and experience to pull off the venture and:

A) whether the new venture is properly structured
B) whether the new venture has intellectual property
C) legal and tax issues
D) whether a real opportunity exists
E) industry and competitor analysis

Question 44

There are two primary audiences for a firm's business plan: a firm's employees and investors and other external stakeholders.

Question 45

Most business plan writers interpret or make sense of a firm's historical and/or pro form financial statements through:

A) ratio analysis
B) assumptions analysis
C) scenario analysis
D) proportion analysis
E) relative analysis

Question 46

Even though the executive summary appears at the beginning of the business plan, it should be written last.

Question 47

To make the best impression, a business plan should follow an unconventional structure and stand out in some exceptional way.

Question 48

The document that lays out specifically how much money a firm needs, where the money will come from, and what the money will be used for is referred to as a:

A) sources and uses of funds statement
B) assumptions sheet
C) pro forma financial statement
D) credit and debit statement
E) capital and operational budgeting statement

Question 49

A feasibility plan is a written narrative that describes what a new business plans to accomplish and how it plans to accomplish it.

Question 50

According to the textbook, in the first meeting investors typically focus on:

A) legal and tax issues and whether a real opportunity exists
B) whether the new venture is properly structured and whether a real opportunity exists
C) whether a real opportunity exists and whether the management team has the skills and experience to pull off the venture
D) the new venture's marketing plans and the whether the new venture has intellectual property that can be patented
E) industry and competitor analysis and whether the management team has the skills and experience to pull off the venture

Question 51

A prototype is:

A) a form of opportunity recognition
B) a tool for evaluating the industry a new firm plans to enter
C) a financial model
D) the first physical depiction of a new product
E) a tool for evaluating the organizational prowess of a new firm

Question 52

A business plan is typically between 25 and 35 pages long.

Question 53

The ________ section of the business plan outlines how your business will be run and how your product or service will be produced.

A) operations plan
B) company description
C) management team and company structure
D) marketing plan
E) market analysis

Question 54

An operational business plan is between 40 and 100 pages, it is meant primarily for an internal audience, and works best as a tool for creating a blueprint for a new venture's operations and providing guidance to operational managers.

Question 55

According to the textbook, the marketing plan portion of a business plan is arguably the most important section of the plan.

Question 56

A computer-generated image of an invention that displays the invention as a 3D model that can be viewed from all sides and rotated 360 degrees is called a:

A) virtual prototype
B) concept visualization
C) abstract prototype
D) virtual design
E) usability test

Question 57

Katherine Payne was reading the business plan for New Venture Fitness Drinks, and noticed that prior to its financial statements, New Venture Fitness Drinks placed an explanation of the sources of the numbers for the statements and the assumptions used to generate them. This explanation is called a(n):

A) estimate sheet
B) hypothesis sheet
C) assumptions sheet
D) forecast sheet
E) forecast hypothesis

Question 58

According to the textbook the first rule in making an oral presentation is to:

A) follow instructions
B) be creative
C) emphasize all the positive aspects of a business venture
D) appear confident
E) do something out of the ordinary

Question 59

A business plan can usually be completed in one to three days.

Question 60

For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.

Question 61

A milestone is a noteworthy or significant event.

Question 62

An organizational chart is a graphic representation of how authority and responsibility are distributed within a company.

Question 63

Why is the "management team and company structure" section of the business plan often given disproportionate weight among investors?

Question 64

What is an "executive summary?" Why is the executive summary often called the most important part of a business plan?

Question 65

The management team and company structure section of a business plan is one of the lesser read sections.

Question 66

What is a business plan?

Question 67

Experienced entrepreneurs often refer to business plans as "living, breathing documents." What is meant by this characterization of business plans?

Question 68

Fragmented industries are more receptive to new entrants than industries that are dominated by a handful of large firms.

Question 69

The pro forma financial statements are the heart of the operations section of a business plan.

Question 70

A sources and uses of funds statement is a document that lays out specifically how much money a firm needs, where the money will come from, and what the money will be used for.

Question 71

A competitor analysis, which is a detailed analysis of a firm's competitors, should be included in the market analysis section of its business plan.

Question 72

What are the two main reasons for writing a business plan.

Question 73

The first rule in making oral presentation is to be as creative as possible.

Question 74

A company's industry analysis and target market analysis are usually included in the same section of its business plan.

Question 75

A firm's marketing strategy refers to its overall approach for marketing its products and services.