Question 1

When describing the product in the business plan, the entrepreneur should

Accepted Answer

The entrepreneur should use lay terms to make the product description easily understandable for a wide range of people, including potential investors and customers. Using technical terms may confuse some readers, while assuming that others will like the product is a risky assumption to make. Stating that the product will sell itself is not effective without providing clear and compelling reasons why it will do so.

Question 2

Items such as marketing research studies and the résumés of key executives are placed in the _____ of the business plan.

Accepted Answer

The appendix of a business plan is where supporting documents are typically placed, such as marketing research studies and résumés of key executives. The executive summary provides an overview of the entire business plan, the table of contents lists the sections of the plan, and the management team section specifically discusses the individuals leading the organization.

Question 3

The marketing plan should include which of the following topics?

Accepted Answer

The answer of The marketing plan should include which of...

Question 4

The product/service plan section should include a

Accepted Answer

The product/service plan section should focus on the description of the products and/or services offered by the company. This should include details on the features, benefits, pricing, and how the product or service satisfies customer needs. While it may be useful to have a general understanding of the competition's products and services, listing their weaknesses and how the company will capture market share is better suited for the competitive analysis and marketing plan sections, respectively.

Question 5

In a business plan, the management team section should detail

Accepted Answer

The management team section of a business plan should detail the proposed venture's organizational structure, including information on the roles and responsibilities of key team members and their qualifications and experience. This section provides investors with an understanding of who will be leading the business and how it will be managed, which is critical to evaluating the venture's potential for success. While information on employee needs, projected growth, and ownership may also be important components of a business plan, they would not typically be included in the management team section.

Question 6

One of the primary goals of a prospective investor is to

Accepted Answer

Prospective investors aim to achieve maximum returns on their investments. Although minimizing losses and avoiding risks are also important goals, they are secondary to maximizing potential returns.

Question 7

Nelson is writing about how he will identify and attract customers, how he will price his product, and how and where he will offer it for sale. Nelson is working on the _____ section of his business plan.

Accepted Answer

Nelson is discussing marketing strategies in this section, which pertains to the marketing plan of his business.

Question 8

Information about the backgrounds of key employees should be placed in the _____ of the business plan.

Accepted Answer

The management team section is where information about the backgrounds of key employees should be placed as it highlights the experience and qualifications of the team that will be responsible for managing and running the business. The executive summary provides a brief overview of the entire business plan, the operations and development plan details the strategies for marketing, sales, and growth, and the critical risks section identifies potential risks and how they will be managed.

Question 9

Quentin, a venture capitalist, is scanning Mildred's business plan to see if and when he can recoup his investment and make a profit. Quentin is looking for a(n)

Accepted Answer

Quentin is specifically looking for Mildred's exit strategy, which outlines how he can eventually recoup his investment and make a profit. A financial plan and marketing plan may be part of the business plan, but they do not address Quentin's specific concern about making a return on his investment. An investment plan may be relevant, but it is not mentioned in the scenario as being Quentin's primary focus.

Question 10

Which of the following statements about the appearance of a business plan is true?

Accepted Answer

The plan should be presented in a three-ring, loose-leaf binder so that it can be easily updated and revised.

Question 11

Prentiss is writing about the potential lack of customer acceptance of his product and possible retaliations from competitors. Prentiss is writing the _____ of the business plan.

Accepted Answer

The critical risks section of a business plan addresses potential risks and challenges that may arise in the business and how they will be mitigated. Prentiss writing about the lack of customer acceptance and potential retaliations from competitors falls under this section.

Question 12

When dealing with weaknesses in a business plan, the entrepreneur should

Accepted Answer

Being straightforward about weaknesses and having an action plan to address them is the most effective way for entrepreneurs to show investors that they have carefully thought through their business plan and are prepared for potential challenges. Ignoring weaknesses or using technical jargon can damage the entrepreneur's credibility and make it less likely for investors to invest in their business.

Question 13

In a business plan, the key statement in the financial plan is the

Accepted Answer

The statement of cash flows is a key statement in the financial plan as it provides a detailed overview of the cash inflows and outflows over a period, helping to assess the liquidity, solvency, and financial viability of the business.

Question 14

Orlando has just finished the section describing his quality control methods and the need for specific equipment. Orlando has written the

Accepted Answer

The quality control methods and specific equipment mentioned by Orlando are part of the operations and development plan, which details the processes and resources needed to create and deliver a product or service. The management team section would focus on introducing the key individuals involved in running the business, the marketing plan would outline the strategies for promoting and selling the product or service, and the company description would give an overview of the business's history, mission, and values.

Question 15

In the financial plan section of a business plan, pro forma statements should be presented for

Accepted Answer

Pro forma statements should be presented for three to five years to provide a realistic and accurate view of the company's financial future. This timeframe allows for adequate forecasting of revenue, expenses, and potential profits. Six months is too short of a timeframe to accurately predict financial performance, while seven years is too far in the future and may be difficult to estimate. One year may not provide enough visibility into long-term financial objectives.

Question 16

Plans that appeal effectively to investors are

Accepted Answer

Plans that appeal effectively to investors are market-oriented, meaning they focus on the market opportunity and how the product or service will address the market's needs. Long and thorough plans can be overwhelming, and very short plans may not contain enough information to convince investors. However, plans that are too detailed and product-focused may not effectively communicate the market opportunity to investors. A good rule of thumb is to keep the plan concise and focused, ideally around 10-15 pages, with a strong emphasis on the market opportunity.

Question 17

Of all the factors that investors consider, the _____ is/are paramount.

Accepted Answer

The quality of the management team is often considered the most important factor by investors because they want to ensure that the company is being led by competent individuals who have the skills and experience necessary to successfully grow and manage the business. While the other factors listed are also important, they are typically viewed as secondary to the quality of the management team.

Question 18

In a business plan, the facilities and location of the proposed venture are described in the

Accepted Answer

The operations and development plan section of a business plan typically includes details about the facilities and location of the proposed venture. This section focuses on how the business will operate and is often broken down into topics such as production, marketing, and management. Describing the facilities and location is important in determining how the business will function and attract customers. The executive summary provides an overview of the entire business plan, the management team section focuses on the people involved in the venture, and the product/service plan outlines the details of the goods or services offered.

Question 19

The sources and uses table is a part of the _____ of the business plan.

Accepted Answer

The answer of The sources and uses table is a...

Question 20

In analyzing the market for her or his product, an entrepreneur should answer which of the following questions?

Accepted Answer

The answer of In analyzing the market for her or...

Quiz 6: The Business Plan: Visualizing the Dream