Question 1

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.

Accepted Answer

The answer of Business plans need to pass three tests:
A)the...

Question 2

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

Accepted Answer

The plan of operation typically includes a section on the management and organization of the business, which would include the organization chart. The resumes of the officers/owners would provide information on the background and experience of the individuals involved in the business, but not necessarily a visual representation of the organizational structure. The business strategy would focus on the overall direction and goals of the business, while the executive summary provides a brief overview of the entire business plan.

Question 3

The C of the five Cs that is a synonym for "cash flow" is:
A)capital.
B)character.
C)collateral.
D)capacity.

Accepted Answer

Capacity refers to a borrower's ability to repay a loan, which is closely related to their cash flow. It takes into account factors such as their income, expenses, and existing debts. Therefore, capacity is the C that is a synonym for "cash flow".

Question 4

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.

Accepted Answer

The marketing strategy portion of the business plan typically includes a detailed plan for distributing the product or service to the target market. This may include information on channels of distribution, logistics, and partnerships with other companies.

Question 5

The process of testing the business model on a small scale before committing serious resources to launch a business that might not work is called:
A)benchmarking.
B)business prototyping.
C)scaling.
D)lean modeling.

Accepted Answer

Business prototyping involves testing the business model on a small scale before launching a full-fledged business. Benchmarking is the process of comparing business processes and performance metrics to industry bests. Scaling refers to expanding a business that has already proven successful. Lean modeling is a methodology for developing business models which emphasizes flexibility and efficiency.

Question 6

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.

Accepted Answer

When presenting a business plan, it is important to exhibit enthusiasm for the venture, use visual aids to help illustrate your points, and avoid technical jargon that some stakeholders may not understand. Doing all of these will help you deliver a persuasive and compelling presentation that can help you win the support and funding you need.

Question 7

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.

Accepted Answer

The answer of An effective market analysis identifies:
A)your product's competitive...

Question 8

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.

Accepted Answer

The competitor analysis section of the business plan should focus on demonstrating your company's advantage over competitors. This includes analyzing their strengths and weaknesses and identifying opportunities for your company to differentiate itself in the market. It is not necessary to describe your overall product line in this section. Demonstrating the existence of the market for your product may be covered in other sections of the business plan, and showcasing the experience of your management team does not necessarily relate to your competitors.

Question 9

The loan proposal portion of the business plan should include:
A)three sets of forecasts: optimistic,realistic,and pessimistic.
B)a realistic timetable 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.

Accepted Answer

The loan proposal should include a realistic timetable for repayment or for investors to exit. This is important for lenders and investors to assess the risk and potential return on their investment. Options A, C, and D are also important components of a business plan, but they do not specifically relate to the loan proposal portion.

Question 10

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.

Accepted Answer

When creating financial forecasts, an entrepreneur should make sure that all forecasts are realistic and based on reasonable assumptions. Embellishing the forecasts can mislead investors, lenders, and other stakeholders and could harm the credibility of the entrepreneur. Including assets of the officers/owners or listing previous loans which are in default may not be relevant to the financial forecasts and could be addressed in other sections of the business plan.

Question 11

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.

Accepted Answer

Defining the target market and its characteristics is a crucial part of the marketing strategy section of a business plan. This section outlines the plan for promoting and selling the product or service to the target market. Understanding the potential size and characteristics of the target market is essential for developing an effective marketing strategy.

Question 12

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.

Accepted Answer

In order for a market to be profitable, there must be a need for the good or service and customers who are willing to pay for it. This is the foundation of any successful business. Comparing products, explaining business objectives, and showing the linkage between operations and profitability are all important factors, but they are secondary to the basic requirement of customer demand.

Question 13

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.

Accepted Answer

The reality test is an external test of a business plan that focuses on proving that a market exists for the product or service, ensuring that there is a demand and that the business can realistically capture a portion of that market.

Question 14

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

Accepted Answer

Investors look for experience, talent, and integrity in the management team of a new venture because they want to ensure that the team has the skills and track record necessary to successfully execute on the business plan and navigate the challenges of starting a new venture. Assets that can be used as collateral for the loan/investment and plans for keeping the management team in place are also important, but not as critical as the overall experience and capability of the team. A hiring strategy that has the customer clearly in focus is not necessarily a factor in evaluating the management team's experience, although it may be relevant to the overall business plan.

Question 15

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

Accepted Answer

The answer of Kyoto is writing a description of her...

Question 16

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.

Accepted Answer

The answer of The plan of operation of the company...

Question 17

In the business strategy section 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.

Accepted Answer

The business strategy section is where the owner outlines their plan for achieving the company's objectives and goals. This includes outlining specific steps, tactics, and strategies that will be used to grow the business and achieve success. This section is important for investors because it gives them insight into how the entrepreneur plans to use their investment to grow the business and generate returns. While the other options may be relevant to other sections of the business plan, they are not directly related to the business strategy section.

Question 18

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

Accepted Answer

The discussion of profitability and anticipated profitability, as well as entry, exit, and merger of firms all fall under the business and industry profile section of a business plan. This section provides an overview of the industry in which the firm operates, including market trends, competition, and potential risks or challenges that may impact the firm's profitability.

Question 19

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.

Accepted Answer

The answer of The most common reason cited by banks...

Question 20

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.

Accepted Answer

Projected financial statements are an essential part of a loan application. They must accurately demonstrate the company's ability to repay the loan, both principal and interest. Good financial projections can make the difference between acceptance and rejection of the loan application. Therefore, projected financial statements should be prepared with great care and accuracy.

Quiz 8: New Business Planning Process: Feasibility Analysis,business Modeling,

Business plans need to pass three tests:

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

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

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

The process of testing the business model on a small scale before committing serious resources to launch a business that might not work is called:

When presenting the business plan it is important to:

An effective market analysis identifies:

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

The loan proposal portion of the business plan should include:

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

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

Proving that a profitable market exists involves:

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

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

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.

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

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

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.

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

Which of the following statements is true?