Question 1

"Sometimes the greatest service a business plan provides an entrepreneur is the realization that the business venture just won't succeed." Explain this statement.

Accepted Answer

The answer of "Sometimes the greatest service a business plan...

Question 2

Before presenting a business plan to potential lenders and investors, an entrepreneur must be well informed and well prepared.

Accepted Answer

It is important for entrepreneurs to do thorough research and preparation before presenting their business plan to potential lenders and investors. This includes understanding their target market, competition, financial projections, and overall business strategy. Being well informed and prepared increases the chances of securing funding and support for the business.

Question 3

Which of the following is true about the preparation of a business plan?

Accepted Answer

While certain elements of a business plan may be standard, such as the executive summary, market analysis, and financial projections, the content should reflect the unique aspects of the business and the excitement of the entrepreneur. A cookie-cutter approach may not adequately showcase the business's potential, and a lengthy plan that covers every detail may not be necessary. Seeking the advice of professionals can provide valuable insight and improve the quality of the plan.

Question 4

The company history section of the business plan typically includes ________.

Accepted Answer

The company history section of the business plan typically includes all three options: significant financial and operational events, highlights of the key goals and objectives the company has accomplished in the past, and a brief description of when and how the company was formed and how it has evolved over time. Including all three elements provides a comprehensive overview of the company's past performance and evolution.

Question 5

To get external financing, an entrepreneur's plan must pass three tests with potential lenders and investors. List and briefly explain all three.

Accepted Answer

The answer of To get external financing, an entrepreneur's plan...

Question 6

The ________ serves as the "thesis statement" for the entire business plan and is the broadest expression of a company's purpose and defines the direction in which it will move.

Accepted Answer

The mission statement defines a company's purpose and serves as the overarching goal for the business. The executive summary provides an overview of the business plan, the company history is a chronological account of the company's past, and the marketing strategy outlines how the company plans to promote and sell its products/services.

Question 7

The ideal business plan should be at least 100 pages long to prove to potential lenders and investors that the entrepreneur has studied the business and the market opportunity sufficiently.

Accepted Answer

The ideal length of a business plan may depend on the specific business and industry, but typically it should be concise and to the point. A 100-page business plan may be too long and overwhelming for investors and lenders to review thoroughly. A well-written and effective business plan can range from 20 to 30 pages, and should include a clear executive summary, market analysis, financial projections, and strategies for growth and success.

Question 8

The real value in preparing a business plan is not so much in the plan itself as it is in the process the entrepreneur goes through to create the plan.

Accepted Answer

The process of creating a business plan helps the entrepreneur clarify their vision, identify their target market, analyze the competition, and develop strategies for success. Going through this process can also uncover potential flaws in the business concept and allow for adjustments to be made before investing time and resources into the venture. Therefore, the real value of preparing a business plan is in the preparation process, not just the final document itself.

Question 9

An entrepreneur may find that the business plan indicates that the business concept is not viable. This is another potential benefit of writing a business plan; this revelation occurred before the owner committed significant resources (time and money) to the venture.

Accepted Answer

Writing a business plan can help an entrepreneur identify potential flaws in their business concept before investing significant resources.

Question 10

A business plan should contain certain basic elements, but it should also be tailored to the individual company by emphasizing its particular personality and reflecting the entrepreneur's excitement for the business opportunity.

Accepted Answer

A business plan should include basic elements such as executive summary, company description, market analysis, marketing and sales strategies, and financial projections. However, it should also reflect the unique aspects of the company and the entrepreneur's passion for the business.

Question 11

The executive summary section of the business plan ________.

Accepted Answer

The executive summary section of the business plan should be a concise summary of the business venture, should be no more than two pages long, and must capture the reader's attention and entice them to read the rest of the plan. Therefore, all of the given options (A, B, and C) are correct.

Question 12

Explain at least two functions or purposes of preparing a business plan.

Accepted Answer

The answer of Explain at least two functions or purposes...

Question 13

The "two-thirds rule" says that only two-thirds of the entrepreneurs with a sound new business venture will get financing, that they will get only two-thirds of what they need, and that it will take them two-thirds longer to get it than they anticipated.

Accepted Answer

This is a widely accepted rule in the entrepreneurial world that reflects the challenges entrepreneurs face in securing financing, often resulting in reduced funding and longer time to obtain it.

Question 14

The most effective business plans follow the "cookie cutter approach," following the standard format most preferred by lenders and investors.

Accepted Answer

The most effective business plans are unique to the specific business and industry, and may deviate from the standard format based on the goals, strategies, and financial projections of the business.

Question 15

The ________ is also known as the "elevator pitch" and is written last, but is included as the first part of the business plan and should summarize all the relevant points in about two pages.

Accepted Answer

The executive summary is a brief overview of the entire business plan and includes the key elements of the plan such as the company's product or service, target market, financial projections, and management team. It is typically written last to ensure that it includes all of the relevant points and should be concise, usually no longer than two pages. It is also known as the "elevator pitch" because it should be able to be delivered in the time it takes to ride an elevator with a potential investor or lender.

Question 16

Because the entrepreneur is the driving force behind a business idea, he or she should also be the driving force behind the business plan.

Accepted Answer

As the entrepreneur is the one who conceptualizes the business idea, he/she is the most knowledgeable about it and should take the lead in creating the business plan to ensure that it reflects the vision and goals of the business.

Question 17

Which of the following is true regarding the process of building a business plan?

Accepted Answer

All of the above statements are true regarding the process of building a business plan. It helps to replace uncertain assumptions with concrete data to reduce the risk of failure, improves objectivity and critical evaluation, and allows an entrepreneur to make and learn from mistakes on paper before implementing them in the real world.

Question 18

A table of contents that allows lenders to navigate a business plan easily is an important element of any business plan.

Accepted Answer

A table of contents helps lenders quickly find specific sections they need to review in a business plan, making it easier to navigate and assess the overall viability and potential of the business.

Question 19

Ideally, a business plan should be about ________ pages in length.

Accepted Answer

The answer of Ideally, a business plan should be about...

Question 20

Potential lenders and investors believe that an entrepreneur who lacks the discipline to develop a good business plan likely lacks the discipline to run a business.

Accepted Answer

A well-written, comprehensive business plan demonstrates an entrepreneur's understanding of key business concepts, potential challenges, and opportunities for growth. It also shows that the entrepreneur has taken the time and effort to research and develop a strategic plan for success. This level of discipline and attention to detail is highly valued by lenders and investors who want to ensure that their investment is being placed in capable hands.

Quiz 5: Crafting a Business Plan and Building a Solid Strategic Plan