Deck 4: The Business Plan

Question 1

Planning is essential if a business is to succeed.

Answer 1

True

Question 2

A business plan should provide a road map for future operations.

Answer 2

True

Question 3

If a new small business runs out of cash, thus having inadequate cash flow, it is out of business.

Answer 3

True

Question 4

Business plans do not necessarily need to be written on paper; having the plan in mind is sufficient.

Question 5

The executive summary is located at the beginning of the business plan and should be written first.

Question 6

A business plan can be the difference between running a business proactively and running a business reactively.

Question 7

The goal of the marketing research section of the business plan is to convince readers that a market exists for the product/service and that the projected sales forecasts can be achieved.

Question 8

A timeline does not need to be attainable; it need only show a general outline of when projects may be completed.

Question 9

A projected profit-and-loss statement should be 100 percent accurate in the future dollar amounts it states.

Question 10

When writing the company and industry section of the business plan, any setbacks or wrong turns should not be included.

Question 11

Information and documents critical to the business plan would be found in the appendix section of the business plan.

Question 12

Writing a business plan involves a long series of interrelated steps.

Question 13

The most important section of a business plan is the executive summary.

Question 14

The most important financial statement for a small business is the cash-flow statement.

Question 15

The overall appearance of a business plan is not important; content is what counts.

Question 16

Writing a business plan is pure science, not an art.

Question 17

A successful management team combines people with complementary business knowledge, technical skills, and life experiences.

Question 18

Marketing objectives and strategies used to accomplish those objectives are included in the products/services section of the business plan.

Question 19

The marketing plan section of the business plan is where alternative plans are established in case the unexpected should occur.

Question 20

The marketing plan section of the business plan stresses the manufacturing and operations plan that will be needed to produce the product.

Question 21

Warren is in the process of developing a business plan, so he visits a nearby Small Business Development Center to get guidance. Which of the following is the best advice that could be given by the SBDC?

A) "Try to write your business plan in the first person"
B) "Try to write a plan that is longer than 45 pages"
C) "Follow a business plan template"
D) "Consider your audience"

Question 22

A document that tests the feasibility of a business idea, describes ways to raise capital, and serves as a road map for future operations is called a

A) Code of ethics
B) Mission statement
C) Business plan
D) Strategic plan

Question 23

Although passion is needed to run a business, it must be tempered with logic and rationality to bring success. A business plan does this by

A) Removing the need for capital
B) Providing perfect planning
C) Proving feasibility
D) Identifying demographics

Question 24

An environmental analysis should be completed after the industry analysis is complete.

Question 25

A business plan says nothing about the level of financial and professional knowledge a potential small business owner has acquired.

Question 26

Many people just starting a new business focus on

A) Obtaining financing
B) The excitement and emotions involved in beginning a new business
C) Hiring good employees
D) Making a profit

Question 27

Identifying a business's breakeven point is used to provide direction for that business.

Question 28

Potential pitfalls and problems should be addressed in a well-written business plan.

Question 29

Deciding whether to use a sales force or distributors involves using service policies as part of the marketing plan.

Question 30

The 18-to-25 year old female market is an example of a consumer demographic.

Question 31

Which of the following is not a major reason for writing a business plan?

A) To aid in determining the feasibility of a business
B) To attract capital
C) To provide direction after the business has begun operations
D) To successfully begin an advertising campaign

Question 32

Two good sources for guidance on writing business plans include a local SCORE chapter and a nearby college or university.

Question 33

One of the first questions bankers ask potential small business owners is

A) What will be used as collateral?
B) How long before a profit will be made?
C) Where is the business plan?
D) How much debt will be held by the business?

Question 34

To reinforce financial projections and establish benchmarks, it is important to compare projected financial ratios with GDP averages.

Question 35

Financial data should never be included in a business plan's executive summary.

Question 36

The make-or-buy decision involves deciding what will be produced and what will be purchased in a manufacturing business.

Question 37

eDivvy is an online gift sharing program that allows groups from office parties or weddings to select gifts and invite others to contribute to the price.

Question 38

Launched in 2009, eDivvy is an 11- person firm that generated _________ in its first year.

A) Over $50,000
B) $500,000
C) One million
D) $3.5 million

Question 39

Providing new technical skills and creating opportunities for career advancement provide human development benefits to a community.

Question 40

A common mistake made in writing business plans is for the small business owner to propose investing none of their own money in the business.

Question 41

Which of the following people is most qualified to write the business plan for a proposed new business?

A) The small business owner
B) A banker
C) A consultant
D) A college professor

Question 42

A condensed abstract of a business plan used to spark reader interest and to highlight critical information is called a/an

A) Business plan
B) Strategic plan
C) Executive summary
D) Code of ethics

Question 43

__________ involves identifying trends and changes that are happening at the national and international levels that may influence the future of a small business.

A) Environmental analysis
B) Financial positioning
C) Internal Positioning
D) Quality control

Question 44

Of the following business plans shown in the text, which is an example of a poorly written business plan in the Manager's Notebook titled "Good, Bad, and Ugly Business Plans"?

A) King's Medical Company
B) Jay's Quarterback Club
C) Sassy Scents
D) Mail Boxes, Etc.

Question 45

In general, how many pages should the business plan contain?

A) 10 pages or less
B) 30 pages or less
C) 40 pages or less
D) at least 45 pages

Question 46

Descriptions of factors such as the background of the company, your competitive advantage, company objectives, and the legal business form would be found in which of the following sections?

A) Executive summary
B) Company and industry
C) Products and services
D) Marketing research and evaluation

Question 47

Daniel is preparing a business plan for the carwash that he plans to open. He is writing a one-page abstract of the plan to highlight crucial information and to spark readers' interest. This abstract is part of which business plan component?

A) Cover page
B) Executive summary
C) Table of contents
D) Industry analysis

Question 48

The executive summary should include all but which of the following?

A) Company information
B) Market opportunity
C) Financial data
D) A listing of competitors' products in the appendix section

Question 49

Which of the following areas is addressed in the marketing research section of the business plan when the price leader, the quality leader, and the service leader are identified?

A) Markets
B) Market trends
C) Competition
D) Market share

Question 50

A business plan's cover page should include all of the following information except

A) Short summary
B) Name of business
C) Address of business
D) The date the plan was issued

Question 51

Which of the following Web sites should be referenced first when seeking help in writing a business plan?

A) www.queenmotherofbusinessplan.com
B) www.sba.gov
C) www.bplansrus.org
D) www.businessplanet.biz

Question 52

Which of the following is not a necessary component of a business plan?

A) A cover page
B) An executive summary
C) Products and services
D) Advertising samples and brochures

Question 53

In writing her business plan, Rita wants to include an honest portrayal of the setbacks that she had come up against along the way in forming the business. This would fit under which area of the business plan?

A) Industry analysis
B) Company information
C) Executive summary
D) Cover page

Question 54

Free or inexpensive business planning assistance is available from

A) A local accountant
B) Small business development centers
C) Local consultants
D) Competitors

Question 55

Factors such as uses for the product, patents and trademarks, and how the product is different will be found in which of the following sections?

A) Executive summary
B) Company and industry
C) Products and services
D) Marketing research and evaluation

Question 56

A small business plans should be written by

A) Consultants
B) Investors
C) Proposed employees
D) Proposed business owners

Question 57

In terms of appearance, a business plan should be

A) Handwritten
B) Professionally prepared by outside experts
C) Printed and spiral bound
D) Printed on gold-leaf-trimmed pages

Question 58

A good executive summary provides the opportunity to develop an elevator pitch. What is an elevator pitch?

A) The approach you take when selling elevators
B) The short explanation of your business idea condensed to its essence
C) Directions you provide vendors to find your business
D) A list of your products

Question 59

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

A) Keep the audience in mind.
B) Keep the plan brief.
C) Obtain help when needed.
D) Begin with the executive summary.

Question 60

Which of the following areas is addressed in the marketing research section of the business plan when the target markets are identified by some common variable?

A) Markets
B) Market trends
C) Competition
D) Market share

Question 61

The _________ section of the manufacturing and operations segment of the business plan discusses the adequacy and quantity of skilled workers that are available to help in the production of the product/service.

A) Labor force
B) Facilities
C) Make or buy policy
D) Control systems

Question 62

Which of the following is a possible contingency that should be anticipated in the critical risks and assumptions section of the business plan?

A) Competition through underpricing by competitors
B) Unrealistic timelines
C) Inadequate management
D) Lack of sufficient capital

Question 63

The section of the business plan where such items as facilities, location, capital equipment, labor force, inventory control, and purchasing are discussed is

A) Product/services section
B) Company and industry
C) Marketing
D) Manufacturing and operations

Question 64

All but which of the following benefits might arise for a community in which a small business is located?

A) Economic development
B) Community development
C) Human development
D) Social development

Question 65

Stella, a tattoo artist, visits tattoo conventions in a nearby city every few months to attract potential customers who live on the outskirts of her business's geographic market. This is an example of using

A) Pricing as part of the marketing plan
B) Promotion as part of the marketing plan
C) Place as part of the marketing plan
D) Service policies as part of the marketing plan

Question 66

Contingencies related to ____________ in the critical risks and assumptions segment of the business plan discusses either sales that are too low or sales that are too high.

A) Unreliable sales forecasts
B) Competition
C) Unfavorable industry-wide trends
D) Insufficient numbers of trained employees

Question 67

Which of the following areas in the marketing plan section of the business plan is described when advertising media, trade shows, and direct mail are discussed?

A) Pricing
B) Promotion
C) Place
D) Service policies

Question 68

Which of the following sections of the manufacturing and operations section of the business plan discusses what will be produced in the plant and what components will be purchased to be assembled into the finished product?

A) Labor force
B) Facilities
C) Make-or-buy policy
D) Control systems

Question 69

Ensuring for product quality is part of which portion of a manufacturing and operations plan?

A) Facilities
B) Geographic location
C) Labor force
D) Control system

Question 70

The _______________ section of the manufacturing and operations segment of the business plan discusses the proximity to customers or the proximity to transportation.

A) Geographic location
B) Facilities
C) Make or buy policy
D) Control systems

Question 71

Which of the following areas in the marketing plan section of the business plan is described when sales representatives and channels of distribution are discussed?

A) Pricing
B) Promotion
C) Place
D) Service policies

Question 72

Which of the following areas is addressed in the marketing research section of the business plan when sales in relation to total industry sales are expressed as a percentage?

A) Markets
B) Market trends
C) Competition
D) Market share

Question 73

All of the following are considered psychographic variables except

A) Similar lifestyle
B) Usage rate of products
C) Degree of loyalty
D) Consumer demographics

Question 74

Which of the following areas is addressed in the marketing plan section of the business plan when gross margin and the ability to make a profit after all expenses are paid are discussed?

A) Pricing
B) Promotion
C) Place
D) Service policies

Question 75

Developing adequate parking for a business establishment involves which area of the manufacturing and operations plan?

A) Facilities
B) Geographic location
C) Labor force
D) Control system

Question 76

Which of the following areas in the marketing plan section of the business plan is described when warranties, customer problems and complaints, and subcontracts are discussed?

A) Pricing
B) Promotion
C) Place
D) Service policies

Question 77

Which of the following is not included in the marketing plan section of the business plan?

A) How sales forecasts will be reached
B) Marketing objectives
C) Identification of potential markets
D) Cash-flow statements

Question 78

Which of the following is the contingency in the critical risks and assumptions segment of the business plan that discusses events occurring within the economy and society that could negatively affect the product/service being offered?

A) Unreliable sales forecasts
B) Competition
C) Unfavorable industry-wide trends
D) Insufficient numbers of trained employees

Question 79

Although Bob's Outdoor Retailer competes directly with nearby supercenters, managers at Bob's are confident that individuals within a ten-mile radius of the business will be loyal customers. These managers are establishing a target market based on

A) Demographics
B) Psychographic variables
C) Geographic location
D) Market trends

Question 80

A core management team must be balanced by obtaining all but which types of the following skills?

A) Technical skills
B) Business skills
C) Management experience
D) Marketing experience