Deck 18: Writing the Business Plan

Question 1

The parts of a business plan body should be given in a logical sequence that develops the entrepreneur's case for the plan.

Answer 1

True

Question 2

The preliminary components of a business plan are similar to the preliminary components of a formal business report.

Answer 2

True

Question 3

Inexperienced writers are advised to use business plan templates or software instead of struggling with format and other details of the plan.

Answer 3

False

Question 4

A management plan is a minor part of the business plan.

Question 5

In a business plan, the purpose of an industry and market analysis is to show that an entrepreneurial opportunity exists.

Question 6

Which topic is usually OMITTED from the product or service description?

A) Potential sources of materials and components
B) Protection of the business concept
C) Competitive forces in the industry
D) Stage of product development
E) None of these topics (a-d)

Question 7

The writer of a business plan should emphasize opportunities and promises associated with the business concept and de-emphasize the related threats or problems.

Question 8

The financial plan is the most important element of a business plan.

Question 9

The executive summary is the first thing the developer of a business plan should write because it will help him/her focus on the plan's purpose.

Question 10

The dual purpose of a business plan is to convince readers that the business concept is viable and persuade them to help bring it to market.

Question 11

The venture strategy for a business concept is the same as proposed business tactics.

Question 12

Which item is NOT a business plan preliminary?

A) Cover page
B) Table of contents
C) Executive summary
D) Summary of business concept
E) All items (a-d) are business plan preliminaries

Question 13

Porter's "five forces model" for industry analysis recommends an analysis of the-

A) competitive threat of similar products on the market and of other products that may substitute for the business plan's product.
B) rivalry among current firms in the industry but not of potential new entrants.
C) bargaining leverage of the industry's suppliers and of its customers.
D) both a and c
E) both b and c

Question 14

A key to persuading readers to support a business venture is to describe a deal structure in terms of its benefits to those who will provide capital.
B. Multiple Choice - For the following items, select the most appropriate choice (a-e).

Question 15

Which statement BEST describes how to present the business concept in a business plan?

A) Omit references to customers since they will be discussed later in the plan.
B) Establish the context for everything else included in the business plan.
C) Present the concept in narrative form without visuals.
D) Focus it on features of the product or service involved.
E) Omit visuals at this point.

Question 16

A business plan must attract and sustain the readers' attention without taking too much of their time.

Question 17

The writer of a business plan can safely apply the same strategies used to write sales promotions.

Question 18

Which item is NOT a reason to write a business plan?

A) To attract potential investors
B) To discover fatal flaws in the concept
C) To bring a new idea to market quickly
D) To clarify the business concept in one's own mind
E) All items (a-d) are reasons to write a business plan.

Question 19

While seeking startup capital, the writer of a business plan should not be concerned about future development of his/her new business.

Question 20

A table of contents is the least important business plan preliminary.

Question 21

Because many professional investors specialize in identifying promising new companies rather than in holding a portfolio of established companies, they want to see a realistic exit strategy in a business plan.

Question 22

Which statement about the management plan is INcorrect?

A) Potential investors are generally more interested in the financial plan than the management plan.
B) Some needs for management talent can be met through a board of directors or an advisory board.
C) The plan should identify necessary managerial skills and how managerial activities will be organized into positions.
D) When you create a business plan, the complete management team may be unknown.
E) It should open with a restatement of key management roles and requirements.

Question 23

Which item should be OMITTED from the marketing plan?

A) Sales methods
B) Major competitors
C) Distribution channels
D) Advertising and promotions
E) Alliances with other companies to advance the venture

Question 24

The proposed deal structure should-

A) omit the possibility of selling interest in the company after a period of time.
B) refer to the capital structure outlined in the pro forma financial statements.
C) state clearly what the business plan writer asks of lenders and investors.
D) describe the deal in terms of its benefits to the entrepreneur.
E) all of the above (a-d).

Question 25

The unfailingly positive statements, glowing descriptions, and heavy use of superlatives that characterize many sales messages are disastrous in a business plan.

Question 26

The purpose of a reader notification is to-

A) remind readers that the business plan and the ideas it contains are your intellectual property.
B) notify investors that the startup business faces some risks.
C) let potential investors know when you will release the business plan.
D) notify investors that the business plan is an offer for them to participate by way of investment.
E) assure potential investors that an investment in the proposed enterprise will be a safe one.

Question 27

Which statement describes the venture strategy?

A) It explains concretely how the product / service will differ from those of rivals.
B) It gives details about how the entrepreneur will achieve a cost advantage.
C) It reinforces the earlier description of the business concept.
D) All statements (a-c) describe the venture strategy.
E) Only a and b describe the venture strategy.

Question 28

Almost anyone who starts a business, even as a solo effort, would benefit from writing a business plan.

Question 29

Which of the following statements is NOT accurate?

A) Ensure the business plan contains at least 40 pages since readers may view a shorter plan as inadequately developed.
B) Binding the appendices separately may make the plan appear to be easier and less time-consuming to read.
C) Number all pages; use index tabs to divide main sections; and identify sections and subsections clearly.
D) An entrepreneur may safely hire someone to help organize, revise, and edit his or her business plan.
E) The success of a business plan depends in part on its ability to maintain readers' interest.

Question 30

Which statement is a guide for effective production of the business plan?

A) Use a binding that allows the plan to lie flat when opened.
B) Leave enough white space to allow for readers' notes.
C) Maintain a consistent style and voice throughout.
D) Use a common type size and style.
E) All statements (a-d) are production guides.

Question 31

Identifying an unmet need does not ensure that a venture will succeed in the market. Therefore, a business plan should include the-

A) main competitive methods used by potential rivals.
B) product lines of every potential rival.
C) product lines of major potential rivals.
D) all (a-c) should be included in the business plan.
E) both a and b should be included.

Question 32

Which statement BEST describes how to handle the matter of risks in a business plan?

A) Ignore risks.
B) Underplay risks.
C) Acknowledge risks; outline contingent plans.
D) Acknowledge risks; provide an alternative version of the business plan.
E) Do not project plans for the company's development beyond the stage covered in detail in the business plan.

Question 33

The financial plan should include the following information-

A) coverage of debt obligations.
B) expected returns to investors.
C) projected income statements and balance sheets.
D) sources and uses of funds received from investors and lenders.
E) all (a-d) should be included.