Question 1

The Board of Directors' primary role is to oversee the company on behalf of the employees, and to that end the board has the power to replace top executives if it feels doing so would be in the best interests of the staff.

Accepted Answer

The Board of Directors' primary role is to oversee the company on behalf of the shareholders, not specifically the employees, although their decisions can impact employees. They do have the power to replace top executives if it is in the best interest of the company and its shareholders.

Question 2

What are the two methods of forecasting future revenues, as stated in the chapter?
A) The comparable method and the build-up method;
B) The comparable method and the distributed method;
C) The distributed method and the precise method;
D) The random method and the precise method;
E) None of the above.

Accepted Answer

The two methods of forecasting future revenues mentioned are the comparable method and the build-up method. These methods are used to estimate future sales based on either comparisons to similar entities or by building up an estimate from individual components, respectively.

Question 3

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan.

Accepted Answer

The appendices of a business plan are meant to include supplementary information that supports the main content of the plan but is too detailed, technical, or voluminous to fit within the main sections. This can include resumes of key personnel, detailed market research data, technical specifications, legal documents, and financial projections.

Question 4

When presenting your plan, you should tailor the information, style, and format of the presentation to the information needs and formatting preferences of your audience.

Accepted Answer

Tailoring your presentation to the audience's preferences and information needs ensures better understanding, engagement, and effectiveness in communication.

Question 5

Which of the following is not a reason that business planning can help entrepreneurs to articulate the business opportunity to stakeholders?
A) The plan provides background information that enables the entrepreneur to communicate the upside potential to investors.
B) It provides the validation needed to convince potential employees to leave their current jobs for the uncertain future of a new venture.
C) It can help secure a strategic partner,
D) It can help secure a key customer, or supplier.
E) All of the above.

Accepted Answer

All the options listed (A through D) are reasons why business planning can help entrepreneurs articulate the business opportunity to stakeholders, making E (All of the above) incorrect as it implies one of the options is not a reason.

Question 6

A company's sales channels can include all of the following except:
A) Internal sales stream
B) Retail
C) Internet
D) Cost reduction
E) Direct mail

Accepted Answer

Cost reduction is not a sales channel; it is a strategy to decrease expenses to increase profit margins, not a method to sell products or services. Sales channels are paths through which a company sells its products or services, such as retail, internet, direct mail, or through an internal sales team.

Question 7

Entrepreneurs often enter markets and find, to their surprise, either that direct competition does not exist, or that it is complacent and slow to react.

Accepted Answer

The answer of Entrepreneurs often enter markets and find, to...

Question 8

Which of the following is NOT a common category in the critical risks section?
A) Market Interest and Growth Potential
B) Competitor Actions and Retaliation
C) Time and Cost of Development
D) Operating Expenses
E) Offering of Financing

Accepted Answer

Offering of Financing is not typically considered a critical risk; it is more related to funding strategies rather than inherent business risks.

Question 9

Which of the following is the most important part of the business plan?
A) Executive Summary
B) Operations
C) Team
D) Critical Risks
E) Financial Plan

Accepted Answer

The Executive Summary is considered the most important part of the business plan because it provides a concise overview of the entire plan, including the business concept, financial features, and current business position. It's designed to grab the reader's attention and summarize the key elements of the business plan, making it crucial for attracting investors or partners.

Question 10

Detailed information which expands upon main areas of your business plan should be included in which portion of the plan?
A) Operations
B) Appendices
C) Financial Plan
D) Market Plan
E) None of the Above

Accepted Answer

The appendices section of a business plan is where you include detailed information that supports the main areas of your plan. This can include resumes of key personnel, detailed market research, technical product information, and any other detailed information that is too lengthy or detailed to include in the main body of the plan.

Question 11

A proper organization is critical to making a business plan easy to read. Thus, it should include which of the following?
A) Major sections
B) Sub-sections
C) Exhibits
D) Appendices
E) All of the above

Accepted Answer

A proper organization of a business plan includes major sections, sub-sections, exhibits, and appendices to ensure clarity and ease of navigation for the reader.

Question 12

Advantages of a price skimming are;
A) You can gauge what price the customer is willing to pay
B) You'll gain increased market penetration
C) It's easier to lower prices than to raise them
D) A and B
E) A and C

Accepted Answer

Price skimming involves setting a high price before other competitors come into the market and then gradually lowering the price over time. This strategy allows a company to maximize profits on early adopters before dropping prices to attract more price-sensitive customers. It's easier to lower prices than to raise them, and this approach helps gauge customer price sensitivity.

Question 13

Strategic partners are required by law to be offered seats on your Board of Directors.

Accepted Answer

Strategic partners are not legally required to be offered seats on a company's Board of Directors; such decisions are typically based on the agreements between the entities involved and the strategic value they bring, rather than a legal obligation.

Question 14

It is important to explain why the team's compensation is appropriate.

Accepted Answer

Explaining why the team's compensation is appropriate helps in maintaining transparency, ensuring fairness, and boosting morale by making team members feel valued and understood.

Question 15

A three-ring binder filled with initial intelligence can be a good starting point in the business planning process.

Accepted Answer

A three-ring binder filled with initial intelligence can serve as a flexible, easily updated repository for the research, data, and insights that inform the business planning process, making it a practical tool for organizing and refining business strategies.

Question 16

The biggest difference between an internal operation plan and the one that you might present to a potential investor is the level of detail, which tends to be greater in the disclosure to the investor.

Accepted Answer

The biggest difference is actually the opposite; an internal operation plan typically contains more detailed, technical information about the company's operations, while the version presented to potential investors might be more summarized and focused on the business's potential for profitability and growth, omitting some of the intricate operational details.

Question 17

When an entrepreneur understands who his customers are, he can assess _____:
A) what compels them to make purchases.
B) how his company can sell to them.
C) the cost of sales.
D) how his company can retain customers.
E) All of the above.

Accepted Answer

Understanding who the customers are enables an entrepreneur to assess what compels them to make purchases, how his company can sell to them, the cost of sales, and how his company can retain customers. This comprehensive understanding is crucial for tailoring marketing strategies, sales approaches, pricing models, and customer retention plans.

Question 18

If business planning predicts that your gross margins will be small, you would be best advised to:
A) redesign your concept or abandon your concept.
B) keep your business small so that you can manage costs.
C) focus on guerilla marketing to target a niche.
D) All of the above
E) None of the above

Accepted Answer

If gross margins are predicted to be small, it may indicate that the business model is not viable, so redesigning or abandoning the concept could be the best course of action to avoid potential losses.

Question 19

Which of the following subsections is traditionally NOT placed in the executive summary?
A) Description of opportunity
B) Industry overview
C) Critical risks
D) Competitive advantage
E) Team and offering

Accepted Answer

Critical risks are typically detailed in other sections of a business plan or investment proposal, not in the executive summary. The executive summary aims to capture the essence of the business opportunity, including the market, competitive advantage, and the team, to entice further reading.

Question 20

All plans have risks, and a solid business plan should acknowledge critical assumptions made, the risk of those assumptions proving false, and a plan to confirm/deny those assumptions in a timely manner.

Accepted Answer

A solid business plan should indeed acknowledge the critical assumptions made, outline the risks associated with those assumptions, and detail a strategy for validating or refuting those assumptions promptly to ensure the business can adapt and mitigate potential negative impacts.

Quiz 8: The Business Planning Process

The Board of Directors' primary role is to oversee the company on behalf of the employees, and to that end the board has the power to replace top executives if it feels doing so would be in the best interests of the staff.

What are the two methods of forecasting future revenues, as stated in the chapter?

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan.

When presenting your plan, you should tailor the information, style, and format of the presentation to the information needs and formatting preferences of your audience.

Which of the following is not a reason that business planning can help entrepreneurs to articulate the business opportunity to stakeholders?

A company's sales channels can include all of the following except:

Entrepreneurs often enter markets and find, to their surprise, either that direct competition does not exist, or that it is complacent and slow to react.

Which of the following is NOT a common category in the critical risks section?

Which of the following is the most important part of the business plan?

Detailed information which expands upon main areas of your business plan should be included in which portion of the plan?

A proper organization is critical to making a business plan easy to read. Thus, it should include which of the following?

Advantages of a price skimming are;

Strategic partners are required by law to be offered seats on your Board of Directors.

It is important to explain why the team's compensation is appropriate.

A three-ring binder filled with initial intelligence can be a good starting point in the business planning process.

The biggest difference between an internal operation plan and the one that you might present to a potential investor is the level of detail, which tends to be greater in the disclosure to the investor.

When an entrepreneur understands who his customers are, he can assess _____:

If business planning predicts that your gross margins will be small, you would be best advised to:

Which of the following subsections is traditionally NOT placed in the executive summary?

All plans have risks, and a solid business plan should acknowledge critical assumptions made, the risk of those assumptions proving false, and a plan to confirm/deny those assumptions in a timely manner.