Question 1

The second essential purpose for creating a business plan is ________.

Accepted Answer

A business plan is often used to attract lenders and investors by demonstrating the viability and potential profitability of the business.

Question 2

The ________ test that a business plan must pass to attract financing from lenders and investors involves proving that a market for the company's product or service actually does exist and that the company actually can build it for the cost estimates included in the plan.

Accepted Answer

The reality test requires demonstrating that a market exists for the product or service and that the company can produce it within the cost estimates provided.

Question 3

The competitive test that a business plan must pass to attract financing from lenders and investors involves proving ________.

Accepted Answer

A

Question 4

A solid business plan ________.

Accepted Answer

A solid business plan forces potential entrepreneurs to critically evaluate their business idea and its feasibility. It also helps them to assess the potential success of the venture more objectively. Additionally, a well-constructed business plan can be used to convince potential lenders and investors that the business has a viable chance of success.

Question 5

A business plan ________.

Accepted Answer

A business plan serves multiple purposes, including helping an entrepreneur focus on developing a course for a business, convincing lenders or investors to invest in the business, and forcing the entrepreneur to consider both the positive and negative aspects of the business idea. Therefore, all of the choices are valid reasons for creating a business plan.

Question 6

The competitive test that a business plan must pass to attract financing for lenders and investors involves proving to them that the venture offers a high probability of repayment or an attractive rate of return.

Accepted Answer

The answer of The competitive test that a business plan...

Question 7

Although building a business plan does not guarantee an entrepreneur's success, it does increase his or her chances of succeeding in business.

Accepted Answer

Building a business plan helps entrepreneurs think through different aspects of their business, including market demands, competition, financials, and marketing strategies. This process increases the chances of making sound decisions and identifying potential obstacles early on, which can lead to a higher likelihood of success. However, other factors such as market conditions, product-market fit, and execution also play a significant role.

Question 8

The reality test that a business plan must pass to attract financing from lenders and investors involves proving that a market for the company's product or service actually does exist, and that the company actually can build it for the cost estimates in the plan.

Accepted Answer

One of the main factors that lenders and investors consider when evaluating a business plan is the market potential for the product or service being offered, as well as the company's ability to bring it to market within the projected cost estimates. Therefore, proving that there is a viable market and demonstrating the feasibility of the plan are important steps in securing financing.

Question 9

The data shows that writing a business plan increases the odds that a venture will successfully accomplish important tasks (initializing product development, obtaining inputs, starting marketing, talking to customers, and asking for external funds)as well as continue in business.

Accepted Answer

The statement is supported by the given data.

Question 10

A business plan is a written summary of an entrepreneur's proposed venture, its operational and financial details, its marketing opportunities and strategy, and its managers' skills and abilities.

Accepted Answer

This sentence accurately describes what a business plan is.

Question 11

To get external financing, an entrepreneur's business plan must pass the reality test, the competitive test, and the value test with potential lenders and investors.

Accepted Answer

This statement is true. A business plan needs to demonstrate that it is based on a viable business concept, that it can compete in the market, and that it will provide value to investors and lenders.

Question 12

A business plan is a written summary of ________.

Accepted Answer

A business plan is a comprehensive document that outlines a proposed business venture, including operational, financial, and marketing details, as well as information about the skills and abilities of the business venture's managers. Therefore, all of the options (A, B, and C) are correct.

Question 13

The value test that a business must pass to attract financing from lenders and investors involves proving to them that the venture offers a high probability of repayment or an attractive rate of return.

Accepted Answer

This statement is true. Lenders and investors look for businesses that have a high probability of repayment or offer an attractive rate of return in order to minimize their risk and maximize their profit potential.

Question 14

The three "tests" associated with a business plan are ________.

Accepted Answer

The three tests associated with a business plan are reality, competitive, and value. These tests help assess the feasibility, market position, and worth of the business idea.

Question 15

Potential investors tend to believe that if an entrepreneur cannot develop a good plan, the entrepreneur ________.

Accepted Answer

Developing a good plan is essential for running a successful business, and if an entrepreneur cannot do so, it indicates a lack of discipline and attention to detail, which are crucial qualities for a business leader. As a result, potential investors may be hesitant to put their money into such an entrepreneur's venture.

Question 16

A well-prepared business plan forces an entrepreneur to assess the venture's chances of success more objectively.

Accepted Answer

By conducting research, analyzing the market, and creating financial projections, a business plan helps entrepreneurs identify potential challenges and opportunities, leading to a more realistic assessment of the venture's viability.

Question 17

To convince lenders and investors to put their money into the venture, a business plan must prove to them that it offers a high probability of repayment or an attractive rate of return. This is the ________ test.

Accepted Answer

The answer of To convince lenders and investors to put...

Question 18

The primary purpose of building a business plan is to raise capital.

Accepted Answer

While raising capital is certainly one reason why someone might build a business plan, it is not the primary purpose. The main purpose of building a business plan is to provide a roadmap for the business, including its goals, strategies, and key actions. The plan also helps to identify potential challenges and opportunities, and provides a framework for making decisions and measuring progress.

Question 19

The value test that a business plan must pass to attract financing from lenders and investors involves proving ________.

Accepted Answer

Lenders and investors are primarily concerned with the financial return on their investment or the likelihood of repayment, making option B the critical value test for attracting financing.

Question 20

The reality test that a business plan must pass to attract financing from lenders and investors involves proving ________.

Accepted Answer

The answer of The reality test that a business plan...

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