Entrepreneurship: Successfully Launching New Ventures, Ventures, 4e (Barringer/Ireland) Chapter 4 Writing a Business Plan
1) Lincoln & Lexi, the company profiled in the opening feature for Chapter 4, was founded to: A) sell consulting services to ecommerce sites !) provide nannie and tutoring services C) sell "ewelry online #) sell i$hone apps for casual gamers %) sell childrens clothing through home parties and 'a'y showers Answer: % #iff: 1 $age (ef: 111 opic: opic: he !usiness !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -) .artin /elson is thin+ing a'out launching a small 'usiness consulting company0 o get advice on how to proceed, he stopped 'y his local *mall * mall !usiness Administration Administration *!A) office0 he *!A advisor told .artin that one of the first things he needs to do is to sit down and write a -2 to 32 page narrative that descri'es what his h is new 'usiness plans to accomplish and how it plans to accomplish it0 he *!A advisor is telling .artin to write an): A) tactical plan !) mar+eting plan C) operations plan #) 'usiness plan %) feasi'ility analysis Answer: # #iff: 1 $age (ef: 11opic: opic: he !usiness !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 3) hich of the following is the main purpose for writing a 'usiness plan5 A) he plan helps the company develop a 6road map6 to follow0 !) he plan introduces potential investors and other sta+eholders to the 'usiness opportunity0 opportunity0 C) !oth A and ! are e7ually important0 #) /either A nor ! captures the true purpose of a 'usiness plan0 %) (eason A is the most important for experienced entrepreneurs and reason ! is the most important for inexperienced entrepreneurs0 Answer: C #iff: $age (ef: 11opic: opic: he !usiness !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
1 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
4) According to the text'oo+, a 'usiness plan is 'est descri'ed as an): A) narrative description of a new 'usiness !) contract C) 'udget #) agreement %) mar+eting initiative Answer: A #iff: $age (ef: 11opic: opic: he !usiness !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 2) According to the text'oo+, only <<<<<<<< of the =99 entrepreneurs that participated in a recent ells ells >argo?@allup *mall !usiness *tudy indicated that they had started their venture with a 'usiness plan0 A) 1- percent !) 31 percent C) -9 percent #) = percent %) 4 percent Answer: ! #iff: 3 $age (ef: 113 opic: opic: he !usiness !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =) A 'usiness plan is important for two reasons: it forces the founding team to systematically thin+ through every aspect of their new venture and: A) it is a 'udget !) it is a pu'lic relations document that can 'e used to promote the firm C) it is a contract that is signed 'y the founders of the firm #) it is a financial analysis %) it communicates the merits of a new venture to outsiders, such as investors and 'an+ers Answer: % #iff: $age (ef: 113 opic: opic: he !usiness !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
B) hich of the following statement is incorrect a'out 'usiness plans5 A) riting a 'usiness plan forces a firms founders to systematically thin+ through each aspect of their new venture0 !) >or most new ventures, the 'usiness plan is a dualpurpose document used 'oth inside and outside the firm0 C) A 'usiness plan is typically -2 to 32 pages long0 #) A large percentage of entrepreneurs do not write 'usiness plans for their new ventures0 %) he 'usiness plan should 'e written while the feasi'ility analysis is 'eing completed0 Answer: % #iff: $age (ef: 113 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan ) he document that does the 'est "o' of introducing potential investors and other sta+eholders with the 'usiness opportunity the firm is pursuing and how it plans to pursue it is the: A) 'usiness plan !) feasi'ility analysis C) opportunity analysis #) industry analysis %) mar+eting plan Answer: A #iff: 1 $age (ef: 113 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan ) here are two primary audiences for a 'usiness plan: A) a firms employees and officials with the *%C !) a firms customers and its competitors C) investors and other external sta+eholders and pu 'lic relations firms #) officials with the *%C and pu'lic relations firms %) a firms employees and investors and other external sta+eholders Answer: % #iff: $age (ef: 112 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
3 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
19) here are two primary audiences for a 'usiness plan: investors and other external sta+eholders and: A) officials with the *%C !) a firms employees C) a firms competitors #) a firms customers %) pu'lic relations firms Answer: ! #iff: $age (ef: 112 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 11) hich of the following is not an individual, group or institution that normally reads a companys 'usiness plan5 A) 'oard of directors !) potential alliance partners and ma"or customers C) state and local government officials #) +ey recruits for "o's with the new firm %) ran+andfile employees Answer: C #iff: $age (ef: 112 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 1-) hich of the following is not a recommended guideline for writing a 'usiness plan5 A) o ma+e the 'est impression, a 'usiness plan should follow a n unconventional structure and stand out in some dramatic way0 !) A 'usiness plan needs to pro"ect a sense of anticipation and excitement a'out the possi'ilities that surround a new venture0 C) >or most plans, -2 to 32 pages is sufficient0 #) A 'usiness plan should loo+ sharp, 'ut not a lot of money should 'e spent on the physical appearance of the plan0 %) *hy away from using a lot of 'oldfaced type, italics, clip art, and different font siDes and colors when preparing a 'usiness plan0 Answer: A #iff: $age (ef: 11= opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
4 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
13) hich of the following is not one of the 6red flags6 listed in the text'oo+ that raises 7uestions a'out one of more aspects of a companys 'usiness plan5 A) founders with none of their own money at ris+ !) defining the mar+et siDe too narrowly C) a poorly cited plan #) sloppiness in any area %) overly aggressive financials Answer: ! #iff: $age (ef: 11B opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 14) hich of the following is one of the 6red flags6 listed in the text'oo+ that raises 7uestions a'out one or more aspects of a companys 'usiness plan5 A) ta+es several days or wee+s to complete !) founders that have their own money at ris+ C) defining the mar+et siDe too 'roadly #) less than 29 pages long %) directed towards 'oth an external and an internal audience Answer: C #iff: $age (ef: 11B opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 12) hich of the following statements is incorrect regarding 'usiness plans5 A) A firms 'usiness plan is typically the first aspect of a proposed venture that will 'e seen 'y an investor0 !) o ma+e the 'est impression, a 'usiness plan should follow an unconventional structure, so it will stand out0 C) A 'usiness plan has 'oth an external and an internal audience0 #) A companys 'usiness plan is typically written 'y its founders0 %) $otential investors are typically +eenly interested in a companys 'usiness plan0 Answer: ! #iff: $age (ef: 11B opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
2 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
1=) >or most 'usiness plans <<<<<<<< pages are sufficient0 A) 49 to 29 !) 39 to 49 C) 12 to -9 #) -2 to 32 %) 2 to 19 Answer: # #iff: $age (ef: 11B opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 1B) here are three types of 'usiness plans: A) functional 'usiness plan, full 'usiness plan, feasi'ility plan !) summary 'usiness plan, contingency plan, full 'usiness plan C) functional 'usiness plan, contingency plan, full 'usiness plan #) opportunity plan, feasi'ility plan, full 'usiness plan %) summary 'usiness plan, full 'usiness plan, operational 'usiness plan Answer: % #iff: $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 1) Eachery .ays is in the very early stages of putting together a 'usiness startup, and is thin+ing a'out writing a 'usiness plan to re7uest funds to conduct a feasi'ility analysis and write a more complete 'usiness plan0 hat type of 'usiness plan should Eachery write at this point5 A) full 'usiness plan !) tactical 'usiness plan C) summary 'usiness plan #) operational 'usiness plan %) strategic 'usiness plan Answer: C #iff: $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
= Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
1) An) <<<<<<<<, which is typically -2 to 32 pages long, wor+s 'est for new ventures who are at the point where they need funding or financing0 A) tactical 'usiness plan !) strategic 'usiness plan C) summary 'usiness plan #) full 'usiness plan %) operational 'usiness plan Answer: # #iff: $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -9) An) <<<<<<<<, which is intended to 'e a 'lueprint for a companys operations, is 49199 pages long and is meant primarily for an internal audience0 A) operational 'usiness plan !) full 'usiness plan C) deli'erate 'usiness plan #) summary 'usiness plan %) tactical 'usiness plan Answer: A #iff: $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -1) %dward Andrews has decided to write a 'usiness plan that is intended to 'e read primarily 'y his staff, which will present a 'lueprint for his companys entire operation and will provide guidance to operational managers0 %dward shou ld write an): A) operational 'usiness plan !) tactical 'usiness plan C) strategic 'usiness plan #) summary 'usiness plan %) functional 'usiness plan Answer: A #iff: $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
B Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
--) .atch the 'usiness plan with its appropriate length: A) operational 'usiness plan, 1912 pages !) full 'usiness plan, -232 pages C) summary 'usiness plan, -232 pages #) full 'usiness plan, 49 to 199 pages %) operational 'usiness plan, -232 pages Answer: ! #iff: 3 $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -3) .atch the 'usiness plan with its appropriate emphasis: A) summary 'usiness plan, wor+s 'est for companies who are at the point where they need funding or financingF serves as a 6'lueprint6 for the companys operations !) operational 'usiness plan, wor+s 'est for companies in the early stages of development that want to 6test the waters6 to see if investors are interested in their idea C) full 'usiness plan, wor+s 'est for companies in the early stages of development that want to 6test the waters6 to see if investors are interested in the idea #) summary 'usiness plan, is meant primarily for an internal audienceF wo r+s 'est as a tool for creating a 'lueprint for a companys operations and providing guidance to operational managers %) summary 'usiness plan, wor+s 'est for companies in the early stages of development that want to 6test the waters6 to see if investors are interested in their idea Answer: % #iff: $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -4) he *avvy %ntrepreneurial >irm feature for Chapter 4 focuses on three companies: !ox0net, $ixa'ility, and @roupon0 he overarching point of the feature is: A) most 'usiness plan re7uire ma"or changes after the 'usiness is launched and the founders start getting customer feed'ac+ !) the degree to which 'usiness plans pan out as their founders envisioned varies C) most 'usiness plans re7uire only minor changes after the 'usiness is launched and the founders start getting customer feed'ac+ #) the most effective 'usiness plans ta+e four to eight wee+s to complete %) most 'usiness plans are 7uic+ly discarded after the 'usiness is launched Answer: ! #iff: $age (ef: 1-9 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
-2) he <<<<<<<< is a short overview of the entire 'usiness plan0 A) summary statement !) executive summary C) managerial review #) founders introduction %) a'stract Answer: ! #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -=) hich of the following statements is incorrect regarding the executive summary of a 'usiness plan5 A) t is a short overview of the entire 'usiness plan0 !) n many instances an investor will first as+ for a copy of a firms executive summary and will re7uest a copy of the full 'usiness plan only if the executive summary is sufficiently convincing0 C) t is argua'ly the most important section of the 'usiness plan0 #) t should not exceed two singlespaced pages0 %) he executive summary is the first thing that should 'e written in preparing a 'usiness plan0 Answer: % #iff: 3 $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -B) $aul ;emp+en "ust spo+e to an investor, who is interested in his 'usiness idea0 $aul offered to send the investor a copy of his full 'usiness plan, 'ut the investor as+ed for a short overview of the 'usiness plan instead0 hat portion of his 'usiness plan should $a ul send the investor5 A) mar+eting plan !) executive summary C) elevator pitch #) company description %) operations plan Answer: ! #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
-) According to the text'oo+, in many instances an investor will first as+ for a c opy of a firms <<<<<<<< and will re7uest a copy of the full 'usiness plan only if that portion of the plan is sufficiently convincing0 A) appendix !) industry analysis C) operations plan #) financial plan %) executive summary Answer: % #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan -) hich of the following statements is incorrect regarding the industry analysis portion of a firms 'usiness plan5 A) t is important to focus simultaneously on a 'usinesss industry and its target mar+et0 !) ndustry structure refers to how concentrated or fragmented an industry is0 C) .ost industries have = to 19 +ey success factors that should 'e reported in the industry analysis0 #) ndustry trends should 'e discussed, which include 'o th environmental and 'usiness trends0 %) he industry analysis should conclude with a 'rief statement of your 'eliefs regarding the longterm prospects for the industry0 Answer: A #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 39) A companys mission statement should 'e placed in the <<<<<<<< section of its 'usiness plan0 A) mar+eting plan !) management team and company structure C) company description #) mar+et analysis %) industry analysis Answer: C #iff: $age (ef: 1-opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
19 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
31) ndustry structure refers to how: A) concentrated or fragmented an industry is !) traditional or progressive an industry is C) innovative or conservative an industry is #) hierarchical or flat an industry is %) large or small an industry is Answer: A #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 3-) An) <<<<<<<< descri'es why a company exists and what it aspires to 'ecome0 A) tactical statement !) values statement C) mission statement #) operations statement %) strategic statement Answer: C #iff: $age (ef: 1-3 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 33) An) <<<<<<<<, in a 'usiness plan context, is a noteworthy event in the past or future development of a 'usiness0 A) aspiration !) intention C) signpost #) milestone %) target Answer: # #iff: $age (ef: 1-4 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
11 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
34) he <<<<<<<< section of a 'usiness plan 'rea+s the industry into segments and Deroes in on the specific segment or target mar+et) to which the firm will try to appeal0 A) competitive analysis !) current status C) mar+et analysis #) mar+eting plan %) operations plan Answer: C #iff: $age (ef: 1-4 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 32) A competitor analysis should 'e included in the <<<<<<<< section of a 'usiness plan0 A) mar+et analysis !) industry analysis C) company description #) management team and company structure %) operations plan Answer: A #iff: $age (ef: 1-4 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 3=) he $artnering for *uccess feature in Chapter 4 focuses on the types of partnerships that are common in 'usiness plans0 According to the feature, 'usinesses often ma+e partnering an essential part of their 'usiness plans 'ecause they: A) want to o'tain a +ey customer !) want to increase their visi'ility C) want to reduce ris+ #) what to appear legitimate %) have limited resources Answer: % #iff: $age (ef: 1-2 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
1Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
3B) he <<<<<<<< section of the 'usiness plan addresses the 'asic logic of how profits are earned in the 'usiness0 A) %conomics of the !usiness !) perations $lan C) %xecutive *ummary #) #esign and #evelopment plan %) .ar+et Analysis Answer: A #iff: $age (ef: 1-= opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 3) perating leverage is highest in companies that have: A) a service rather than a manufacturing emphasis !) virtually no fixed costs C) e7ual varia'le costs and fixed costs #) a high proportion of varia'le costs relative to their fixed costs %) a high proportion of fixed costs relative to their varia'le costs Answer: % #iff: $age (ef: 1-B opic: utline of the !usiness $lan AAC*!: Analytic *+ills '"ective: #escri'e the components of a 'usiness plan 3) hich of the following statements is incorrect regarding the mar+eting plan section of a 'usiness plan5 A) he mar+eting plan focuses on how the 'usiness will mar+et and sell its product or service0 !) he two most important items to include in a mar+eting plan are 1) overall mar+eting strategy and -) the nuts and 'olts of mar+eting a firms product in terms of product, price, promotion, and place0 C) he 'est way to descri'e a companys mar+eting plan is to 'egin 'y tal+ing a'out its competitors0 #) A firms mar+eting strategy refers to its overall approach for mar+eting its products and services0 %) A firms overall approach to mar+eting typically 'oils down to how it positions itself in its mar+et and how it differentiates itself from its competitors0 Answer: C #iff: $age (ef: 1-B opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
13 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
49) A computergenerated image of an invention that displays the invention as a 3# model that can 'e viewed from all sides and rotated 3=9 degrees is called an): A) virtual prototype !) concept visualiDation C) a'stract prototype #) virtual design %) usa'ility test Answer: A #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 41) A prototype is: A) a form of opportunity recognition !) a tool for evaluating the industry a new firm plans to enter C) a financial model #) the first physical depiction of a new product %) a tool for evaluating the organiDational prowess of a new firm Answer: # #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 4-) hat section of the 'usiness plan deals with the da ytoday operations of a company5 A) financial plan !) mar+eting plan C) operations plan #) industry analysis %) executive summary Answer: C #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
14 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
43) he facilities and e7uipment that a 'usiness needs should 'e descri'ed in the <<<<<<<< section of its 'usiness plan0 A) mar+eting plan !) management team and company structure C) company description #) mar+et analysis %) operations plan Answer: % #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 44) According to the text'oo+, many investors and others who read 'usiness plans loo+ first at the executive summary and then go directly to the <<<<<<<< section of the 'usiness plan to ma+e their preliminary assessment0 A) management team and company structure !) product or service) design and development plan C) industry analysis #) mar+eting plan %) operations plan Answer: A #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 42) An) <<<<<<<< is a graphic representation of how authority and responsi'ility are distri'uted within a company0 A) organiDational chart !) personnel chart C) human resources chart #) administrative chart %) directional chart Answer: A #iff: $age (ef: 139 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
12 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
4=) he document that lays out specifically how much money a firm needs, where the money will come from, and what the money will 'e used for is referred to as an): A) sources and uses of funds statement !) assumptions sheet C) pro forma financial statement #) credit and de'it statement %) capital and operational 'udgeting statement Answer: A #iff: $age (ef: 131 opic: utline of the !usiness $lan AAC*!: Analytic *+ills '"ective: #escri'e the components of a 'usiness plan 4B) Gate $ayne was reading the 'usiness plan for /ew Henture >itness #rin+s, and noticed that prior to its financial statements, /ew Henture >itness #rin+s placed an explanation of the sources of the num'ers for the statements and the assumptions used to generate them0 his explanation is called an): A) estimate sheet !) hypothesis sheet C) assumptions sheet #) forecast sheet %) forecast hypothesis Answer: C #iff: $age (ef: 131 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 4) According to the text'oo+, the <<<<<<<< are the heart of the financial section of a 'usiness plan0 A) financial ratios !) pro forma financial statements C) 'udgets #) sources and uses of funds statements %) 'rea+even analyses Answer: ! #iff: $age (ef: 131 opic: utline of the !usiness $lan AAC*!: Analytic *+ills '"ective: #escri'e the components of a 'usiness plan
1= Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
4) .ost 'usiness plan writers interpret or ma+e sense of a firms historical and?or pro forma financial statements through: A) ratio analysis !) assumptions analysis C) scenario analysis #) proportion analysis %) relative analysis Answer: A #iff: $age (ef: 131 opic: utline of the !usiness $lan AAC*!: Analytic *+ills '"ective: #escri'e the components of a 'usiness plan 29) According to the text'oo+, the first rule in ma+ing an oral presentation is to: A) follow instructions !) 'e creative C) emphasiDe all the positive aspects of a 'usiness venture #) appear confident %) do something out of the ordinary Answer: A #iff: $age (ef: 133 opic: $resenting the !usiness $lan to nvestors AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 21) A commercialiDation plan is a written narrative that descri'es what a new 'usiness plans to accomplish and how it plans to accomplish it0 Answer: >AL*% #iff: 1 $age (ef: 11opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 2-) According to a ells >argo?@allup *mall !usiness *tudy cited in the 'oo+, a large percentage of entrepreneurs write 'usiness plans for their ventures0 Answer: >AL*% #iff: $age (ef: 113 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
1B Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
23) >or most new ventures, the 'usiness plan is a dualpurpose document used 'oth inside and outside the firm0 Answer: (I% #iff: $age (ef: 113 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 24) A 'usiness plan can usually 'e completed in one to three days0 Answer: >AL*% #iff: $age (ef: 113 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 22) here are two primary audiences for a firms 'usiness plan: a firms employees and investors and other external sta+eholders0 Answer: (I% #iff: $age (ef: 112 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 2=) o ma+e the 'est impression, a 'usiness plan should follow a conventional structure0 Answer: (I% #iff: $age (ef: 11= opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 2B) >or most 'usiness plans, -2 to 32 pages are sufficient0 Answer: (I% #iff: $age (ef: 11B opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan 2) According to the text'oo+, the executive summary is argua'ly the most important section of the 'usiness plan0 Answer: >AL*% #iff: $age (ef: 1-9 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
1 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
2) he executive summary is a lengthy overview of the entire 'usiness plan0 Answer: >AL*% #iff: $age (ef: 1-9 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =9) A companys industry analysis and target mar+et analysis are usually included in the same section of its 'usiness plan0 Answer: >AL*% #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =1) >ragmented industries are more receptive to new entrants than industries that are dominated 'y a handful of large firms0 Answer: (I% #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =-) A tagline is a phrase that a 'usiness uses to reinforce its position in the mar+etplace0 Answer: (I% #iff: $age (ef: 1-3 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =3) A competitor analysis, which is a detailed analysis of a firms competitors, should 'e included in the mar+et analysis section of its 'usiness plan0 Answer: (I% #iff: $age (ef: 1-4 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =4) he ma"or revenue drivers, which are the ways a 'usiness earns money, should 'e first identified in 6he %conomics of the !usiness6 section of the 'usiness plan0 Answer: (I% #iff: $age (ef: 1-= opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
1 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
=2) A firms operating leverage is an analysis of its de't versus its e7uity0 Answer: >AL*% #iff: $age (ef: 1-B opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan ==) he management team and company structure section of a 'usiness plan is one of the lesser read sections0 Answer: >AL*% #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =B) An organiDational chart is a graphic representation of how authority and responsi'ility are distri'uted within a company0 Answer: (I% #iff: $age (ef: 139 opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan =) A sources and uses of funds statement is a document that lays out specifically how much money a firm needs, where the money will come from, and what the money will 'e used for0 Answer: (I% #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: Analytic *+ills '"ective: #escri'e the components of a 'usiness plan =) he pro forma financial statements are the heart of the operations section of a 'usiness plan0 Answer: >AL*% #iff: $age (ef: 131 opic: utline of the !usiness $lan AAC*!: Analytic *+ills '"ective: #escri'e the components of a 'usiness plan B9) he first rule in ma+ing oral presentation is to follow instructions0 Answer: (I% #iff: $age (ef: 131 opic: $resenting the !usiness $lan to nvestors AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
-9 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
B1) hat is a 'usiness plan5 Answer: A 'usiness plan is a written narrative, typically -2 to 32 pages long, that descri'es what a new 'usiness plans to accomplish and how it plans to accomplish it0 #iff: 1 $age (ef: 11opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan B-) hat are the two main reasons for writing a 'usiness plan5 Answer: >irst, writing a 'usiness plan forces a firms founders to systematically thin+ through each aspect of their new venture0 *econd, writing a 'usiness plan creates a selling document for a company0 t provides a mechanism for a young company to present itself to potential investors, suppliers, 'usiness partners, +ey "o' candidates, and others0 #iff: $age (ef: 113 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan B3) %xperienced entrepreneurs often refer to 'usiness plans as 6living, 'reathing documents06 hat is meant 'y this characteriDation of 'usiness plans5 Answer: An important aspect of writing a 'usiness plan is to recogniDe that the plan will usually change as it is 'eing written0 /ew insights invaria'ly emerge when an entrepreneur or team of entrepreneurs immerse themselves in writing the plan and start getting feed'ac+ from others0 his process continues throughout the life of a company, and it 'ehooves entrepreneurs to remain alert and open to new insights and ideas0 As a result of this phenomenon, entrepreneurs who have written 'usiness plans and have launched successful 'usinesses stress that a 'usiness plan is a living, 'reathing document, rather than something that is set in stone0 #iff: $age (ef: 11 opic: he !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan B4) hat is an 6executive summary56 hy is the executive summary often called the most important part of a 'usiness plan5 Answer: he executive summary is a short overview of the entire 'usiness planF it provides a 'usiness plan reader with everything that needs to 'e +nown a'out a new ventures distinctive aspects0 he executive summary is important 'ecause it is often the first or only) part of a 'usiness plan that a 'usy investor or other sta+eholders will read0 As a result, unless the executive summary is compelling, the 'usiness plan may not get any additional attention0 #iff: $age (ef: 1-opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
-1 Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
B2) hy is the 6management team and company structure6 section of the 'usiness plan often given disproportionate weight among investors5 Answer: nvestors read more 'usiness plans with interesting ideas and exciting mar+ets than they are a'le to finance0 As a result, its often not the idea o r mar+et that wins funding among competing plans, 'ut the perception that one management team is 'etter prepared to execute their idea than the others0 #iff: $age (ef: 1- opic: utline of the !usiness $lan AAC*!: (eflective hin+ing '"ective: #escri'e the components of a 'usiness plan
-Copyright 8 -91- $earson %ducation, nc0 $u'lishing as $rentice ;all
