Exam 6: Creating Business Plans

A business plan should generally project financial and operational aspects of the proposed business for the first

The owner of Alison Sportswear, a small manufacturer of women's tennis apparel, uses a computer in preparing a business plan. She finds that a major advantage of using a computer is that

Entrepreneurs typically focus on the positive potential of the startup-what will happen if everything goes right.

Identify the various users of business plans and show how a plan is useful to each.

The executive summary part of a business plan should be written

Pro forma financial statements reflect the past financial performance of a firm.

Identify and describe the two types of business plans.

Prospective investors are most attracted by business plans showing

You Make the Call-Situation 1 When they created Round Table Group (RTG) Inc., Russ Rosenstein and Robert Hull envisioned a company offering one-stop shopping for intellectual expertise. They wanted to help businesspeople, management consultants, and litigation attorneys get answers to important questions from top-notch thinkers anywhere in the world through the Internet. RTG's plan was to have a kind of SWAT team of professors who would answer questions based on their expertise. A team might consist of one or two professors, who would communicate with the client via e-mail, phone, or videoconferencing on projects that might involve a few hours or a few weeks of input. In the traditional management-consulting model, work on a project often lasts as long as a couple of years, and the team consists of a group of junior analysts, managers, and partners. RTG assembled a database made up mainly of 3,000 university professors available to consult on an as-needed basis. The firm's fixed costs would be low because the professors would be paid only when they did billable work. But an unexpected wrinkle soon emerged. RTG's customers wanted RTG to start acting more like a traditional consulting firm. Business executives wanted face-to-face contact with the professors giving the information. They also wanted number crunching and follow-up analysis. And they wanted current, customized research. That has left RTG at a crossroads. Should it try to become a more traditional management-consulting firm or continue to pursue its original mission of providing advice through Internet content and virtual links? Taking the first path would mean providing support to clients, adding infrastructure and formalizing its operation by dividing it into distinct specialties. That would have the downside of making RTG's competitive point of differentiation murky. But the second path would risk putting off clients who say they want more. (Source: Elena De Lisser, "A Plan May Look Good, but Watch Out for the Real World," Startup Journal, The Wall Street Journal Online, http://www.startupjournal.com/howto/management/199908240948-lisser.html, January 15, 2004.)

Investors are more product-oriented than market-oriented.

A business plan should always be written before deciding to go forward with a startup business idea.

Capital-constrained entrepreneurs cannot afford to do much prior analysis and research because

A computer may properly be used in a new business operation but not in preparation of the business plan.

As the game plan for a new venture, the business plan focuses on the entrepreneur's bank account and other cash sources.

The business plan should never include photographs because these tend to make the plan look unprofessional.

One advantage of preparing a formal written plan for a business is the discipline provided for the prospective entrepreneur.

A business plan should describe where you are, where you want to go, and how you plan to get there.

Prior to writing a comprehensive business plan the entrepreneur should have completed a(n)

In the context of business planning, a prospectus is viewed as a

A business plan is