Deck 7: Writing An Effective Business Plan: Building A Road Map to Success

Question 1

Having confidence does not automatically translate into a first-rate presentation.

Answer 1

True

Question 2

The business plan should also contain a section describing "critical risks," or "what might go wrong."

Answer 2

True

Question 3

The phrase "business model" refers to how a business will operate and how it intends to make a profit.

Answer 3

True

Question 4

Writing a business plan requires an entrepreneur to address a number of complex issues dealing with the process of converting an idea into reality. Which of the following is not one of those issues?

A) How the product will be produced.
B) The price the product will sell for.
C) How the product will compare with those of existing competitors.
D) How the product will compare with those of potential competitors.
E) All of the above are issues that need to be addressed.

Question 5

Which of the following statements is NOT true about business plans?

A) A carefully prepared and well reasoned business plan will help with the process of planning.
B) Once developed, a business plan should not change and should remain constant as the business develops.
C) A business plan will explain what the new venture is trying to accomplish.
D) A business plan should mention how the business will go about attaining its goals.
E) All of the above correctly describes a business plan.

Question 6

One important reason for writing a business plan is that it can provide a roadmap for the entrepreneur to achieve the goals of the venture.

Question 7

The seven deadly sins of a business plan are potential threats,but should not be considered very important when showing the plan to possible investors.

Question 8

Before distributing a business plan to potential investors,an entrepreneur should have it reviewed by good writers,making sure that it is grammatically correct and does not have any fatal writing flaws.

Question 9

Investors generally do not require a business plan before they will invest in a new firm.

Question 10

There is always room for improvement in a business plan.

Question 11

Talented,experienced,and motivated people at the top of a new venture are very important for its success.

Question 12

A business plan should answer which of the following important questions for investors?

A) What is the basic idea for the new product?
B) Why is this product useful or appealing?
C) Who are the entrepreneurs?
D) To whom will the new product be aimed?
E) All of the above.

Question 13

Entrepreneurs who prepare excellent business plans are more likely to attain success than those who do not.

Question 14

Analysis paralysis may occur when an entrepreneur spends countless hours in the library developing long,formal business plans with lots of data and assumptions,fancy spreadsheets,and beautiful bindings.

Question 15

Part of the reason that it is important to have a well written,persuasive business plan is because it can usually hide from investors the fact that the business has little economic potential or is not a sound idea.

Question 16

Once a business plan is written,it should not be changed.

Question 17

The management section of a business plan includes information on the company's current financial state and offers projections for future needs.

Question 18

The executive summary is a brief,clear,and persuasive overview of what is in the entire business plan.

Question 19

If there is any section of the business plan in which entrepreneurs should strive to hold their enthusiasm and optimism in check,the financial section is not it. Overly optimistic predictions get the investor excited about the venture's potential and leads to a high number of the entrepreneur's projections being accepted.

Question 20

Explanation of how the new product or service will be priced should appear in the "development,production,and location" section of the business plan.

Question 21

When thinking about potential risks that new ventures face,which would NOT be an example?

A) Price cutting by competitors?
B) Sales projections that are not achieved for a variety of reasons.
C) Product development or production schedules that are met.
D) Longer than expected lead times with respect to obtaining parts.
E) All of the above are potential risks.

Question 22

Sophisticated investors want to see specific and detailed information concerning which one of the following marketing concerns?

A) What entrepreneurs have done to identify the market for their product.
B) The size of the markets.
C) How the new products or services will be promoted in the market.
D) Competing products.
E) All of the above.

Question 23

The part of the business plan that is important because of its opportunity to stimulate interest in other people and make them want to learn more about the venture is the

A) executive summary.
B) financial section.
C) background and purpose part.
D) marketing section.
E) None of the above.

Question 24

Entrepreneurs can show investors that they are paying careful attention to the operations of the company and have developed clear plans for its future progress by identifying and working towards milestones. Which of the following would NOT be an example of a milestone for a company to use to show that it is moving forward?

A) Completion of product design.
B) Completion of prototypes.
C) Planning for the move into actual production.
D) Product display at trade shows.
E) Receipt of initial orders.

Question 25

Which part of the business plan should address the company's goals;what it hopes to accomplish?

A) Marketing.
B) Management.
C) Background and purpose.
D) Development, production, and location.
E) Risk factors.

Question 26

Which of the following is not good advice concerning the market analysis section of the business plan?

A) It should include information about competing products.
B) It is not necessary to predict how long the market for the product will last since it is almost impossible to do that.
C) It should contain an explanation of how the company's product will be superior to those of competitors.
D) It should estimate how large the market is.
E) It should explain how the product will be promoted.

Question 27

All but which of the following are included in a proforma income statement?

A) Amount of profit.
B) Sales revenue.
C) Value of assets invested.
D) Cost of goods sold.
E) Expenses.

Question 28

The plan for how the founding entrepreneurs can eventually be replaced is known as

A) management succession.
B) exit strategies.
C) planning fallacy.
D) founder turnover.
E) harvest.

Question 29

Information illustrating projected operating results based on profit and loss can be found in the

A) proforma balance sheet.
B) proforma income statement.
C) cash flow statement.
D) break-even analysis.
E) None of the above.

Question 30

The executive summary should

A) provide a clear overview of what the venture is about.
B) be at least 3 to 4 pages long.
C) transmit the entrepreneurs' excitement and enthusiasm.
D) A and C only.
E) A, B, and C.

Question 31

Which of the following should not be included directly inside of the management section of the business plan?

A) Description of the experience of the management team.
B) Description of the knowledge of the management team.
C) The complete resumes of the management team.
D) Information about ownership.
E) Information about what skills the management team may need in the near future.

Question 32

There are seven deadly sins that can affect the acceptance of a business plan. Which of the following is one of the seven?

A) The plan is poorly prepared and has an unprofessional look.
B) The plan is far too slick.
C) The executive summary is too long and rambling-it doesn't get right to the point.
D) No clear answer is provided to the question: Why would anyone ever want to buy one?
E) All of the above.

Question 33

Researchers agree that the way in which people think about stressful situations is a powerful determinant of how they react to them. In order to experience lower levels of anxiety,people should

A) emphasize the downside of stressful situations.
B) emphasize the upside.
C) view stressful situations as a challenge or opportunity to rise to the occasion.
D) completely ignore the stressful situation.
E) None of the above.

Question 34

According to the text,when writing a business plan,

A) anything more than 10 to 20 pages is almost certainly overkill.
B) anything more than 40 to 50 pages is almost certainly overkill.
C) the longer the better..
D) the shorter the better..
E) None of these are correct. A business plan should be at least 100 pages.

Question 35

The financial section of the business plan should provide potential investors with a clear picture of how the new venture will use

A) the resources it already has.
B) resources generated by continuing operations.
C) resources provided by investors to move toward its financial objectives.
D) A and C only.
E) A, B, and C.

Question 36

A step that will help ensure that a verbal presentation will match the high quality of a business plan is

A) to choose the content carefully.
B) to remember that you are trying to persuade, not overwhelm.
C) to show enthusiasm, but temper it with reality checks.
D) to rehearse the presentation.
E) Al of the above.

Question 37

To turn a rejected business plan into an opportunity to learn and improve,an entrepreneur should

A) try to find out why the proposal was rejected.
B) find out if there were any aspects of the plan and presentation that the potential investor found to be strong or positive.
C) go back to the drawing board and rework the plan.
D) go back to the drawing board and rework the presentation.
E) All of the above.

Question 38

Which of the following normally is not included in the development,production,and location section of the business plan?

A) Are the products still under development?
B) Are the products fully developed and ready to be manufactured?
C) In what market will the product be distributed first?
D) What are the projected costs for the development of the product?
E) What is the timetable for making the product available?

Question 39

Jill Jones has asked for your advice in writing her business plan. Which of the following should she not do?

A) Be very optimistic in the finance section. Base the proforma income statement on the highest possible numbers for revenue and profit in order to attract investors.
B) Write a very "tight," clear executive summary.
C) Keep the length of the overall plan brief but complete; perhaps not over 50 pages.
D) Be sure that the plan answers the basic questions of what, why, how, and who.
E) Be sure that the plan looks professional.

Question 40

Break-even analysis refers to

A) the total number of products that will be sold.
B) the total dollar value of sales for the year.
C) cash flow.
D) the level of sales (dollar value and number of products) needed to cover all costs.
E) proforma.

Question 41

There is a method of research in which factors that are believed to play a role are identified and then,the decision maker is asked to rate the chance of success of each situation/case into which the factors have been inserted. This method is intended to help identify what factors influence certain decisions. It is known as

A) proforma statement.
B) financial analysis section.
C) proprietary protection.
D) policy capturing.
E) None of the above are correct.

Question 42

Why is break-even analysis important in the business plan?

Question 43

Assume that an entrepreneur has been successful in starting a new business and now wants to sell shares in the business to the public;those shares to trade on a national exchange. This first selling of shares is known as a/an

A) equity enhancement venture.
B) initial public offering.
C) management succession planning.
D) prototype analysis.
E) feasibility analysis.

Question 44

Explain what policy capturing is as it applies to venture capitalists.

Question 45

Which of the following statements is most likely to be true?

A) A carefully prepared business plan tends to be related to success of a new business.
B) Just having a business plan leads to success of a new business.
C) Venture capitalists do not care if an entrepreneur asking for funding has a plan or not.
D) Research shows that business plans are not related to success of a business.
E) Policy capturing is the best way to develop a business plan.

Question 46

Which of the following is not an important part of presenting a business plan?

A) Avoid technical jargon.
B) Be sure that the presenter knows how to get the PowerPoint presentation working.
C) Rehearse carefully and often.
D) Choices a and c are correct.
E) Choices a, b, and c are correct.

Question 47

What is a proforma income statement? Why is it important?

Question 48

A plan describing how a new business will actually operate and how it will make a profit is known as

A) cash flow statement.
B) proforma income statement.
C) business model.
D) persuasion plan.
E) policy capturing.

Question 49

Discuss the importance of a business plan and what questions it should answer.

Question 50

Discuss the seven deadly sins,errors all entrepreneurs should avoid,of a business plan.

Question 51

Milestones,in a business plan refer to

A) a type of product made to mark distances on interstate highways.
B) important things to be accomplished that can serve as goals and as measures of when the important things are accomplished.
C) the total amount of revenue from sales.
D) the explanation of the experiences of the key managers.
E) risk factors.

Question 52

Describe the major sections of a business pan.

Question 53

Which of the following is not good advice related to presenting a business plan to investors?

A) Choose the content carefully.
B) Remember, you are trying to overwhelm, not merely persuade.
C) Show enthusiasm, but stay "real."
D) Rehearse.
E) Prepare, practice.