Deck 12: Developing an Effective Business Plan

Question 1

Planning is not essential to the success of an undertaking.

Answer 1

False

Question 2

Lack of any time frame to accomplish things is an indicator of the pitfall known as no realistic goals.

Answer 2

True

Question 3

An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it.

Answer 3

True

Question 4

A business plan should be no more than l50 pages.

Question 5

The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim.

Question 6

A summary gives a brief overview of what is to follow, helps put all of the information into perspective, and should be no longer than ten pages.

Question 7

A lack of demonstrated experience, no clear market niche, a failure to anticipate roadblocks, no realistic goals set, and a lack of commitment are pitfalls or common points of failure that occur before an entrepreneur ever gets a plan reviewed.

Question 8

One of the benefits of a business plan for a financial source is that it forces the source to view the plan for miscalculations.

Question 9

Because of the competition for funding, an entrepreneur's business plan needs to capture the reader's interest right away by stating the uniqueness of the venture.

Question 10

A business plan must illustrate the current status of the venture but not the projected results.

Question 11

The pro forma balance sheet is used in the critical risk segment of the business plan.

Question 12

There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source.

Question 13

An entrepreneur should include a three- to five-year financial projection so that the financial source can adequately evaluate the venture.

Question 14

A "niche" is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service).

Question 15

An investment prospectus is the same as a business plan.

Question 16

The business plan is the entrepreneur's road map for a successful enterprise.

Question 17

The major purpose of a business plan is its utilization as a working document.

Question 18

Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility.

Question 19

One of the indicators of the failure to anticipate roadblocks is a lack of priorities.

Question 20

The manufacturing segment of the business plan should identify key personnel, their responsibilities and their positions, and career experience that qualifies them for those particular roles.

Question 21

In preparing a business plan for oral presentation, the entrepreneur should scan the outline once or twice.

Question 22

The major thrust of the business plan, as defined in the textbook, is

A) to provide a working document for the venture.
B) to encapsulate the strategic development of the project in a comprehensive document.
C) to serve as a communication tool for the entrepreneur.
D) to outline capital needs for the new venture.

Question 23

Every business plan should provide information about future harvest strategies.

Question 24

An indicator of the planning pitfall of "no realistic goals" is

A) lack of timetable to accomplish things.
B) missed appointments.
C) excessive procrastination.
D) lack of desire to invest personal money.

Question 25

The entrepreneur's professionalism and how well he or she handles the venture capitalist is far more important than being well organized and prepared.

Question 26

Which of the following is not a critical factor that should be addressed in planning a venture?

A) milestones
B) flexibility
C) specific profit goals
D) realistic goals

Question 27

Which of the following is a pitfall to avoid in planning, according to the textbook author?

A) lack of priorities
B) lack of profit orientation
C) lack of future vision
D) lack of illustrations

Question 28

In some professional areas, the business plan is referred to as

A) a proposal for economic development.
B) an investment prospectus.
C) a strategic development project.
D) a and b only.

Question 29

To avoid the pitfall of "no market niche" (segment), do what?

A) conduct a market analysis
B) imitate the competition
C) clearly target a niche
D) create a market niche

Question 30

After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.

Question 31

An indicator of the planning pitfall of "failure to anticipate roadblocks" is

A) recognition of future problems.
B) making no admission of possible flaws in the plan.
C) having a contingency or alternative plan.
D) pursuing a good work force.

Question 32

One suggestion for helping to recall key examples, visual aids, and other details when presenting the business plan is to utilize key words in the outline.

Question 33

The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources.

Question 34

An indicator of the planning pitfall of "no commitment or dedication" is

A) no experience in the business.
B) excessive procrastination.
C) no recognition of future problems.
D) lack of understanding about the industry.

Question 35

The comprehensive business plan should be the result of

A) reflections on the direction of the venture.
B) continuous operations of the venture.
C) investor's promises of capital.
D) the entrepreneur's best guesses.

Question 36

Planning entails the information of ______ and ______ for the future of a venture.

A) goals; directions
B) data; directions
C) data; market
D) goals; market

Question 37

Sometimes a business plan is referred to as

A) a loan proposal.
B) an encyclopedia.
C) a novelization.
D) a receivables exchange.

Question 38

A common mistake in business planning is to purge all acronyms and technical jargon from the plan.

Question 39

A business plan is

A) a written document that details the proposed venture.
B) an instance of entrepreneurial passion
C) the result of the new business.
D) a blueprint of the product.

Question 40

In planning, there are a number of critical factors that must be addressed. On that the textbook mentions is

A) having a calendar.
B) the timetable involved.
C) commitment.
D) employee zeal.

Question 41

Which of the following is not an important aspect of an entrepreneurial venture?

A) current status
B) expected needs
C) family support
D) marketing

Question 42

The cover page should bear

A) the name of the company.
B) the phone number of each supplier.
C) the month and year.
D) a customer endorsement.

Question 43

Which of the following statements would not be an appropriate guideline for successful business plan development?

A) Avoid exaggeration.
B) Orient the plan to the present.
C) Highlight critical risks.
D) Do not overdiversify.

Question 44

An important guideline in putting the plan together is

A) to overdiversify.
B) to not highlight critical risks.
C) to identify the target market.
D) to impress with excessive detail

Question 45

A business plan __________ potential financial backers.

A) indicates the exact sum to be borrowed from
B) establishes a first impression of the company and its principals on
C) provides an accurate sales forecast for
D) purposefully underestimates financial need for

Question 46

The recommended length of a business plan is

A) about 100 pages.
B) about 20 to 25 pages.
C) no more than 150 pages.
D) 10 pages, at the maximum.

Question 47

A critical point to be included in the business description is:

A) sales projections
B) the business cycle
C) key personnel
D) the potential advantages the new venture has over the competition

Question 48

To an entrepreneur, one of the benefits of a business plan is

A) the development of operating strategies for outside evaluators.
B) benchmarks for comparing forecasts with actual results.
C) both a and b
D) neither a nor b.

Question 49

Which of the following statements about a business plan is True?

A) It is the entrepreneur's road map for profits.
B) It is the minimum document required by financial sources.
C) It allows the entrepreneur to avoid pitfalls in starting a new venture.
D) It describes the entrepreneur's ideas and thoughts.

Question 50

How can entrepreneurs best orient their plans toward the future?

A) by informing investors of how wealthy they will be in five years.
B) by developing trends and forecasts that describe what the venture intends to do.
C) by identifying opportunities are for future investment
D) by planning 20 years ahead.

Question 51

Which of the following statements is not part of the "five-minute reading" by venture capitalists?

A) Determine the characteristics of the venture and industry.
B) Determine the strengths and weaknesses of the entrepreneur.
C) Determine the financial structure of the plan.
D) Read the latest balance sheet.

Question 52

Which of the following is the most common viewpoint in business plans?

A) the entrepreneur's viewpoint
B) the marketplace's viewpoint
C) the financial source's viewpoint
D) the competitor's viewpoint.

Question 53

Which of the following describes advantages of the business plan for financial sources?

A) The plan identifies critical risks.
B) The plan helps assess the entrepreneur's family.
C) the plan identifies sources of capital.
D) all of the above.

Question 54

Which of the following is not one of the steps in reading a business plan discussed in the text?

A) the establishment of the unique feature in this venture.
B) the reading of the latest balance sheet.
C) the thorough reading of each section.
D) the brief review the history of the company.

Question 55

Which of the following would be a benefit gained by financial sources from a business plan?

A) The venture's ability to service debt or provide an adequate return on equity
B) Favorable lease terms
C) Opinions about proposed business regulations
D) Probability of future employment with the business

Question 56

The completed business plan provides the entrepreneur with

A) a tool for communicating with financial sources.
B) a sense of well-being.
C) a product-launch timetable.
D) a nicely designed booklet.

Question 57

One thing that should be included in the business description is

A) the name of each investor.
B) industry background.
C) potential disadvantages of the venture.
D) a list of suppliers.

Question 58

A business plan

A) forces the venture capitalist to prepare an effective strategy to use in case of trouble.
B) provides a foolproof "blueprint" for a small business.
C) may help an entrepreneur avoid a project that is "doomed" from the start.
D) is a loan application.

Question 59

It is recommended that the final copy of the business plan be

A) paper clipped.
B) put in a plastic folder.
C) professionally typeset and bound.
D) none of the above.

Question 60

It is important that an entrepreneur

A) seek the assistance of outside professionals to prepare a business plan.
B) develop an entrepreneurial team to organize the plan.
C) prepare his or her own plan.
D) do a and b only.

Question 61

The second section of a business plan is

A) the summary.
B) the business description.
C) a statement of purpose and goals.
D) a statement of financing goals.

Question 62

Which of the following is a critical factor that should be discussed in the management segment?

A) unfavorable trends in the industry
B) board of directors and consultants
C) competitive analysis
D) size of manufacturing operation

Question 63

Which of the following is a critical factor to be considered in the management segment?

A) suppliers
B) location of the plant
C) organizational structure
D) product design

Question 64

How should an entrepreneur prepare to present his or her business plan?

Question 65

What is the basic structure of a business plan?

Question 66

What is the significance of a harvest strategy segment in a business plan?

A) It is important for the entrepreneur to plan for a liquidity event as an exit strategy.
B) It is important for the entrepreneur to know how to buy up troubled companies.
C) It is important for the entrepreneur to indicate how the business will increase in value.
D) It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise.

Question 67

Which of the following statements may be the most important in new venture creation?

A) the pro forma balance sheet
B) the income statement
C) the cash flow statement
D) the profit statement

Question 68

Which of the following is something an entrepreneur should not do when preparing for the oral presentation of a business plan?

A) Organize the presentation.
B) Develop an outline of the plan.
C) Make the presentation rigid.
D) Practice the presentation

Question 69

The financial segment includes

A) the pro forma balance sheet.
B) the profit statement.
C) the cost statement.
D) the R & D statement.

Question 70

The textbook recommends which of the following devices to help in the oral presentation of a business plan?

A) mnemonics
B) index cards
C) rote memorization cues
D) keywords on an outline

Question 71

Should a business plan/venture be turned down the first time, the entrepreneur should

A) feel defeated.
B) revise, rework, and improve the plan.
C) take it personally.
D) change careers.

Question 72

Competitive analysis, advertising plan, and pricing policy are all part of the

A) research, design, and development segment.
B) marketing segment.
C) milestone schedule segment.
D) financial plan segment.

Question 73

The appendix and/or bibliography segment is not mandatory, but it allows for

A) additional incorporation of the venture.
B) additional capital funding.
C) additional documentation not appropriate in the main parts of the plan.
D) additional completion of design and development.

Question 74

Which of the following is part of the marketing segment?

A) plans for specific TV ads
B) the competitive analysis
C) plans for gaining shelf space
D) entry barriers

Question 75

Which of the following questions should an entrepreneur ask when a business plan is turned down?

A) "That means you do not know how to evaluate a good plan?"
B) "Can you identify friends who would like this kind of deal?"
C) "If you were in my position, how would you proceed?"
D) none of the above

Question 76

What are some of the errors made in the preparation of a business plan that minimize an entrepreneur's chance for success?

Question 77

The entrepreneur must be

A) able to handle questions from the evaluators.
B) interesting and humorous.
C) able to criticize the evaluators.
D) able to deftly avoid answering certain questions.

Question 78

How does a business plan benefit the entrepreneur?

Question 79

Blueprints, sketches, drawings, and models are often important features to be placed in what section of the business plan?

A) research, design and development
B) marketing
C) manufacturing
D) critical risks

Question 80

The day of the presentation, the entrepreneur should arrive early to

A) serve snacks to attendees.
B) arrange to have breakfast and coffee catered in.
C) read the paper to relieve nervousness.
D) set up, test any equipment, and organize notes and visual aids.