Ch.5 Exam Questions Writing The Winning Business Plan Warren

Chapter 5: Writing the Winning Business Plan

True/False

1. The main purpose of writing a business plan is to test the viability of the business idea and set a path for the entrepreneur to follow.
2. A business plan allows for bank loans and investors to gain insight into the business idea and determine the financial requirements.
3. A business plan is a 45 to 60 page written document that describes where a business is heading and how it hopes to achieve its goals and objectives.
4. The single most important reason for preparing a business plan is to secure needed human resources.
5. A business plan is a first attempt at controlling entrepreneurial life.
6. Writing a business plan guarantees that problems do not come up.
7. Research finds that it will take at least three hundred hours of dedicated effort to produce a good plan.
8. The marketing and sales strategy section of the business plan describes how the business will implement the marketing plan to achieve expected sales performance.
9. To protect the human resource talent and competitive positioning, the management team’s talents and skills should not be detailed in the management team section of the business plan.
10. Fortunately, the financial plan is the most flexible part of a business plan in terms of format.

Short Answer / Fill in the Blank

1. A(n) ________ serves as a blueprint for building a company.
2. An entrepreneur should use a(n) ________ business plan when he or she needs to describe the business in detail to attract potential investors, strategic partners, or buyers.
3. A(n) _________ is a two-to-five page document that contains the most important information about the business and its direction.
4. _______ pricing is when the business sells the products or services based on demand or whatever the market will bear.
5. ________ are individuals who buy products, often overseas, directly from the distributor and sell them to retailers or end users.
6. The term _______ is used to describe when products and services are sold through a web site or through Internet partner alliances.
7. ________ most often reflects at least quarterly performance for the first year.
8. The _______ should reflect the company’s financial position at its inception.
9. The funds required and uses section of the business plan should describe how much _______ is required to finance the business, where these funds will be spent, and when they will be needed.
10. A business plan may fail because the _______ is unclear, not concise, and not specifically targeted to the intended audience.

Multiple Choice

1. The business plan’s primary purpose is to:
   1. develop new applications.
   2. guide the entrepreneur.
   3. avoid competition.
   4. provide a historical perspective of the venture.
2. Which of the following is not one of the ways that the business plan will determine if the business has a chance of becoming successful?
   1. Decrease the likelihood of the venture’s success.
   2. Test the feasibility of the business concept.
   3. Attract bank loans and investors.
   4. Improve your business planning process to become more manageable and effective.
3. How long is a typical business plan?
   1. 45-50 pages
   2. 25-40 pages
   3. 60-80 pages
   4. 20-22 pages
4. Which of the following is not one of the three essential reasons to prepare a business plan?
   1. Entrepreneurs reap benefits from the planning activity itself.
   2. The plan provides a basis for measuring actual performance against expected
      1. performance.
   3. The plan acts as a vehicle for communicating to others what it is that the business
      1. is trying to accomplish.
   4. The plan is to attract competitors’ action.
5. Which of the following is the first step in the process to write the business plan?
   1. Draft the Outline
   2. Review the Outline
   3. Draft the Plan
   4. Identify the Objectives
6. Which of the following is the third step in the process to write the business plan?
   1. Draft the Outline
   2. Review the Outline
   3. Draft the Plan
   4. Identify the Objectives
7. Detailed support for any assumptions and assertions made in the business plan should be available in what stage of writing the business plan?
   1. Draft the Outline
   2. Review the Outline
   3. Draft the Plan
   4. Identify the Objectives
8. Which of the following is the fourth step in the process to write the business plan?
   1. Draft the Outline
   2. Review the Outline
   3. Draft the Plan
   4. Have the Plan Reviewed and Updated
9. Which of the following is not part of the executive summary?
   1. Business Concept
   2. Financial Features
   3. Success Factors
   4. Temporary Position
10. An entrepreneur should use a(n) _____ when he or she needs to describe the business in detail to attract potential investors, strategic partners, or buyers.
    1. executive summary plan
    2. full business plan
    3. action plan
    4. target plan
11. A document the management team uses to implement the plan is called the:
    1. Executive summary plan
    2. Full business plan
    3. Action plan
    4. Target plan
12. The business plan should be read by:
    1. The key employees of the venture.
    2. Banks.
    3. Potential customers.
    4. A and B only.
13. Which of the following is NOT addressed in the business plan?
    1. Target customer
    2. Competition
    3. Market constraints
    4. Government’s role
14. The purpose of the title page is:
    1. to provide contact information about the company.
    2. Indicate the length of the plan.
    3. Questionable, especially to investors.
    4. Both A and B.
15. How long should the executive summary be?
    1. One page
    2. Four to six pages
    3. Two to three pages
    4. 8-10 pages
16. Writing the overview of the company, industry, products, and services addresses all of the following questions except:
    1. What is the business?
    2. How much money will the business bring in?
    3. What customers will it serve?
    4. Where is it located, and where will it do business?
17. Which marketing section should define how the business will use its marketing tools?
    1. Market Opportunity
    2. Competition
    3. Marketing Strategy
    4. Sales Forecasts
18. Which marketing section presents financial projections in the financial section of a business plan?
    1. Sales Forecasts
    2. Market Research
    3. Support Material
    4. Competition
19. Which type of pricing includes all costs, both fixed and variable, and a profit percentage is added on?
    1. Demand Pricing
    2. Competitive Pricing
    3. Markup Pricing
    4. Cost-Plus Pricing
20. Which type of pricing is where the company enters a market where there is an established price and where it is difficult to differentiate one product from another?
    1. Value Pricing
    2. Competitive Pricing
    3. Markup Pricing
    4. Cost-Plus Pricing
21. In the operations section of the business plan, all of the following are included except:
    1. Maintenance and Support
    2. Manufacturing
    3. Marketing
    4. Product/Service Development
22. Which section of the business plan should formulate a credible, comprehensive set of projections reflecting the business’s anticipated financial performance?
    1. Financial plan
    2. Operations section
    3. Marketing analysis section
    4. Marketing and sales strategy section
23. All of the following information should be presented in the financial plan except:
    1. Project income statements
    2. Projected cash flow statements
    3. Competitor’s balance sheet
    4. Other financial projections
24. Which section of the business plan describes how much money is required to finance the business, where these funds will be spent, and when they will be needed?
    1. Operations section
    2. Marketing analysis section
    3. Funds required and uses
    4. Management plan
25. All of the following are typical exhibits except:
    1. Market potential
    2. Process flow
    3. Detailed financials
    4. Working capital