Question 1

Paul Hempken just spoke to an investor, who is interested in his business idea. Paul offered to send the investor a copy of his full business plan, but the investor asked for a short overview of the business plan instead. What portion of his business plan should Paul send the investor?

Accepted Answer

A)   marketing plan
B)   executive summary
C)   elevator pitch
D)   company description
E)   operations planF) A) and B)
G) B) and E)

Question 2

The first rule in making oral presentation is to follow instructions.

Accepted Answer

A) True 
 B)False

Question 3

A prototype is:

Accepted Answer

A)   a form of opportunity recognition
B)   a tool for evaluating the industry a new firm plans to enter
C)   a financial model
D)   the first physical depiction of a new product
E)   a tool for evaluating the organizational prowess of a new firmF) D) and E)
G) A) and C)

Question 4

The ________ section of a business plan breaks the industry into segments and zeroes in on the specific segment (or target market)  to which the firm will try to appeal.

Accepted Answer

A)   competitive analysis
B)   current status
C)   market analysis
D)   marketing plan
E)   operations planF) A) and D)
G) A) and E)

Question 5

According to the textbook, the ________ are the heart of the financial section of a business plan.

Accepted Answer

A)   financial ratios
B)   pro forma financial statements
C)   budgets
D)   sources and uses of funds statements
E)   break-even analysesF) B) and D)
G) C) and D)

Question 6

The facilities and equipment that a business needs should be described in the ________ section of its business plan.

Accepted Answer

A)   marketing plan
B)   management team and company structure
C)   company description
D)   market analysis
E)   operations planF) A) and D)
G) A) and C)

Question 7

An organizational chart is a graphic representation of how authority and responsibility are distributed within a company.

Accepted Answer

A) True 
 B)False

Question 8

A(n)  ________ is a graphic representation of how authority and responsibility are distributed within a company.

Accepted Answer

A)   organizational chart
B)   personnel chart
C)   human resources chart
D)   administrative chart
E)   directional chartF) B) and D)
G) A) and C)

Question 9

The pro forma financial statements are the heart of the operations section of a business plan.

Accepted Answer

A) True 
 B)False

Question 10

There are two primary audiences for a business plan: investors and other external stakeholders and:

Accepted Answer

A)   officials with the SEC
B)   a firm's employees
C)   a firm's competitors
D)   a firm's customers
E)   public relations firmsF) A) and E)
G) B) and E)

Question 11

A company's industry analysis and target market analysis are usually included in the same section of its business plan.

Accepted Answer

A) True 
 B)False

Question 12

A commercialization plan is a written narrative that describes what a new business plans to accomplish and how it plans to accomplish it.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is incorrect regarding the industry analysis portion of a firm's business plan?

Accepted Answer

A)   It is important to focus simultaneously on a business's industry and its target market.
B)   Industry structure refers to how concentrated or fragmented an industry is.
C)   Most industries have 6 to 10 key success factors that should be reported in the industry analysis.
D)   Industry trends should be discussed, which include both environmental and business trends.
E)   The industry analysis should conclude with a brief statement of your beliefs regarding the long-term prospects for the industry.F) D) and E)
G) C) and E)

Question 14

There are two primary audiences for a business plan:

Accepted Answer

A)   a firm's employees and officials with the SEC
B)   a firm's customers and its competitors
C)   investors and other external stakeholders and public relations firms
D)   officials with the SEC and public relations firms
E)   a firm's employees and investors and other external stakeholdersF) All of the above
G) A) and E)

Question 15

According to the textbook, only ________ of the 600 entrepreneurs that participated in a recent Wells Fargo/Gallup Small Business Study indicated that they had started their venture with a business plan.

Accepted Answer

A)   12 percent
B)   31 percent
C)   20 percent
D)   6 percent
E)   48 percentF) None of the above
G) B) and D)

Question 16

Which of the following statement is incorrect about business plans?

Accepted Answer

A)   Writing a business plan forces a firm's founders to systematically think through each aspect of their new venture.
B)   For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.
C)   A business plan is typically 25 to 35 pages long.
D)   A large percentage of entrepreneurs do not write business plans for their new ventures.
E)   The business plan should be written while the feasibility analysis is being completed.F) C) and D)
G) B) and C)

Question 17

A business plan is important for two reasons: it forces the founding team to systematically think through every aspect of their new venture and:

Accepted Answer

A)   it is a budget
B)   it is a public relations document that can be used to promote the firm
C)   it is a contract that is signed by the founders of the firm
D)   it is a financial analysis
E)   it communicates the merits of a new venture to outsiders, such as investors and bankersF) A) and E)
G) B) and C)

Question 18

Which of the following is not a recommended guideline for writing a business plan?

Accepted Answer

A)   To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way.
B)   A business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture.
C)   For most plans, 25 to 35 pages is sufficient.
D)   A business plan should look sharp, but not a lot of money should be spent on the physical appearance of the plan.
E)   Shy away from using a lot of boldfaced type, italics, clip art, and different font sizes and colors when preparing a business plan.F) B) and D)
G) A) and E)

Question 19

Match the business plan with its appropriate emphasis:

Accepted Answer

A)   summary business plan, works best for companies who are at the point where they need funding or financing; serves as a "blueprint" for the company's operations
B)   operational business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea
C)   full business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in the idea
D)   summary business plan, is meant primarily for an internal audience; works best as a tool for creating a blueprint for a company's operations and providing guidance to operational managers
E)   summary business plan, works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their ideaF) All of the above
G) D) and E)

Question 20

Which of the following statements is incorrect regarding the executive summary of a business plan?

Accepted Answer

A)   It is a short overview of the entire business plan.
B)   In many instances an investor will first ask for a copy of a firm's executive summary and will request a copy of the full business plan only if the executive summary is sufficiently convincing.
C)   It is arguably the most important section of the business plan.
D)   It should not exceed two single-spaced pages.
E)   The executive summary is the first thing that should be written in preparing a business plan.F) A) and D)
G) All of the above

Exam 4: Writing a Business Plan

An organizational chart is a graphic representation of how authority and responsibility are distributed within a company.

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There are two primary audiences for a business plan:

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The pro forma financial statements are the heart of the operations section of a business plan.

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A(n) ________ is a graphic representation of how authority and responsibility are distributed within a company.

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A business plan is important for two reasons: it forces the founding team to systematically think through every aspect of their new venture and:

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Which of the following statement is incorrect about business plans?

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Match the business plan with its appropriate emphasis:

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A company's industry analysis and target market analysis are usually included in the same section of its business plan.

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According to the textbook, only ________ of the 600 entrepreneurs that participated in a recent Wells Fargo/Gallup Small Business Study indicated that they had started their venture with a business plan.

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Which of the following statements is incorrect regarding the executive summary of a business plan?

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A prototype is:

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Which of the following statements is incorrect regarding the industry analysis portion of a firm's business plan?

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A commercialization plan is a written narrative that describes what a new business plans to accomplish and how it plans to accomplish it.

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According to the textbook, the ________ are the heart of the financial section of a business plan.

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The first rule in making oral presentation is to follow instructions.

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The facilities and equipment that a business needs should be described in the ________ section of its business plan.

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There are two primary audiences for a business plan: investors and other external stakeholders and:

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Which of the following is not a recommended guideline for writing a business plan?

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The ________ section of a business plan breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal.

Correct AnswerverifiedShow Answer

Paul Hempken just spoke to an investor, who is interested in his business idea. Paul offered to send the investor a copy of his full business plan, but the investor asked for a short overview of the business plan instead. What portion of his business plan should Paul send the investor?

Correct AnswerverifiedShow Answer

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