ENT 396 Ch 6

The marketing plan should include which of the following topics? a. Credit and pricing strategies b. The degree of patent or copyright protection c. The spending habits of potential customers d. Competitors' existing distribution channels

a. Credit and pricing strategies

A business plan a. contains facts, not assumptions. b. is more important than the final outcome. c. is not the business. d. will ensure success.

c. is not the business.

Nelson is writing about how he will identify and attract customers, how he will price his product, and how and where he will offer it for sale. Nelson is working on the _____ section of his business plan. a. customer service b. product/service plan c. marketing plan d. development plan

c. marketing plan

Information that assures investors that they can recover their principal investment plus a nice return within five to ten years should be included in which section of the business plan? a. Exit strategy section b. Offering section c. Financial plan section d. None of these choices

a. Exit strategy section

A business model explains how a business will generate profits and cash flow. a. True b. False

a. True

A business plan is a document that outlines the basic concept underlying a business—specifically, what problem will be solved—and describes how the entrepreneur will execute the plan to solve the problem. a. True b. False

a. True

A loss leader is a revenue stream that is sold at a loss to create sales in a more profitable revenue stream. a. True b. False

a. True

A narrative is more appropriate for businesses that are breaking new ground with a new product, service, or operational technique. a. True b. False

a. True

A product or service should be described in lay terms even if the product is technical in nature. a. True b. False

a. True

There is no one correct formula for preparing a business plan. a. True b. False

a. True

While every financial statement is important, the pro forma statements of cash flows deserves special attention. a. True b. False

a. True

Tam is planning a business. Which of the following would be part of the outsider group that Tam would want to read his business plan? a. Wealthy uncle (investor) b. Nephew (employee) c. Sister (partner) d. Cousin (manager)

a. Wealthy uncle (investor)

Eric Ries and Steve Blank popularized a concept that can make the process of starting a new venture less risky by using an iterative process, which they called a. a lean start-up. b. pivoting. c. the build-test-retest loop. d. a value proposition.

a. a lean start-up.

Items such as marketing research studies and the résumés of key executives are placed in the _____ of the business plan. a. appendix b. executive summary c. table of contents d. management team section

a. appendix

The most beneficial plan when facing significant change in the external environment is a _____ plan. a. comprehensive b. narrative c. subjective d. short

a. comprehensive

Martina is creating the part of her business plan that includes the name, address, website, and logo of her company. Martina is working on the a. cover page. b. table of contents. c. executive summary. d. company description.

a. cover page.

Prentiss is writing about the potential lack of customer acceptance of his product and possible retaliations from competitors. Prentiss is writing the _____ of the business plan. a. critical risks section b. executive summary c. marketing plan d. exit strategy

a. critical risks section

When determining a cost structure for a business model, equipment lease payments would be an example of a _____ cost. a. fixed b. variable c. semi-variable d. step

a. fixed

The company description section of a business plan should include the company's _____ if the business is already in existence. a. history b. customer list c. sales revenues d. credit score

a. history

When considering the content of a comprehensive business plan, an entrepreneur should think first about the a. opportunity. b. financing structure. c. resources. d. context.

a. opportunity.

In a business plan, the management team section should detail a. the proposed venture's organizational structure. b. profiles of employee needs during the first three years of operation. c. the projected growth of the proposed venture. d. the intended distribution of ownership in the firm.

a. the proposed venture's organizational structure.

Two resources that are always in short supply for beginning entrepreneurs are _____ and _____. a. time; money b. raw materials; labor c. plant; equipment d. financial backing; creative genius

a. time; money

With a(n) _____ revenue stream, customers pay a fixed price per unit in exchange for a product or service. a. volume-based b. subscription/membership c. advertising-based d. licensing

a. volume-based

At a minimum, every business plan should include three key elements. Which of the following elements would be left off of a short plan? a. A significant amount of hard evidence, based in part on your business model b. An exit strategy—ways that investors will be able to harvest their investment c. Candor about the risks, gaps, and assumptions that might be proved wrong d. A logical statement of a business problem and your solution

b. An exit strategy—ways that investors will be able to harvest their investment

Which of the following would be addressed in a comprehensive business plan only? a. The problem that needs to be solved for customers b. An in-depth analysis of critical factors c. Measures that will be used to gauge success d. Milestones to be met

b. An in-depth analysis of critical factors

Tam is planning a business. Which of the following would be part of the insider group that would find Tam's business plan helpful? a. Wealthy uncle (investor) b. Cousin (manager) c. Community bank (lender) d. Wholesale produce distributor (supplier)

b. Cousin (manager)

A business model's key resource requirements include only the amount of investment in hard assets, such as equipment and buildings, not personnel and contacts. a. True b. False

b. False

A business plan should not mention competitors' strengths and weaknesses. a. True b. False

b. False

An extensive business plan that is not executed is more valuable than no business plan at all. a. True b. False

b. False

Investors are only interested in reading a comprehensive business plan before deciding about the investment. a. True b. False

b. False

Once the decision is made to prepare a business plan, it should always be a comprehensive plan. a. True b. False

b. False

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

b. False

The executive summary of a business plan presents a firm's history and its form of organization. a. True b. False

b. False

The financial plan section of a business plan should include balance sheets and income statements on an annual basis and statements of cash flows on a monthly basis, all projected out for two to three years. a. True b. False

b. False

The purpose of the pitch is to close the deal with the investors. a. True b. False

b. False

Which of the following is recommended regarding PowerPoint presentations? a. Do not use PowerPoint presentations. b. Limit the presentation to 10-12 slides. c. Make sure that each section of the business plan is included. d. Include only the supporting graphs, photos, and tabular summaries from the appendix section of the business plan.

b. Limit the presentation to 10-12 slides.

In a business plan, the legal form of organization would be discussed in the a. financial plan. b. company description. c. executive summary. d. marketing plan.

b. company description.

The product/service plan section should include a a. description of the competition's products and/or services. b. description of the firm's products and/or services with an explanation of their merits. c. listing of the weaknesses of the competition's product and/or services. d. statement of how the company intends to capture market share.

b. description of the firm's products and/or services with an explanation of their merits.

Before beginning to write a business plan, the entrepreneur should complete a a. thorough market analysis. b. feasibility analysis. c. patent application. d. technical writing course.

b. feasibility analysis.

The subscription/membership revenue stream would require customers to pay a a. fraction of the true value of the product or service. b. fixed amount at regular intervals, prior to receiving the product or service. c. fixed price per unit in exchange for a product or service. d. one-time fee to be able to use a product or service.

b. fixed amount at regular intervals, prior to receiving the product or service.

According to Kawasaki, the purpose of the pitch is to a. close the deal. b. get potential investors to the next stage of due diligence. c. draw attention to the business plan. d. weed out undesirable investors and lenders.

b. get potential investors to the next stage of due diligence.

Presenting a business plan with a unique format could be a mistake because a. the business plan is not the right place to express one's creativity. b. investors like to see the plan in a format that is familiar to them. c. investors may lose confidence in the entrepreneur's ability to follow best practices. d. investors don't appreciate opportunities that are too far "outside the box."

b. investors like to see the plan in a format that is familiar to them.

Outside users of business plans include potential _____ and _____. a. employees; leaders b. investors; customers c. managers; investors d. government agencies; employees

b. investors; customers

The executive summary part of a business plan should be written a. first. b. last. c. before the financial plan. d. before the operations and development plan.

b. last.

Information about the backgrounds of key employees should be placed in the _____ of the business plan. a. executive summary b. management team section c. operations and development plan d. critical risks section

b. management team section

The sources and uses table is a part of the _____ of the business plan. a. critical risks section b. offering section c. exit strategy d. financial plan

b. offering section

In a business model canvass, value proposition is a. a section made up of three building blocks. b. one of the five building blocks related to the customer. c. one of the four building blocks related to infrastructure. d. a channel between the customer and infrastructure building blocks.

b. one of the five building blocks related to the customer.

After a lean start-up and discovering flaws, Andrea _____ to a new business model. a. pitched b. pivoted c. digressed d. exited

b. pivoted

The industry, target customer, and competitive analysis section should a. begin to describe the company. b. present the opportunity and demonstrate why there is a significant market to be served. c. introduce the product or service the company will offer. d. identify the company's objectives for sales and growth.

b. present the opportunity and demonstrate why there is a significant market to be served.

Of all the factors that investors consider, the _____ is/are paramount. a. entrepreneur's educational achievements b. quality of the management team c. firm's competitive advantage d. firm's target market

b. quality of the management team

The type of executive summary that briefly covers all aspects of the business plan, giving each topic relatively equal treatment, is the _____ form of executive summary. a. narrative b. synopsis c. abbreviated d. comprehensive

b. synopsis

The section of the business plan that is helpful in allowing a potential investor to spot-read the plan is a. the cover page. b. the table of contents. c. the company description. d. none of these choices.

b. the table of contents.

Which of the following is often thought to be a crucial section of the business plan because it helps to catch the reader's attention? a. Financial plan b. Company description c. Executive summary d. Operating plan

c. Executive summary

Christopher Mirabile classifies entrepreneurs into three groups. Which of the following is an accurate quote about one of those groups? a. Competent entrepreneurs can explain their company in terms of their customer and their market. b. Good entrepreneurs can explain their company in terms of what the product does. c. Funded entrepreneurs can pitch their company in terms that an investor can relate to. d. Poor entrepreneurs describe their product in lay terms.

c. Funded entrepreneurs can pitch their company in terms that an investor can relate to.

In analyzing the market for her or his product, an entrepreneur should answer which of the following questions? a. How strong is the patent protection? b. How costly will it be to produce the product? c. How much are customers willing to pay for the product? d. All of these choices

c. How much are customers willing to pay for the product?

What do the numbers stand for in Guy Kawasaki's 10/20/30 rule for pitches? a. Number of attendees/slides/minutes b. Number of selling points/slides/font point size c. Number of slides/minutes/font point size d. Number of visual aids/slides/minutes

c. Number of slides/minutes/font point size

The _____ type of executive summary is more appropriate for a business that intends to break new ground with a new product, service, or operational technique. a. informative b. synopsis c. narrative d. blended

c. narrative

In a business plan, the facilities and location of the proposed venture are described in the a. executive summary. b. management team section. c. operations and development plan. d. product/service plan.

c. operations and development plan.

Cost structures of a business model a. define the types of income. b. determine how much money is needed for positive cash flow. c. provide a framework for estimating a company's cost of goods sold and expenses. d. are the most critical components for long-term success.

c. provide a framework for estimating a company's cost of goods sold and expenses.

The discussion of the opportunity in the business plan should reflect a. how the product or service will fill a need. b. the amount of return the investors should receive. c. the potential and attractiveness of the market and industry. d. the entrepreneur's enthusiasm for the business idea.

c. the potential and attractiveness of the market and industry.

In the financial plan section of a business plan, pro forma statements should be presented for a. six months. b. one year. c. three to five years. d. seven years.

c. three to five years.

When describing the product in the business plan, the entrepreneur should a. use technical terms. b. state that the product will sell itself. c. use lay terms. d. assume that others will like the product.

c. use lay terms.

Which of the following key factors should a comprehensive business plan consider? a. Opportunity b. Critical resources c. Financing structure d. All of these choices

d. All of these choices

Which of the following questions is key for forecasting revenue streams? a. Who are the most likely customers? b. What events will trigger the need or desire for the type of product or service? c. How will customers make decisions on whether to buy the product or service? d. All of these choices

d. All of these choices

When dealing with weaknesses in a business plan, the entrepreneur should a. use technical jargon to confuse readers. b. ignore them because they might not attract investors. c. assume that investors will not find them. d. be straightforward with them and have an action plan.

d. be straightforward with them and have an action plan.

The document that provides a framework that helps an entrepreneur and the management team focus on important issues and activities for the new venture is the a. organization chart. b. budget. c. sales analysis. d. business plan

d. business plan

A business plan is more likely to make a difference when the entrepreneur and management team a. identify all unexpected events. b. make decisions realizing that change may hurt the new company. c. understand the plan is static. d. effectively execute the plan.

d. effectively execute the plan.

Maria, a venture capitalist, is scanning Mildred's business plan to see if and when she can recoup her investment and make a profit. Maria is looking for a(n) a. financial plan. b. marketing plan. c. investment plan. d. exit strategy.

d. exit strategy.

One of the primary goals of a prospective investor is to a. make as much money as possible. b. minimize losses. c. avoid risk at all costs. d. maximize potential return on an investment

d. maximize potential return on an investment

An entrepreneur should think of ways to _____ the resources necessary for start-up. a. outsource b. insure c. maximize d. minimize

d. minimize

Orlando has just finished the section describing his quality control methods and the need for specific equipment. Orlando has written the a. management team section. b. marketing plan. c. company description. d. operations and development plan.

d. operations and development plan.

In the financial plan section of the business plan, special attention should be given to the pro forma a. balance sheets. b. income statements. c. budgets. d. statements of cash flows

d. statements of cash flows

The _____ of a business plan provides a sequential listing of the sections and their page numbers. a. executive summary b. company description c. cover page d. table of contents

d. table of contents

The narrative form of an executive summary a. is more straightforward than the synopsis form. b. allows the author to include hyperbole that builds enthusiasm. c. is a better format for ventures that have several dominant advantages. d. works well for companies with impressive histories.

d. works well for companies with impressive histories.