Small Business Management Chapter 3 Test (for midterm)

true or false: a brief explanation of why you are asking for a loan and what you plan to do with the money is called an executive summary

false

true or false: a business plan does not give suppliers much confidence when it comes to extending credit

false

true or false: a business plan will not help you think about all the aspects of your business

false

true or false: a financial statement based on projected revenues is called an informal statement

false

true or false: a handwritten business plan is acceptable if it is neat, well organized, and inviting to read

false

true or false: after your business is up and running, you will rarely use your business plan

false

true or false: businesses must have completely new products or services to convince investors that the idea is solid

false

true or false: entrepreneurs can hire experts from trade associations to help them prepare business plans

false

true or false: entrepreneurs should avoid seeking advice from bankers or accountants because doing so will make them appear inexperienced and unqualified to run a business

false

true or false: how a business will get and keep customers is not a part of a business plan

false

true or false: only corporations need to include a form of ownership section in a business plan

false

true or false: the Internet is not a trusted source of information on how to develop a business plan

false

true or false: the only person who should read a business plan is the owner and the potential investors

false

true or false: writing an effective business plan should only take 24 hours

false

a business plan may help you secure ______ for your business

financing

a(n) ___________ strategy, or exit strategy, is the way an entrepreneur intends to extract his or her money from a business after it is operating successfully

harvest

this section of your business plan should describe your products and services and explains how they are different from those already on the market

marketing

a financial statement based on projected revenues and expenses is called a(n) ________ financial statement

pro forma

organizations made up of professionals in a specific industry are called

trade associations

true or false: a business plan provides financial information that shows how your business will earn a profit

true

true or false: a good business plans includes sales projections for the short, medium, and long term and sets forth future business plans

true

true or false: a local Chamber of Commerce can provide information on trends affecting local businesses, local resources, zoning and licensing information

true

true or false: an undefined target market can ruin a business plan

true

true or false: copies of resumes help show that the owners are qualified to manage a business

true

true or false: counselors from Small Business Development Centers and volunteers from SCORE can provide advice and workshops to help you develop your business plan

true

true or false: describing how you came up with the idea for your business can help others understand how your business will operate

true

true or false: lenders require a business plan before they will consider financing a business

true

true or false: the backgrounds and experience of the people who will be running the business help lenders make financing decisions

true

true or false: the financial section of your business plan should state how much money you need to borrow and how much you are investing in the business

true

true or false: the marketing section of your business plan should describe the location of your business

true

true or false: writing a business plan can force entrepreneurs to think about their goals

true

true or false: writing a business plan can help you identify problems you might encounter in the future

true

a letter that introduces and explains an accompanying document is called a(n): a. cover letter, b. introductory letter, c. statement of purpose, d. letter of intent

A

which of the following is least likely to be a helpful resource for your business plan: a. National Geographic, b. books on entrepreneurship, c. SBA publications, d. Business Week magazine

A

which of the following is not a purpose of business plan?: a. to describe the backgrounds and experience of your suppliers, b. to explain the idea behind your business, c. to explain how you expect to achieve specific objectives, d. to describe the backgrounds and experience of the people who will be running the business

A

before they will consider financing a business, leaders require: a. an organizational chart that lists all of your employees, b. a business plan, c. the history and background of your product, d. all of these

B

which of the following is an independent agency of the federal government that helps Americans start, build, and grow businesses: a. the SCORE, b. the SBA, c. local Chambers of Commerce, d. all of these

B

the U.S. ________ is an independent agency of the federal government that was created to help Americans start, build, and grow businesses

SBA

the __________ is made up of thousands of retired executives who volunteer their time to provide entrepreneurs with real-world advice and know-how

SCORE

a(n) ________ is a short restatement of your business plan

executive summary

before lenders will loan money to a new business they will: a. want to interview all potential employees, b. the new business must have at least two years' worth of work already lined up, c. they need to be convinced that the people running the business have the necessary skills to succeed, d. all of these

C

a business plan explains how your product or service: a. will be produced, b. will be sold, c. is either new or better than existing products, d. all of these

D

a business plan should do this out of the following: a. identify target customers, b. show how your business will earn a profit, c. detail on who will run your business, or d. all of these

D

information about necessary equipment for your business is included in the: a. financial management section, b. concluding statement, c. marketing section, d. operations section

D

the appendix of a business plan might include: a. tax returns of the business owner, b. letters of recommendation, c. a copy of required licenses, d. all of these

D

the marketing section of your plan explains: a. how you plan to enter the market, b. who your prospective customers are, c. your advantages over the competition, d. all of these

D

trade associations provide all of the following to entrepreneurs except: a. useful information, b. education, c. networking opportunities, d. small loans

D

the personal financial statement of the owner would be included in the _________ to the business plan

appendix

a written document that describes all the steps necessary for opening a business

business plan

a letter that introduces and explains an accompanying document or set of documents is called

cover letter