1. The Business Plan

Korey is planning to open a comic book store. He has developed the following expense breakdown for set-up and operation for the first year. Korey has $8,500 in savings and $25,000 in inheritance money to use to open his store. If Korey doesn't make any changes to his initial expenses, what percent of the total set-up and operation expense will have to be funded through loans or investors? Expense Amount Rent $10,800 Insurance $3,000 Store Fixtures $2,700 Computer and Cash Register $1,200 Inventory $17,400 a. 4.6% b. 9.5% c. 45.6% d. 95.4% Please select the best answer from the choices provided A B C D

a

Sam is planning to start a pool cleaning business from his home. He has developed the following cost analysis for the set-up and operation for the first year of his business. He has $9,000 in savings and $23,000 in credit that he can use for the business. Will Sam be able to afford the operational costs of the first year of business on his own? Item Cost Truck $9,000 Pool Cleaning Supplies $6,000 Payroll $23,000 Advertising $1,500 a. No, Sam will be short $7,500. b. No, Sam will be short $15,500. c. Yes, Sam will have $7,500 to spare. d. Yes, Sam will have $15,500 to spare. Please select the best answer from the choices provided A B C D

a

Sam is planning to start a pool cleaning business. He expect to make a profit of $45,000 in his first year of business, after which he expects profits to increase by 5.5% annually for the next 5 years. Sam's business will cost $49,500 to set up and run for the first year. Sam then expects an annual operational expense total of $30,500. According to Sam's model, how long will it take Sam to see an overall profit in his business (where total profits exceed total expenses)? a. Sam will see an overall profit in his first year of business. b. Sam will see an overall profit in his second year of business. c. Sam will see an overall profit in his third year of business. d. Sam will see an overall profit in his fourth year of business. Please select the best answer from the choices provided A B C D

b

Sam is planning to start a pool cleaning business from his home, but has realized that he does not have enough money in savings or credit to pay for the set-up costs and first year of operation. Which of the following would not be a good way for Sam to get the money to start his business? a. Talk to a bank about a business loan for the missing funds. b. Talk to an investor about investing their money into his business. c. Purchase a $3,000 compact car instead of a truck for his business. d. Find a business partner to share the initial expenses. Please select the best answer from the choices provided A B C D

c

The executive summary component of a business plan is to describe _____. a. where the funds to start and operate your business will come from, when you expect to see profit, and how much profit you expect to see b. the size of the market, how your business will fit into the market, and how your business will stand out from other businesses in the market c. the 'big picture' behind your business, what your business has to offer the consumer, and why your business will be successful d. how your business will be organized and what type of management or department structure your business will have Please select the best answer from the choices provided A B C D

c

Korey is planning to open a comic book store near his home. After completing a population survey for 3,520 homes in a 5 mile radius, Korey created the chart below to include in the market analysis section of his business plan. Which of the following is the best reason to include in the market analysis component of Korey's business plan explaining why such a high percentage of grade-school aged kids in the surveyed region is good for Korey's store? a. Younger kids like to read more than older kids. b. Younger kids are the only regular buyers of comic books. c. Younger kids often have allowance money that they are anxious to spend at comic stores. d. Younger kids who read comic books are likely to read them when they are older, which will create a current and future customer base. Please select the best answer from the choices provided A B C D

d

Korey's comic book store has been up and running for 4 years. Korey feels that his store has been successful and is considering moving to a larger property to allow for greater inventory and customer opportunities in his business. He would like investors to cover the cost of his expansion. The profits of Korey's comic book store for its first four years are outlined below. According to this information, what would be the best estimate for Korey to quote as expected profits in the next year in his new business plan? Year Net Profits 1 $14,250.00 2 $15,390.00 3 $16,621.20 4 $17,950.90 5 a. $20,550.19 b. $19,090.90 c. $19,280.60 d. $19,386.97 Please select the best answer from the choices provided A B C D

d

Sam is planning to start a pool cleaning company from his home. He has decided on a radius of 30 miles from his home as a region of operation. After surveying the region of operation, he found that 43% of the homes in the region have a swimming pool. If there are 36,248 homes within a 30 mile radius of Sam's home, approximately how many potential customers does Sam have? a. 1,087 b. 1,559 c. 10,874 d. 15,587 Please select the best answer from the choices provided A B C D

d

The financial analysis component of a business plan is to describe _____. a. how your business will be organized and what type of management or department structure your business will have b. the ?big picture? behind your business, what your business has to offer the consumer, and why your business will be successful c. the size of the market, how your business will fit into the market, and how your business will stand out from other businesses in the market d. where the funds to start and operate your business will come from, when you expect to see profit, and how much profit you expect to see Please select the best answer from the choices provided A B C D

d

Which of the following is not a component included in a standard business plan? a. implementation plan b. organization plan c. market analysis d. credit analysis Please select the best answer from the choices provided A B C D

d