Business chapter 3 study guide

A handwritten business plan is acceptable if it is neat, well organized, and inviting to read.

False

Entrepreneurs can hire experts from trade associations to help them prepare business plans.

False

Never reveal your competitors' strengths in your business plan—focus only on what they have done wrong.

False

Not all new businesses need a business plan.

False

Once your business is up and running, you will rarely use your business plan.

False

Only corporations need to include a section detailing the form of ownership in a business plan.

False

SCORE is cosponsored by the SBA.

False

The Internet is not a trusted source of information on how to develop a business plan.

False

The executive summary appears after the body of the business plan.

False

The only person who should read a business plan is the owner and potential investors.

False

Writing a business plan is one of the easiest things you will do as an entrepreneur.

False

Within the main body of the business plan, which section contains information about the ownership structure of the business?

Introduction

How many pages are the statement of purpose of a business plan?

No more than 1 or 2 paragraphs.

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

Pro-Forma

The (blank) is made up of thousands of retired executives who volunteer their time to provide entrepreneurs with real-world advice and know-how.

SCORE

Name resources for preparing a business plan.

SCORE, SBA, SBDC, Trade associations.

A business plan provides financial information that shows how your business will earn a profit.

True

A good business plan should describe what products or services will be introduced over the next five years.

True

A local chamber of commerce can provide information on trends affecting local businesses, local resources, and zoning and licensing information.

True

An undefined target market can ruin a business plan.

True

Lenders require a business plan before they will consider financing a business.

True

Regardless of the business, all business plans serve the same basic purposes.

True

The Small Business Administration (SBA) has at least one office in every U.S. state.

True

The backgrounds and experience of the leadership team of your company help lenders make financing decisions.

True

The financial management section of your business plan should state how much money you need to borrow and how you plan to use the money.

True

The marketing section of your business plan should describe the location of your business.

True

To convince investors that the idea is solid, you will need a completely new product or service or one that is less expensive than products or services that already exist.

True

How long do most entrepreneurs spend developing their business plans?

6-12 months

Which part of the business plan includes supporting documents that back up statements made in the body of the report?

Appendix

A letter that introduces and explains an accompanying document or set of documents is called a(n)

Cover letter

Name the introductory elements of a business plan.

Cover letter, title page, table of contents, statement of purpose, executive summary.

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

A financial statement based on projected revenues and expenses is called an informal financial statement.

False

To convince readers that you have come up with a practical business idea, you must include information and data from objective sources.

True

Name the common mistakes made by entrepreneurs.

Unrealistic, competition, poor research, target market, inconsistently omission.

The introduction section of a business plan contains all of the following except. a. an identification of risks. b. a description of the nature of the business. c. the legal structure of the business. d. the advantages your business has over your competitors.

a. an identification of risks.

Small Business Development Centers (SBDCs), a. are often located at community and state colleges. b. are made up of working and retired business professionals. c. provide real-world advice and know-how for a small fee. d. all of these

a. are often located at community and state colleges.

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. Entrepreneur magazine

a. national geographic.

Information about the necessary equipment for your business is included in a business plan's, a. operations section. b. marketing section. c. concluding statement. d. financial management section.

a. operations section.

In the financial management section of its business plan, a new business must include, a. projected financial statements. b. copies of all rental agreements. c. current financial statements. d. all of these

a. projected financial statements.

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

a. small loans

Which of the following is not an element of the financial management section of your plan? a. Funding request and return on investment. b. Distribution of profits and losses. c. Identification of risks. d. Financial statements

b. Distribution of profits and losses.

Which of the following is not a purpose of a business plan? a. To describe the backgrounds and experience of the leadership team of the business. b. To describe the backgrounds and experience of your suppliers. c. To explain the idea behind your business. d. To explain how you expect to achieve specific objectives

b. To describe the backgrounds and experience of your suppliers.

Before they will consider financing a business, lenders 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. a business plan.

Financial projections in a business plan should, a. not be included if you could not locate reliable financial information. b. be based on solid evidence. c. be very optimistic so that investors will be impressed. d. based on your best guess.

b. be based on solid evidence.

Long-term sales projections are. a. for ten years in the future. b. for two to four years after startup. c. not included in a business plan. d. for five years in the future.

b. for two to four years after startup

A business plan is important for all of the following reasons except, a. it helps you communicate your ideas to others. b. it helps you decide what to sell. c. it can help you secure financing for your business. d. it makes you think about all aspects of your business.

b. it helps you decide what to sell.

SCORE is, a. cosponsored by the federal government. b. made up of working and retired business professionals. c. a for-profit association. d. an independent agency of the federal government.

b. made up of working and retired business professionals.

An executive summary, a. includes supporting documents that back up statements made in the body of the report. b. should be no longer than one or two paragraphs. c. should be written before the business plan is completed. d. states how much you want to borrow

b. should be no longer than one or two paragraphs.

A(n) (blank) is a written document that describes all the steps necessary for opening and operating a successful business.

business plan

A business plan's title page includes all of the following except, a. the owner's name. b. the name of the company. c. a brief description of the business. d. the date.

c. a brief description of the business.

Before lenders will loan money to a new business, a. they will 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 leadership team of the business has the skills and characteristics necessary to succeed. d. all of these

c. they need to be convinced that the leadership team of the business has the skills and characteristics necessary to succeed.

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 or services. d. all of these

d. all of these

A business plan should. a.explain who will supply your business with goods. b. show how your business will win over customers from competitors. c. explain who will run your business. d. all of these

d. all of these

The SBA, a. is an independent agency of the federal government. b. provides loans and loan guarantees to entrepreneurs and small businesses. c. has at least one office in every U.S. state. d. all of these

d. all of these

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. all of these

The marketing section of your plan explains.a. how you plan to enter the market. b. who your prospective customers are. c. how you plan to deal with competition. d. all of these

d. all of these

Working on a business plan helps you. a. think through business strategies. b. identify problems that you may encounter. c. recognize limits. d. all of these

d. all of these

Your business plan must, a. clearly define your market. b. never overlook the competition. c. be consistent. d. all of these

d. all of these.

Online business resources, a. are not as reliable as print resources. b. should not be used in a business plan. c. are not available from the SBA. d. can be found via search engines.

d. can be found via search engines.

A(n) (blank) 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

Information about insurance and rental or lease agreements should be included in the Information about insurance and rental or lease agreements should be included in the operations section of your business plan (blank) section of your business plan.

operations