ch 12

Provides balance sheet and income statement

Financial Segment

Provides strategy for an initial public offering

Harvest Strategy Segment

Describes any prototypes developed

Milestone Schedule Segment

The business plan is the entrepreneur's road map for a successful enterprise. a. True b. False

a

Describes the potential of the new venture

business description segment

Which of the following questions should an entrepreneur ask when a business plan is turned down? a. "That means you do not know how to evaluate a good plan?" b. "Can you identify friends who would like this kind of deal?" c. "If you were in my position, how would you proceed?" d. none of these.

c

Discusses price-cutting by the competition

critical risks segment

Which of the following is a critical factor to be considered in the management segment? a. product design b. location of the plant c. suppliers d. organizational structure

d

Which of the following statements would not be an appropriate guideline for successful business plan development? a. Highlight critical risks. b. Avoid exaggeration. c. Do not overdiversify. d. Orient the plan to the present

d

Most crucial part of the plan

executive summary

Provides a budget

financial segment

Describes legal structure of the venture

management segment

Provides résumés of all key personnel

management segment

Analyzes case if any sales projections are not attained

marketing segment

Explains costs involved in testing

research and development segment

Explains proximity to suppliers

Operations Segment

The comprehensive business plan should be the result of a. investor's promises of capital. b. reflections on the direction of the venture. c. the entrepreneur's best guesses. d. continuous operations of the venture.

b

The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim. a. True b. False

b

The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources. a. True b. False

b

The pro forma balance sheet is used in the critical risk segment of the business plan. a. True b. False

b

There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source. a. True b. False

b

Which of the following statements is not part of the "five-minute reading" by venture capitalists? a. Determine the characteristics of the venture and industry. b. Determine the strengths and weaknesses of the entrepreneur. c. Determine the financial structure of the plan. d. Read the latest balance sheet.

b

The completed business plan provides the entrepreneur with a. a nicely designed booklet. b. a sense of well-being. c. a tool for communicating with financial sources. d. a product-launch timetable.

c

The financial segment includes a. the profit statement. b. the R & D statement. c. the pro forma balance sheet. d. the cost statement.

c

Discusses pricing strategy

marketing segment

Identifies target markets

marketing segment

Sets forth timetables for completion of major phases of the venture

milestone schedule segment

Shows the relationship between events and deadlines for accomplishment

milestone schedule segment

Discusses the advantages of location

operations segment

A business plan is a. the result of the new business. b. a blueprint of the product. c. a written document that details the proposed venture. d. an instance of entrepreneurial passion.

c

The ten major segments of a business plan are below. Identify the order in which each segment will appear in the plan by placing a 1 next to the first part, a 2 next to the second part, and so on (through 10).

1)summary 2)business description segment 3)marketing segment 4)operations segment 5)management segment 6)financial segment 7)critical-risks segment 8)appendix 9)harvest strategy segment 10)milestone schedule segment

Provides industry background

Business description segment

A "niche" is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service). a. True b. False

a

An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it. a. True b. False

a

Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility. a. True b. False

a

What is the significance of a harvest strategy segment in a business plan? a. It is important for the entrepreneur to plan for a liquidity event as an exit strategy. b. It is important for the entrepreneur to know how to buy up troubled companies. c. It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise. d. It is important for the entrepreneur to indicate how the business will increase in value.

a

Which of the following describes advantages of the business plan for financial sources? a. The plan identifies critical risks. b. The plan helps assess the entrepreneur's family. c. the plan identifies sources of capital. d. all of these.

a

Which of the following statements may be the most important in new venture creation? a. the cash flow statement b. the profit statement c. the pro forma balance sheet d. the income statement

a

Which one of the following is not a benefit of a business plan to the entrepreneur? a. Provides a comprehensive product-launch timetable. b. Allows the entrepreneur to view the venture critically and objectively. c. Quantifies objectives, providing benchmarks for comparing forecasts with actual results. d. Provides a communication tool for outside financial sources.

a

Contains support material such as blueprints and diagrams

appendix

A business plan must illustrate the current status of the venture but not the projected results. a. True b. False

b

After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity. a. True b. False

b

An important guideline in putting the plan together is a. to not highlight critical risks. b. to over diversify. c. to impress with excessive detail d. to identify the target market.

d

An indicator of the planning pitfall of "failure to anticipate roadblocks" is a. recognition of future problems. b. pursuing a good work force. c. having a contingency or alternative plan. d. making no admission of possible flaws in the plan.

d

Competitive analysis, advertising plan, and pricing policy are all part of the a. research, design, and development segment. b. milestone schedule segment. c. financial plan segment. d. marketing segment.

d

Should be written after the business plan is completed

executive summary