Principles of Entp Chapter 6

For most business plans, ________ pages are sufficient. 30 to 40 25 to 35 40 to 50 5 to 10 15 to 20

25 to 35

Athletic Propulsion Labs, the company profiled in the opening feature of Chapter 6, makes athletic shoes that give the wearer extra bounce. One of factors that made the founders' initial business plan seemingly unrealistic was the price point. The price point in the original business plan was $________. 25 40 300 100 200

300

A 2015 Wells Fargo/Gallup Small Business Index Survey found that only ________ percent of business owners have a formal business plan. 42 15 33 10 27

33

Which of the following is the main purpose for writing a business plan? The plan helps the company develop a "road map" to follow. The plan introduces potential investors and other stakeholders to the business opportunity. Both The plan helps the company develop a "road map" to follow and The plan introduces potential investors and other stakeholders to the business opportunity are equally important. Neither The plan helps the company develop a "road map" to follow nor The plan introduces potential investors and other stakeholders to the business opportunity captures the true purpose of a business plan. Reason The plan helps the company develop a "road map" to follow is the most important for experienced entrepreneurs and reason The plan introduces potential investors and other stakeholders to the business opportunity is the most important for inexperienced entrepreneurs.

Both The plan helps the company develop a "road map" to follow and The plan introduces potential investors and other stakeholders to the business opportunity are equally important.

Which of the following is one of the "red flags" listed in the textbook that raises questions about one or more aspects of a company's business plan? Less than 50 pages long Founders that have their own money at risk Directed towards both an external and an internal audience Defining the market size too broadly Takes several days or weeks to complete

Defining the market size too broadly

Which of the following is NOT one of the "red flags" listed in the textbook that raises questions about one or more aspects of a company's business plan? A poorly cited plan Defining the market size too narrowly Overly aggressive financials Founders with none of their own money at risk Sloppiness in any area

Defining the market size too narrowly

Melanie Summer spoke to an investor who is interested in her business idea. Melanie offered to send the investor a copy of her full business plan, but the investor asked for a short overview of the business plan instead. What portion of her business plan should Melanie send the investor? Operations plan Company description Elevator pitch Marketing plan Executive summary

Executive summary

Which of the following statements is incorrect regarding the industry analysis portion of a firm's business plan? Industry structure refers to how concentrated or fragmented an industry is. Most industries have 6 to 10 key success factors that should be reported in the industry analysis. The industry analysis should conclude with a brief statement of your beliefs regarding the long-term prospects for the industry. It is important to focus simultaneously on a business's industry and its target market. Industry trends, which include both environmental and business trends, should be discussed.

It is important to focus simultaneously on a business's industry and its target market.

What section of the business plan deals with the day-to-day operations of a company? Operations plan Executive summary Financial plan Industry analysis Marketing plan

Operations plan

Which of the following is NOT an individual, group or institution that normally reads a company's business plan? Key recruits for jobs with the new firm Potential alliance partners and major customers State and local government officials Board of directors Rank-and-file employees

State and local government officials

Which of the following business plans matches with its appropriate emphasis? Summary business plan works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea. Summary business plan is meant primarily for an internal audience and works best as a tool for creating a blueprint for a company's operations and providing guidance to operational managers. Summary business plan works best for companies who are at the point where they need funding or financing; serves as a "blueprint" for the company's operations. Full business plan works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in the idea. Operational business plan works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea.

Summary business plan works best for companies in the early stages of development that want to "test the waters" to see if investors are interested in their idea.

Which of the following statements is incorrect about business plans? A business plan is typically 25 to 35 pages long. For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm. A large percentage of entrepreneurs do not write business plans for their new ventures. Writing a business plan forces a firm's founders to systematically think through each aspect of their new venture. The business plan should be written while the feasibility analysis is being completed.

The business plan should be written while the feasibility analysis is being completed.

Which of the following statements is incorrect regarding the executive summary of a business plan? It is arguably the most important section of the business plan. The executive summary is the first thing that should be written in preparing a business plan. It is a short overview of the entire business plan. In many instances an investor will first ask for a copy of a firm's executive summary and will request a copy of the full business plan only if the executive summary is sufficiently convincing. It should not exceed two single-spaced pages.

The executive summary is the first thing that should be written in preparing a business plan.

Which of the following is NOT a recommended guideline for writing a business plan? A business plan should look sharp, but not a lot of money should be spent on the physical appearance of the plan. A business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture. To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way. Shy away from using a lot of boldfaced type, italics, clip art, and different font sizes and colors when preparing a business plan. For most plans, 25 to 35 pages is sufficient.

To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way.

The two primary audiences for a business plan are investors and other external stakeholders and ________. officials with the SEC a firm's competitors a firm's customers a firm's employees public relations firms

a firm's employees

Operating leverage is highest in companies that have ________. equal variable and fixed costs a service rather than a manufacturing emphasis a high proportion of variable costs relative to their fixed costs virtually no fixed costs a high proportion of fixed costs relative to their variable costs

a high proportion of fixed costs relative to their variable costs

Kate Payne was reading the business plan for New Venture Fitness Drinks, and noticed that prior to its financial statements, New Venture Fitness Drinks placed an explanation of the sources of the numbers for the statements and the assumptions used to generate them. This explanation is called a(n) ________. forecast hypothesis assumptions sheet forecast sheet hypothesis sheet estimate sheet

assumptions sheet

The document that does the best job of introducing potential investors and other stakeholders with the business opportunity the firm is pursuing and how it plans to pursue it is the ________. opportunity analysis marketing plan business plan feasibility analysis industry analysis

business plan

A business plan is important as it forces the founding team to systematically think through every aspect of their new venture, and it ________. communicates the merits of a new venture to outsiders, such as investors and bankers is a contract that is signed by the founders of the firm is a public relations document that can be used to promote the firm is a financial analysis is a budget

communicates the merits of a new venture to outsiders, such as investors and bankers

A company's mission statement should be placed in the ________ section of its business plan. industry analysis market analysis company description marketing plan management team and company structure

company description

Industry structure refers to how ________ an industry is. concentrated or fragmented large or small traditional or progressive innovative or conservative hierarchical or flat

concentrated or fragmented

The ________ section of the business plan addresses the basic logic of how profits are earned in the business. design and development plan executive summary economics of the business market analysis operations plan

economics of the business

According to the textbook, in many instances an investor will first ask for a copy of a firm's ________ and will request a copy of the full business plan only if that portion of the plan is sufficiently convincing. executive summary operations plan appendix financial plan industry analysis

executive summary

The ________ is a short overview of the entire business plan. summary statement executive summary abstract managerial review founder's introduction

executive summary

According to the textbook, the first rule in making an oral presentation is to ________. emphasize all the positive aspects of a business venture do something out of the ordinary be creative appear confident follow instructions

follow instructions

According to the textbook, many investors and others who read business plans look first at the executive summary and then go directly to the ________ section of the business plan to make their preliminary assessment. management team and company structure product (or service) design and development plan industry analysis operations plan marketing plan

management team and company structure

The ________ section of a business plan breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal. market analysis competitive analysis current status operations plan marketing plan

market analysis

A(n) ________, in a business plan context, is a noteworthy event in the past or future development of a business. aspiration signpost intention target milestone

milestone

According to the textbook, a business plan is best described as a(n) ________. marketing initiative contract agreement narrative description of a new business budget

narrative description of a new business

A(n) ________ business plan, which is intended to be a blueprint for a company's operations, is 40-100 pages long and is meant primarily for an internal audience. full summary tactical deliberate operational

operational

The facilities and equipment that a business needs should be described in the ________ section of its business plan. marketing plan operations plan market analysis management team and company structure company description

operations plan

According to the textbook, the ________ are the heart of the financial section of a business plan. budgets pro forma financial statements financial ratios break-even analyses sources and uses of funds statements

pro forma financial statements

Most business plan writers interpret or make sense of a firm's historical and/or pro forma financial statements through ________ analysis. relative scenario proportion assumptions ratio

ratio

The three types of business plans are ________. summary business plan, contingency plan, full business plan opportunity plan, feasibility plan, full business plan summary business plan, full business plan, operational business plan functional business plan, contingency plan, full business plan functional business plan, full business plan, feasibility plan

summary business plan, full business plan, operational business plan

The Partnering for Success feature in Chapter 6 focuses on the need to involve others in what the entrepreneurs are doing. This community of supporters is called ________. early evangelists shareholders the industry the entrepreneurial team stakeholders

the entrepreneurial team

The Partnering for Success feature in Chapter 6 focuses on the need to involve others in what the entrepreneurs are doing. This community of supporters is called ________. stakeholders early evangelists shareholders the industry the entrepreneurial team

the entrepreneurial team

A prototype is ________. a tool for evaluating the organizational prowess of a new firm the first physical depiction of a new product a financial model a tool for evaluating the industry a new firm plans to enter a form of opportunity recognition

the first physical depiction of a new product

A computer-generated image of an invention that displays the invention as a 3D model that can be viewed from all sides and rotated 360 degrees is called a(n) ________. virtual prototype concept visualization abstract prototype usability test virtual design

virtual prototype