ENT 396 CH. 12

Provides balance sheet and income statement

Financial Segment

Provides a budget

Finanical Segment

Provides strategy for an initial public offering

Harvest Strategy Segment

Explains costs involved in testing

Research and Development Segment

Most crucial part of the plan

Executive Summary

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.

"If you were in my position, how would you proceed?"

Describes the potential of the new venture

Business decription segment

Provides industry background

Business description Segment

Discusses price-cutting by the competition

Critical Risk Segment

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

Determine the strengths and weaknesses of the entrepreneur

Should be written after the business plan is completed

Executive Summary

(T/F) A business plan must illustrate the current status of the venture but not the projected results.

False

Describes legal structure of the venture

Management Segment

Discusses the advantages of location

Operations Segment

Explains proximity to suppliers

Operations Segment

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

Orient the plan to the present

(T/F) 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).

True

(T/F) The business plan is the entrepreneur's road map for a successful enterprise.

True

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

making no admission of possible flaws in the plan

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

marketing segment

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

organizational structure

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

reflections on the direction of the venture

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

the cash flow statement

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

the pro forma balance sheet

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

to identify the target market

Identifies target markets

Marketing Segment

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

a written document that details the proposed venture

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. Harvest strategy segment 9. Milestone schedule segment 10. Appendix

Contains support material such as blueprints and diagrams

Appendix

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

Provides a comprehensive product-launch timetable

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

a tool for communicating with financial sources

(T/F) After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.

False

(T/F) The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim.

False

(T/F) The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources.

False

(T/F) The pro forma balance sheet is used in the critical risk segment of the business plan.

False

(T/F) There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source.

False

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

It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise

Provides résumés of all key personnel

Management Segment

Analyzes case if any sales projections are not attained

Marketing Segment

Discusses pricing strategy

Marketing Segment

Describes any prototypes developed

Milestone Schedule 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

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.

The plan identifies critical risks

(T/F) 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.

True

(T/F) Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility.

True