Small Business Management Chapter 8

Preselling

introducing a future product to potential customers and taking orders for later delivery

data room

refers to an online repository for the documentation that back ups and details the specifics of the firm's business plan

External legitimacy

the extent to which a small business is taken for granted, accepted, or treated as viable by organizations or or people outside the small business or the owner's family

vision statement

simple 5 to 10 word statement that expresses the fundamental idea or goal of the firm

All the classic structures to narratives, such as beginning, middle, and end, or a multiple-step journey, or a situation-complication-resolution, fall into one of several

storytelling arcs

pitch

the name given to the formal presentation of the business plan given before judges or potential investors or partners

business plan

a document designed to detail the major characteristics of a firm

due diligence

The process of investigating a business to determine its value and potential for investment

summary plan

A business plan that provides information on a company, its products or services, its market, and critical risks to prospective business or marketing partners or to prospective key employees

micro-commitment

An online action that is quick and easy to make and helps connect to a message, but does not require a substantial personal or financial commitment, such as liking or favoriting a post or reposting it

Which of the following financial statements are expected to be included in the appendixes section of a business plan?

Balance sheet and its relevant assumptions Income statements and associated assumptions

In the context of elevator pitches, which of the following goals are associated with the success factor "ask"?

Building a business network Getting a prospective client to make a micro-commitment

proprietary technology

Businesses that have a product or service that has a patent, trademark, or copyright protection is discussed in the product/service section

The title page usually contains what information?

Contact information including owner names, address, and telephone numbers. Company name. Date the version was completed.

Which of the following statements regarding business risks are correct?

Each business has risks that are specific to it. Examples of risks include wrong numbers, an inadequate cash cushion, and uncertainty of sales. How risks are assessed is common among businesses.

Which of the following are characteristics that investors look for in a start-up team?

Passion for the business. The level of ease to work with the team. Professionalism and expertise about the business and the plan.

Which of the following are ways that the start-up team can exhibit the important characteristics that investors are looking for in the team?

Passion: when delivering the business pitch make sure it sounds like a fascinating story and not something be read from note cards. Expertise: the team should practice answering questions related to the business. Easy to work with: maintain eye contact, use people's names, and what they might be personally interested in hearing.

Which of the following statements regarding a pioneering business are correct?

Products manufactured by a pioneering business may face manufacturing hurdles. It's greatest problems include showing the market how it will work and estimating how many will want the product. It is a business whose product or service is new to the industry or is itself creating a new industry.

Which of the following is a disadvantage of being a new entrant business?

Proving that a product or service works is harder in a new market.

Which of the following aspects is described in the research and development section or the growth plan of a business plan?

Pursuing new markets

Which of the following statements about key activities are correct?

The section includes activities that the business must get right to be successful. The section should include what makes the firm distinctive. The section should be written so that the reader understands that the owners have mastered a business' specialized operations.

Which of the following are true of proof-of-concept websites?

They are useful for exhibiting a technology or service that is new in a widely spread out market. They track information about site visitors.

Which of the following slide categories are included in a pitch deck?

Why Now slide Team slide

screening plan

also called a mini-plan, gives the basic overview of a firm and a detailed look at the firm's financials

pioneering business

one who product or service is new to the industry or is itself creating a new industry

pitch deck

the slideshow created for a business plan presentation

existing business plan

written after the business has been established

traction

refers to those characteristics of a business that show it is making progress, such as making sales, recruiting customers, being sold in more locations, or achieving milestones that reflect the business's growth or development

Which of the following statement about business plans are correct?

It details the firm's product or service, industry, market, operations, and financial outcomes. It is a document designed to detail the major characteristics of a firm. An important reason to create one is to gain external legitimacy.

Which of the following statements about the value proposition are correct?

It focuses on benefits, such as quality, style, and delivery for the customer. It is related to the product/service's competitive advantage. Its description is found in the product/service section.

Which of the following are true of an elevator pitch?

It has four success factors: hook, solution, support, and ask. It is used when someone asks for more detail after hearing a concept.

Which of the following statements are true of a key employee/partner plan?

It includes all the materials of an informational plan. It comprises the critical risks and the market sections of a regular business plan.

Which of the following statements about the competition and competitive advantage section are correct?

It should be about one page long. It should have a table that identifies major competitors by name. It describes what makes a firm or its products or services unique.

Which of the following are true of a pitch deck created for online access?

It should convey an entrepreneur's thinking without him or her being present in person. It should include enough slides to ensure people understand the basics of a firm's business.

Which of the following statements about a company description are correct?

It will include a firm's most recent milestones that have been achieved. One will read a brief description of the business, e.g., age, current status, location, and the markets it plans to serve. In the case of an existing business, it may include its history.

Which of the following statements regarding the key personnel section are correct?

Key personnel consists of those who will be handling key aspects of the business. The goal of this subsection is to impress the reader. Key employees' accomplishments should be highlighted.

Which of the following statements about the cover letter are correct?

Readers usually read the cover letter first, so it should be well written. The cover letter is a one-page document that introduces the business plan and owner and indicates why the recipient is being asked to read it. Traditionally cover letters were done on business stationery.

Which of the following aspects of a business can a business owner consider including in the appendixes section of a business plan?

Results of pilot sales efforts, if any, to prove market acceptance Specifications of pictures of the products or services offered

test marketing

Selling a product or service in a limited area, for a limited time

Which of the following statements about an informational business plan are correct?

Some of the plan's contents are revised to better address what customers and suppliers are interested in knowing about the firm. Relevant appendixes, such as detailed product descriptions and price lists, are often included. It is written with customers and suppliers in mind.

Which of the following statements about the target customer section are correct?

Target customers are described in terms of demographics. Target customers are those who would buy the firm's products/services. Often there are multiple customer segments.

Which of the following should be included in the industry section of the business plan?

The number of firms and sales. The stage of the industry life cycle. The NAICS or SIC number.

Which of the following statements about a plan for an existing business are correct?

The owners have the benefit of knowing the history, existing market, and financial track record. These plans can discuss new ideas for increasing sales. Financial projects are built on historical data.

Research and development

The part of a business, and a business plan, that is focused on creating new products or services and preparing new technologies, products, ideas, or services for the firm's market

Which of the following statements about the market section are correct?

These market section also covers ways it is organized and the channels. Data that is provided by professional, trade or industry associations can be used in writing this section. The market refers to the total population of customers that will buy your product/service.

Identify the true statements about the financial statements included in the appendixes section of business plans of start-up businesses.

These statements include a list of expenses borne in the start-up process. These statements offer data projections for three years or more, depending on how long start-ups take to show profits.

Which of the following is true about screening plans?

They usually consist of the cover letter, title page, executive summary, and financials sections of a business plan. They can be a useful way for a firm to enter into the planning process.

elevator pitch

a 30-second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another

operational plan

a business plan designed to be used internally for management purposes

signature block

a snippet of text that is inserted at the bottom of an email

the market and target customer section

the second most important section of the business plan, because it describes who will buy the firm's product or service

preselling

involves introducing a future product to potential customers and taking orders for later delivery

new entrant business

a firm whose product or service is established elsewhere, but is the first of its kind in a particular market

Which of the following is generally included in a business plan's table of contents?

Major section headings. Minor sections within each major section. Page numbers for each section.

Which of the following statements regarding the financial summary section of the business plan are correct?

The summary is followed by "the ask" for funding. It often has a summary table showing the business' expected sales and profits. The financial projects should be conservative.

tagline

a memorable catchphrase that captures the key idea of a business, its service, product, or customer

mission statement

paragraph that describes a firm's goals and competitive advantages

Which of the following statements regarding the marketing strategy section of a business plan are correct?

The sales plan paragraph focuses on day-to-day sales. It focuses on: the strategy for pursuing the market, sales plan for gaining customers, and how the firm will protect sales from competitors. The overall strategy describes which generic strategy will be used.

When government involvement in a business is significant, such as gaining approval for a business license, zoning, or environmental impact, delays are unlikely and work is prompt.

false

The goal of the appendixes section of a firm's business plan

provide the most important supporting information that helps explain the significant selling points of the firm's plan

financial summary section

starts with a paragraph showing the overall financial results in sales and profits

Which of the following statements about an operational business plan are correct?

It includes detailed specifications of the major techniques, methods, recipes, and formulas used by the firm to do its work. It is one of two types of plans (the other is a PPM) that add additional material to the full business plan. It is used as working documents within the business.

Which of the following statements about the executive summary are correct?

It is typically one page in length. It usually describes a problem, product, market, competitive advantages, the team, and a financial summary. It is a key component of a business plan because it is often the first part that is read.

Which of the following statements regarding the organization section of the business plan are correct?

The section contains information on key personnel and related service providers. It has to communicate to the reader that the firm is structured to make the best use of both the internal and external people. Its goal is to convince the reader that the business will be successful due to the high-quality people involved with the business.

invention plan

a business plan that focuses on the details of an invention, including intellectual property rights for potential licensees

informational plan

a business plan that gives potential customers or suppliers information about the company and its product or service

Which of the following statements regarding the product/service section of the business plan are correct?

The product or service is described and how it works is explained. It is considered one of the most important sections of the plan. It often starts with a description of the problem or the benefit that is being delivered to the customer.

executive summary

a one- to two-page overview of the business, its business model, market, expectations, and immediate goals