Chpater 7 - ENT2612
In an organizational context, the final part of a business plan's industry analysis section should place emphasis on _______.
specific market
Entrepreneurs can present their business plans for new ventures in colleges and universities or locally sponsored business meetings in a competitive and structured setting. How should an entrepreneur make use of this designated period of time?
By mentioning the recognized risks and how he or she plans to address them By giving audiences an overview of the marketing program
Which of the following is an example of a poorly prepared business plan?
A business plan that lacks an establishment of customer needs for the proposed product or service
Identify the reasons why a business plan for a new venture fails.
An entrepreneur sets unreasonable goals. An entrepreneur lacks sense of potential threats or weaknesses to the business.
What do lenders, as the potential suppliers of business capital for a new venture, typically focus on? (Check all that apply.)
Cash Flow Equity Contribution Character Collateral
Identify an implication of starting a new business without good planning.
Employees will not understand the business goals.
Which of the following is true about the importance of updating an existing business plan for an entrepreneur?
It helps in being responsive to changes in the company, industry, and market.
True or false: All businesses should create an operations plan as part of their business plan.
TRUE
A true statement about a business plan for a new venture is that it is usually________. a) a road map prepared by the employees of a firm b) created to address only short-term decision making for the first three years of operation c) a combination of functional plans like marketing, finance, manufacturing, and human resources d) framed by investors, suppliers, and potential customers
a combination of functional plans like marketing, finance, manufacturing, and human resources
Which of the following sections of a business plan for a new venture contains backup material that is not necessary in the text of the document?
appendix
Before preparing the financial section of a business plan for a new venture, an entrepreneur should ________. create a budget including lists of possible expenditures in the first year and revenue sources prepare the final pro forma statements in the financial plan stimulate the interest of a potential investor through creating an actual budget prepare an appendix that needs to be included in the plan
create a budget including lists of possible expenditures in the first year and revenue sources
Assessment of external uncontrollable variables that may impact a business plan of a new venture is known as a(n)
environmental analysis
If a new business venture has a strong growth plan and in five years expects to be positioned for an initial public offering (IPO), the executive summary of its business plan should ________. explain about an exit strategy avoid stimulating the interest of a potential investor include the address of the company be prepared before the total plan is written
explain about an exit strategy
An ________________________ which is part of a business plan for a new venture, describes market conditions and strategy related to how the product(s) and service(s) will be distributed, priced, and promoted.
marketing plan
If a new venture does not have a strong growth plan and does not expect to be positioned for an initial public offering (IPO) in five years, the executive summary of its business plan should
not include any discussion of an exit strategy.
To prepare the actual budget as part of a business plan for a new venture, an entrepreneur should ___________. a) refrain from including information that stimulate the interest of a potential investor b) recognize benchmarks in the industry that can be used to form the final pro forma statements in the financial plan c) avoid considering reasonable assumptions regarding expenditures based on industry history and trends d) prepare a descriptive appendix that needs to be included in the plan
recognize benchmarks in the industry that can be used to form the final pro forma statements in the financial plan
Identify a true statement about the preparation of a business plan for a new venture. a) When creating the plan, an entrepreneur should avoid consulting lawyers. b) It should be created by an entrepreneur. c) When creating the plan, an entrepreneur should avoid assessing his or her own skills. d) It should be created by marketing consultants.
It should be created by an entrepreneur.
Which of the following are examples of information that should be included in the appendix of a business plan for a new venture?
Letters from distributors Secondary research data
Which of the following sections of a business plan for a new venture goes beyond the manufacturing process (when the venture involves manufacturing) and describes the flow of goods and services from production to the customer?
operational plan
Which of the following is part of a business plan for a new venture that describes a venture's form of ownership—proprietorship, partnership, or corporation?
organizational plan
Before conducting a quick feasibility study of the business concept of a new venture, an entrepreneur should _________. a) hire lawyers, accountants, and engineers b) stimulate the interest of a potential investor c) provide a brief summary of the business plan's contents d) precisely state the goals and objectives of the business
precisely state the goals and objectives of the business
As part of measuring the progress of a business plan, an entrepreneur should compare the cost figures estimated in the business plan with day-to-day operation costs. This process is part of the control element called _________________.
production control
An _______________________________ which is part of a business plan for a new venture, details how the product(s) will be manufactured.
production plan
A business plan is primarily designed to ____________.
provide guidance to an entrepreneur through the first year of operations
An entrepreneur should be prepared for sudden changes or disasters that can affect the implementation of a business plan. In this context, which of the following are true about contingency plans?
A contingency plan should be implemented immediately if there is a crisis. A contingency plan should be a step-by-step plan.
An entrepreneur should be prepared for sudden changes or disasters that can affect the implementation of a business plan. In this context, identify the issues that need to be addressed by an entrepreneur to have a contingency plan?
The entrepreneur should make a list of any factors that can impact his or her venture. The entrepreneur should ensure that the contingency plan includes details of who should be contacted and how in even of a disaster.
Which of the following sections of a business plan for a new venture identifies potential hazards and alternative strategies to meet business plan goals and objectives?
assessment of risk
Which of the following make a business plan for a new venture difficult to control and implement? (Check all that apply.) a) Goals and objectives that are not too general b) Goals and objectives that are not feasible c) Goals and objectives that are too general d) Goals and objectives that are feasible
b)Goals and objectives that are not feasible c) Goals and objectives that are too general
A written document prepared by an entrepreneur that describes all the relevant external and internal elements involved in starting a new venture is known as a(n) ________________________.
business plan
In a business plan for a new venture, a section projects key financial data that determine economic feasibility and necessary financial investment commitment. This section is known as the
financial plan
Entrepreneurs can present their business plans for new ventures in colleges and universities or locally sponsored business meetings in a competitive and structured setting. In this designated period of time, an entrepreneur is expected to ______________.
sell his or her business concept to the audiences
The section of a business plan for a new venture named description of the venture should _________.
start with the mission statement or company mission
Which of the following should be primarily covered in the final part of a business plan's industry analysis section?
who the customers are The condition of the business environment in the specific market
Match the control elements that are assessed by an entrepreneur as part of measuring the progress of a business plan (in the left column) with their descriptions (in the right column).
Inventory control - Making sure that maximum service is provided to customers Production control - Controlling machine time, worker hours, process time, delay time, and downtime cost Quality control - Making sure that a product performs satisfactorily
How should an entrepreneur decide whether to hire a consultant or to make use of other resources when preparing a business plan for a new venture? a) By assessing his or her own skills objectively b) By hiring engineers who can assess other resources subjectively c) By assigning lawyers to create the core of the plan d) By making a subjective assessment of accountants' skills
By assessing his or her own skills objectively
Economy - Culture - Technology - Legislation -
Economy - Trend in the GNP, unemployment by geographic area, disposable income, and so on Culture - shifts in the population demographics and shifts in attitudes Technology - powerful technological developments determined from resources committed by major industries or the US government Legislation - Any future restriction that may affect the product or services, channel of distribution, price, or promotion strategy.
True or false: In an organizational plan as part of a business plan for a new venture, it is important to detail the shares of stock authorized and share options if the venture is a partnership.
FALSE
True or false: Investors of a new business venture often place less emphasis on an entrepreneur's character than lenders do.
FALSE
Liam plans to open a bakery in his town. He decides to use an upside-down pyramid approach to gathering market information. Arrange the steps that should be taken by Liam when using this approach in the correct order of occurrence. (Place the first step at the top). He should analyze the trends in the baking industry in his country. He should analyze the strengths and weaknesses of other bakeries in the town. He should assess the environmental and demographic trends in the town. He should evaluate the general environmental and demographic trends.
He should evaluate the general environmental and demographic trends. He should analyze the trends in the baking industry in his country. He should assess the environmental and demographic trends in the town. He should analyze the strengths and weaknesses of other bakeries in the town.
Identify the true statements about the introductory page of a business plan for a new venture. (Check all that apply.) It establishes the basic concept that an entrepreneur is trying to develop. It is prepared after the total plan is written. It gives a brief summary of the business plan's contents. It is of least interest to the investors of the business.
It establishes the basic concept that an entrepreneur is trying to develop. It gives a brief summary of the business plan's contents.
Why is a firm's business plan important to the entrepreneur, potential investors, and/or new personnel? (Check all that apply.)
It guides the entrepreneur in organizing his or her planning activities. It acts as a significant tool in helping to obtain financing.
Identify a guideline to be followed when preparing the executive summary of a business plan for a new venture. It should provide a brief summary of the business plan's contents. It should emphasize in a concise and convincing manner the key points in the business plan. It should be prepared before the total plan is written. It should be about eight to ten pages in length.
It should emphasize in a concise and convincing manner the key points in the business plan.
Lenders are considered the potential suppliers of business capital for a new venture. According to lenders, what are the requirements for a business plan?
It should show the collateral or tangible assets being secured for a loan. It should indicate the amount of personal equity invested by an entrepreneur. It should mirror an entrepreneur's credit history.
Identify the areas in which an entrepreneur requires information when conducting a feasibility study of the manufacturing operations of a new venture. Employee engagement Profit gains Raw materials Location Equipment Labor skills
Location Raw Materials Equipment Labor Skills
Arrange the steps that should be taken by an entrepreneur when creating the section named assessment of risk in a business plan for a new venture in the correct order of occurrence.
Mention the potential risks to the new venture Discuss what might happen if the identified risks become reality Discuss the plan that will be executed to prevent, minimize, or respond to the identified risks
True or false: Potential investors regard a marketing plan described in a business plan as critical to the success of a new venture.
TRUE
True or false: The significance of a feasibility study of the manufacturing operations by an entrepreneur of a new venture depends on the nature of the business.
TRUE
Which of the following sections of a business plan for a new venture provides complete overview of its product(s), service(s), and operations? The industry analysis The executive summary The description of the venture The assessment of risk
The description of the venture
How should an entrepreneur respond to changes in the company, industry, and market?
The entrepreneur should determine what revisions are needed in the current business plan.
Arrange the contents that should be included in the introductory page of a business plan for a new venture starting from the information that should appear at the beginning to the information that should appear at the end.
The name and address of the company The name of the entrepreneur(s), telephone number, fax number, e-mail address, and website address if available. A paragraph describing the company and the nature of the business. The amount of financing needed. The entrepreneur may offer a package (e.g., stock or debt). However, many venture capitalists prefer to structure this package in their own way. A statement of the confidentiality of the report. This is for security purposes and is important for the entrepreneur.
Which of the following are true about a firm's business plan?
The process of writing the plan provides a self-assessment by the entrepreneur. The thinking process necessary to complete the plan is a beneficial experience for the entrepreneur.
What are the needs of investors, particularly venture capitalists, from a new business venture? (Check all that apply.)
They demand high rates of return from the business. They want an entrepreneur to be compliant and willing to accept their involvement in the actual management of the business.
