EEE Chapter 6 - Exam 2 Review

The sources and uses of funds statement

is a document that lays out specifically how much money a firm needs (if it is raising money), where the money will come from, and what it will be used for.

The last slide in the​ 12-PowerPoint-slide investor presentation is the​ _____ slide. A. financing sought B. summary C. solution D. problem E. title

summary

For most new businesses, the business plan is a dual purpose document that is used both inside and outside the firm.

- Inside the firm, it helps the company develop a road map to follow in executing its strategies. - Outside the firm, it acquaints potential investors and other stakeholders with the business opportunity the firm is pursing and describes how the business will pursue that opportunity.

The ideal number of slides for a business plan presentation is​ ___.

12

The investor will typically ask the firm to make a​ ____ -minute presentation.

15-to-20

The typical length of a business plan is​ ______ pages.

25-35

A 2015 Wells​ Fargo/Gallup Small Business Index survey found that only​ ____ percent of business owners have a formal business plan. A. 92 B. 84 C. 11 D. 55 E. 33

33

Juiced​ Up's main​ product, the​ "Mega Vegan," sells for​ $9.95. If the labor and materials amount to​ $3, the contribution margin of the​ "Mega Vegan" is​ $_____.

6.95

Which of the following is NOT a red flag in a business​ plan? A. Defining the market size too broadly. B. A lack of sloppiness in any area. C. A poorly cited plan. D. Founders with none of their own money at risk. E. Overly aggressive financials.

A lack of sloppiness in any area.

Which of the following is NOT a primary audience for a​ firm's business​ plan? A. Customers B. Potential business partners C. Key employees D. Rank-and-file employees E. Investors

Customers

Which of the following is a red flag in a business​ plan? A. Lack of sloppiness in any area B. A​ well-cited plan C. Founders with none of their own money at risk D. The market size correctly defined E. Conservative financials

Founders with none of their own money at risk

The management team and company structure section of a business plan is critical.

Many investors and others who read business plans look first at the executive summary and then go directly to the management team section to assess the strength of the people starting the firm.

Which of the following is NOT one of the 12 PowerPoint slides to include in an investor​ presentation? A. Solution B. Mission Statement C. Current Status D. Competition E. Problem

Mission Statement

Which of these slides is NOT a part of the 12 PowerPoint slides to include in an investor​ presentation? A. Technology B. Mission statement C. Problem D. Competition E. Solution

Mission statement

A clearly written business plan helps​ ___________ operate in sync and move forward in a consistent and purposeful manner. A. a​ firm's peripheral employees B. a​ firm's rank-and-file employees C. a​ firm's board of advisors D. shareholders E. investors

a firm's rank-and-file employees

Citations are important in a business plan because​ _________. A. a plan should be built on hard evidence and sound​ research, which need to be cited B. plagiarism is an issue C. a business is built on guesswork D. you​ don't want to copy someone​ else's plan E. a business is built on what an entrepreneur​ "thinks" will happen

a plan should be built on hard evidence and sound research, which needs to be cited.

Of the primary reasons to write a business​ plan, the fact that it communicates the merits of a new venture to investors and bankers is​ ______ reason. A. a minor B. a peripheral C. an internal D. an external E. not a

an external

Of the primary reasons to write a business​ plan, the fact that writing it forces the founding team to systematically think through every aspect of its new venture is​ ______ reason. A. a peripheral B. not a C. an internal D. a minor E. an external

an internal

Guidelines are available;

are available for those writing a business plan to follow. Adhering to these guidelines increases the probability that an entrepreneur will develop an effective business plan.

The market analysis part of the plan

breaks the industry analysis into segments and zeros in on the specific segments (or target markets) to which the firm will seek to appeal.

Writing a​ ______ forces a​ firm's founders to systematically think through each aspect of their new venture. A. budget B. business plan C. shareholder plan D. mission statement E. marketing plan

business plan

The gross margin is also called the​ ______ margin. A. contribution B. variable C. final D. operating E. net

contribution

Investors and potential business partners are​ ______. A. internal stakeholders B. irrelevant to a business plan C. not the target of a business plan D. external stakeholders E. shareholders

eternal stakeholders

Art Vandalay is putting together the business plan that he had created for his​ start-up. His business plan should begin with the​ ______. A. executive summary B. market analysis C. company description D. financial projections E. industry analysis

executive summary

Many investors skip directly to the​ ______ portion of the plan. A. financial projections B. executive summary C. marketing plan D. industry analysis E. company description

financial projections

The existence of a business plan is particularly useful for the​ ________ of a young firm. A. board of directors B. functional department heads C. customers D. lawyers E. board of advisors

functional department heads

A business plan is a written document that describes what a new business intends to accomplish and​ ___________. A. how quickly it will go public B. identifies the investors C. what the investment is worth D. how the profits will be used by the owners E. how it intends to accomplish it

how it intends to accomplish it

The business plan's style and format are the issues around which the third guideline is framed. The plan's appearance should be carefully evaluated;

however, it should be consistent with a conventional structure (as noted earlier) and should not suggest to the potential investor that a great deal of money was spent to prepare the plan itself.

Neha Bhagat and Charles Martin are writing the business plan for their entrepreneurial​ start-up, Juiced​ Up, a vegan juice venture. They are working on the main body of their business plan. They should focus on the​ _________. A. marketing plan B. management biographies C. executive summary D. industry analysis E. financial statements

industry analysis

A summary business plan

is 10 to 15 pages and works best for companies in the early stages of development. These companies lack the information needed for a full business plan but are able to develop a summary business plan to see if potential investors are interested in their idea.

A business plan has multiple parts, the first of which is the executive summary. The executive summary

is a quick overview of the entire business plan and provides busy readers with everything they need to know about the distinctive nature of the new venture. In many instances, an investor will ask for a copy of a firm's executive summary and will request a copy of the full business plan only when the executive summary is sufficiently convincing.

A business plan

is a written narrative that describes what a new business intends to accomplish and how it plans to achieve its goals.

An assumption sheet

is an explanation of the most critical assumptions that a business's financial analysis is based on.

The structure of a business plan

is the first guideline to consider. The advice here is that a conventional structure should be used to develop a business plan. Doing this allows business investors to focus on the parts of a plan that are critical to their decision-making process.

An operational business plan

is usually prepared for an internal audience. It is 40 to 100 pages long and provides a blueprint for a company's operations.

The two primary audiences for a firm's business plan are;

its employees and potential investors and other external stakeholders. There are different kinds of business plans.

The current status section of the business plan should reveal how far along the company is in its development. A good way to frame this discussion is to think in terms of​ ______. A. milestones B. stakeholders C. the future D. shareholders E. the past

milestones

The oral presentation of a business plan​ ______. A. should talk only briefly about the business itself B. should use technical jargon C. should spend a lot of time on the technology that goes into​ product/service D. shouldn't consist of plain talk E. should avoid technical jargon

should avoid technical jargon

Second, a business plan

should be concise and clear in its development. All important aspects of the proposed venture should be included in the plan. Once written, the plan should be checked for grammar errors, spelling mistakes, and to verify that all vital information is in fact included.

Sami Peters and Elaine​ Brody, two entrepreneurship majors in​ college, are founders of a company that is in the very early stages of its development. They wrote up a​ 12-page plan mainly to seek funding to further analyze their business opportunity. What Sami and Elaine wrote is called a​ ____business plan. A. functional B. full C. preliminary D. operational E. summary

summary

After writing the business plan,

the entrepreneur must prepare to present it effectively to potential investors and possibly others as well.

A clearly written business plan is important for both the management team and​ ________. A. the​ firm's customers B. the community at large C. the​ rank-and-file employees D. the government E. family members

the rank-and-file employees

An executive summary​ shouldn't exceed​ ____ -spaced pages.

two single

A full business plan,

typically 25 to 35 pages, spells out a company's operations and plans in much more detail than a summary business plan and is the usual format for a business plan prepared for an investor.

The oral presentation of a business plan

typically consists of 20 minutes of formal remarks, accompanied by approximately 12 PowerPoint slide, and 40 minutes of questions and answers. The presentation should be smooth and well-rehearsed. The slides should be sharp and not cluttered with material.

The industry analysis,

which is another part of the business plan, describes the industry a business will enter.