Entrepreneurship unit 3

A business plan's title page includes all of the following except (a) a summary of the plan, (b) the name of your company, (c) the date, (d) the owner's name.

A

Assistance from an SBDC is available to (a) anyone who cannot afford the services of a private consultant, (b) existing business owners only,(c) first-time business owners only, (d) minority business owners only.

A

Which of the following is least likely to be a helpful resource for your business plan? (a) National Geographic, (b) books on entrepreneurship, (c) SBA publications, (d) BusinessWeek magazine.

A

Which of the following describes why you are asking for a loan and what you plan to do with the money?

A. Cover letter B. Statement of Purpose C. Executive Summary D. Title Page

Which of the following is an independent agency of the federal government that helps Americans start, build, and grow businesses? (a) SCORE, (b) the SBA, (c) local Chambers of Commerce, (d) all of these.

B

Before lenders will loan money to a new business, (a) they will want to interview all potential employees, (b) the new business must have at least two years' worth of work already lined up, (c) they need to be convinced that the people running the business have the necessary skills to succeed, (d) all of these.

C

The main body of a business plan includes which of the following elements? A. Executive Summary B. Statement of Purpose C. Financial management D. Supporting documents

C

Writing a business plan A. Is a quick and easy process B. Is quick but different C. Requires patience, research, thought, and time D. None of the above

C

A business plan explains how your product or service (a) will be produced, (b) will be sold, (c) is either new or better than existing products or services, (d) all of these.

D

cover letter

Introduces and explains an accompanying document or set of documents Includes title page & Table of contents

True or False: A good business plan should describe what products or services will be introduced over the next five years

True

trade associations

organizations made up of professionals in a specific industry

Entrepreneurs should avoid seeking advice from bankers or accountants because doing so will make them appear inexperienced and unqualified to run a business.

False

Online business resources (a) should not be used in a business plan, (b) are not as reliable as print resources, (c) can be found via search engines, (d) are not available from the SBA.

C

The introduction section of a business plan contains all of the following except (a) a description of the business and its goals, (b) the legal structure of the business, (c) an identification of risks, (d) the advantages your business has over your competitors.

C

What does an introduction included in a business plan?

Detailed description of the nature of the business and its goals The ownership of the business and the legal structure The skills and experience you bring to the business The advantages you and your business have over competitors

Small Business Development Centers (SBDCs)

provide technical assistance to small businesses and prospective entrepreneurs

A business plan is not intended for

your competition

True or False: To convince investors that the idea is solid, you will need a completely new product or service or one that is less expensive than products or services that already exist

True

Writing a business plan can force entrepreneurs to think about their goals.

True

pro forma financial statements

financial statements based on projected revenues and expenses

The Small Business Administration (SBA)

independent agency of the federal government that was created to help Americans start, build, and grow businesses

All business plans have different purposes, so they do not all have the same basic elements.

True

Statement of Purpose

a brief explanation of why you are asking for a loan and what you plan to do with the money

business plan

a formal written document that describes the nature of a business and how it will operate

Executive Summary

a short restatement of the report

Mistakes to avoid when preparing your business plan include all except A. Providing unrealistic financial projections B. Wasting time on research C. Ignoring the competition D. Failing to define the target market

B

Your business plan must (a) clearly define your market, (b) never overlook the competition, (c) be consistent, (d) all of these.

D

Purposes of a business plan

Explains the idea behind your business Spells out how your product or service will be produced and sold Sets specific objectives and describes how your business expects to achieve them Describes the backgrounds and experience of the leadership team of the business

The only person who should read a business plan is the owner and potential investors.

False

Identification of risks section

This section should list the problems that could cause your business to lose sales and your plans to deal with the problems. Prospective lenders know that every business faces risks and will be reassured to see that you have considered these risks and have devised plans to deal with them.

Copies of resumes help show that owners are qualified to manage a business.

True

Describing how you came up with the idea for your business can help others understand how your business will operate.

True

Which of the following is not a purpose of a business plan? (a) To describe the backgrounds and experience of your suppliers, (b) To explain the idea behind your business, (c) To explain how you expect to achieve specific objectives, (d) To describe the backgrounds and experience of the people who will be running the business.

A

. A business plan is important for all of the following reasons except (a) it helps you communicate your ideas to others, (b) it helps you decide what to sell, (c) it can help you secure financing for your business, (d) it makes you think about all aspects of your business.

B

Before they will consider financing a business, lenders require (a) an organizational chart that lists all of your employees, (b) a business plan, (c) the history and background of your product, (d) all of these.

B

Your business plan should describe the location of your business because (a) different forms of ownership have different types of locations, (b) every industry has an ideal type of location, (c) location is often a critical factor in a business's success, (d) all of these.

C

The marketing section of your plan explains (a) how you plan to enter the market, (b) who your prospective customers are, (c) your advantages over the competition, (d) all of these.

D

True or False: Not all new businesses need a business plan

False

SCORE

Is a nonprofit asssociation made up of working and retired business professionals who volunteer their time to provide small businesses and entrepreneurs with free real-world advice and know-how

Importance of a business plan

Makes you think about all aspects of your business May help you secure financing Helps you communicate your ideas to others Can serve as a tool for managing your business

Funding request and return on investment section

This section should include how much money you are investing in the business, how much you need to borrow, and how you plan to use the money. Prospective lenders want to know whether the total amount of money involved will be sufficient and whether it will be used wisely. Investors want to know how much money they can expect to earn on their investment.

The marketing section of your business plan should describe the location of your business.

True

In the financial management section, a new business must include (a) projected financial statements, (b) copies of all rental agreements, (c) current financial statements, (d) all of these.

A

Financial projections in a business plan should be (a) left out of your business plan if you could not locate reliable financial information, (b) based on solid evidence, (c) very optimistic, in order to impress investors, (d) based on your best guess.

B

Long-term sales projections are (a) for two to four years after start up, (b) for five years in the future, (c) for ten years in the future, (d) not included in a business plan.

B

The purpose of including supporting documents in a business plan is to A. Make the plan lengthy B. Provide additional information C. Give the reader's more information than they might need D. Explain your business idea

B

Which of the following is not an element of the financial management section of your plan? (a) Identification of risks, (b) Distribution of profits and losses, (c) Financial statements, (d) Funding request and return on investment.

B

Information about necessary equipment for your business is included in the (a) financial management section, (b) concluding statement, (c) marketing section, (d) operations section.

D

Purposes of a business plan include which of the following A. it explains your idea for a product or service B. It sets specific objectives and describes how they will be achieved C. It describes the backgrounds and experiences of the people who will run the business D. All of the above

D

The appendix of a business plan might include (a) tax returns of the business owner, (b) letters of recommendation, (c) a copy of required licenses, (d) all of these.

D

True or False: Writing a business plan is one of the easiest things you will do as an entrepreneur

False

What information should be included about your products or services?

The section should describe the products or services the business plans to produce and sell, explain how they differ from those already on the market, highlight any unique features, and explain the benefits customers will receive by purchasing from the business.

The financial section of your business plan should state how much money you need to borrow and how much you are investing in the business.

True

To convince readers that you have a practical business plan, you must include information and data from objective sources.

True

True or False: A business plan provides detailed financial information that shows how your business will succeed in earning a profit

True

True or False: Lenders require a business plan before they will consider financing a business

True

True or False: The backgrounds and experience of the leadership team of your company help lenders make financing decisions

True

Never reveal your competitors' strengths in your business plan—focus only on what they are doing wrong.

False

Only corporations need to include a form of ownership section in a business plan.

False

The Internet is not a trusted source of information on how to develop a business plan.

False

Writing an effective business plan should only take 24 hours.

False

Trade associations provide all of the following to entrepreneurs except (a) useful information, (b) education, (c) networking opportunities, (d) small loans.

D

Which of the following organizations can provide assistance when writing your business plan? A. Bank B. Chamber of Commerce C. Small Business Development Center D. All of the above

D

A brief explanation of why you are asking for a loan and what you plan to do with themoney is called an executive summary.

False

A financial statement based on projected revenues is called an informal financial statement.

False

A handwritten business plan is acceptable if it is neat, well organized, and inviting to read.

False

Entrepreneurs can hire experts from trade associations to help them prepare business plans.

False

Exit Strategy

The way an entrepreneur intends to extract, or harvest, his or her money from a business after it is operating successfully.

A local Chamber of Commerce can provide information on trends affecting local businesses, local resources, and zoning and licensing information.

True

An undefined target market can ruin a business plan.

True

What information should be included about the industry you will operate in?

The industry section should include the growth potential and economic trends of the industry; technology that may affect the industry; forecasts for industry growth; and external factors that can affect the business, such as high competition or lack of suppliers.

True or False: Once your business is up and running, you will rarely use your business plan

False

A letter that introduces and explains an accompanying document is called a(n) (a) cover letter, (b) introductory letter, (c) statement of purpose, (d) letter of intent.

A

After it is completed, you can use your business plan to (a) help manage your business, (b) identify your product or service, (c) identify your target customer, (d) make short-term sales projections.

A

Which of the following is not a true statement regarding risks? A. Identifying the possible risks your business faces will alarm lenders and investors and cause them to withhold funds. B. Potential investors and lenders want to know what risks your business faces and how you plan to deal with them C. Lenders will appreciate the fact that you know what risks you face and have a plan for dealing with them D. Lenders know that every business faces risks

A

A business plan is important for a new business for all of the following reasons except A. It makes you think about all aspects of your business B. It can help you communicate your ideas to others C. It guarantees you will get financing for your business D. It can serve as a tool for managing your business

C

An executive summary (a) should be written before the business plan is completed, (b) includes supporting documents that back up statements made in the body of the report, (c) state the amount you want to borrow, (d) must never be longer than two paragraphs.

C

The retired executives at SCORE (a) provide advice for a small fee, (b) hold inexpensive workshops, (c) represent all areas of business, (d) have offices at the SBA.

C

A business plan should (a) identify target customers, (b) show how your business will earn a profit, (c) detail who will run your business, (d) all of these.

D

What goes into the Financial Management part of your business?

Identification of Risks Financial Statements Funding Request and Return on Investment

The financial management section of your business plan consists of three elements.

Identification of risks Financial Statements Funding request and return on investment

How might the location of your business affect its success?

If the business is located too close to competing businesses, sales may suffer. If the business is located too far from the target customer or if parking is not available, people may not go there because they consider it inconvenient.

basic elements of a Business Plan

Introduction Marketing Financial Management Operations Concluding Statement

What goes into marketing in a business

Product,Service, Market, Industry, Location

What is a concluding statement?

Summarize the goals and objectives you have for you business Emphasize your commitment to the success of the business

Financial statements section

This section should include current and/or projected financial statements. Prospective lenders want to know what you expect to earn in revenues and to pay in expenses. They can then analyze your figures to be sure they are reasonable.

What information should be included about your market?

This section will explain who your prospective customers are, how large the market is for your product or service, how you plan to enter that market, and how you plan to deal with competition.

Counselors from Small Business Development Centers and volunteers from SCORE can provide advice and workshops to help you develop your business plan.

True

Operations

the day-to-day management of a business and its resources Equipment needed for production of the product or service How the product or service will be produced and delivered