Ch. 12

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). a. True b. False

a

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. a. True b. False

a

The business plan is the entrepreneur's road map for a successful enterprise. a. True b. False

a

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

c

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.

c

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

c

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

d

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

d

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

d

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

b

A business plan must illustrate the current status of the venture but not the projected results. a. True b. False

b

After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity. a. True b. False

b

The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim. a. True b. False

b

The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources. a. True b. False

b

The pro forma balance sheet is used in the critical risk segment of the business plan. a. True b. False

b

There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source. a. True b. False

b

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

c

Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility. a. True b. False

a

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

a

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

c

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

a

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.

a

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

a

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 communication tool for outside financial sources. c. Provides a comprehensive product-launch timetable. d. Quantifies objectives, providing benchmarks for comparing forecasts with actual results.

c

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

d