CH 6 T/F
A business plan is used to provide a statement of goals and strategies for use by company outsiders, and aid in the development of relationships with insiders.
F
A business plan should always be written before deciding to go forward with a startup business idea.
F
A component of the business model that provides a framework for estimating the nature and types of costs and expenses a firm may incur is the maximum investment.
F
A loss leader is a revenue stream where products are sold at a loss to hopefully create demand in a more profitable revenue stream.
F
An extensive business plan that is not followed is more valuable than no business plan at all.
F
Even if the business plan reveals sensitive information (e.g., details of an advanced technology or the specifics of a marketing plan), prospective investors can be trusted with that knowledge.
F
Investors are more product-oriented than market-oriented.
F
Once the decision is made to prepare a business plan, it should always be a comprehensive plan.
F
Pro forma financial statements reflect the past financial performance of a firm.
F
The executive summary of a business plan presents a firm's history and its form of organization.
F
The financial plan section of a business plan should include balance sheets and income statements on an annual basis and cash flow statements on a monthly basis, all projected out for 2-3 years.
F
With the right assistance from professional sources (e.g., attorneys, accounting firms, incubator services), the entrepreneur can avoid direct involvement in developing the business plan.
F
Writing an effective plan is more important for internal purposes than for persons outside of the firm.
F
A business model explains how a business will generate profit and cash flow from its revenue streams considering its cost structure and investment size.
T
A business plan is a written document that sets out the basic idea underlying a business and its related startup considerations.
T
A business plan should represent the entrepreneur's vision and goals for the proposed company.
T
A written business plan helps to ensure systematic, complete coverage of the important factors to be considered in starting a new business.
T
Because prospective investors receive so many business plans, they cannot take time to review each in any detailed fashion.
T
Business plans should be prepared so that they are attractive in appearance and well organized.
T
Business plans should provide facts to support the statements and not just tell a story.
T
Describing a product or service should be in lay terms even if the product is technical in nature.
T
Incubator organizations can provide advice on structuring a new business.
T
One of the primary functions of a business plan is to serve as a selling document to convince key individuals that the venture has real potential.
T
Though all financial statements are important, the cash flow statement deserves special attention.
T
Time and money are factors that affect the extent of business plan preparation.
T