ent. hw ch 12

Provides strategy for an initial public offering

Harvest Strategy Segment

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

false

Provides résumés of all key personnel

management segment

Analyzes case if any sales projections are not attained

marketing segment

Discusses pricing strategy

marketing segment

The ten major segments of a business plan are below. Identify the order in which each segment will appear in the plan by placing a 1 next to the first part, a 2 next to the second part, and so on (through 10).

summary business description segment mrketing segment operation segment managment segment financial segment critical risk segment harvest strategy segment milestone schedule segment appendix

Provides industry background

Business description segment

Which one of the following is not a benefit of a business plan to the entrepreneur? a. Quantifies objectives, providing benchmarks for comparing forecasts with actual results. b. Provides a comprehensive product-launch timetable. c. Allows the entrepreneur to view the venture critically and objectively. d. Provides a communication tool for outside financial sources.

b. Provides a comprehensive product-launch timetable.

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

b. making no admission of possible flaws in the plan.

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

b. reflections on the direction of the venture.

Describes the potential of the new venture

business description segment

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. "If you were in my position, how would you proceed?"

Check My Work What is the significance of a harvest strategy segment in a business plan? a. It is important for the entrepreneur to know how to buy up troubled companies. b. It is important for the entrepreneur to indicate how the business will increase in value. c. It is important for the entrepreneur to plan for a liquidity event as an exit strategy. d. It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise.

c. It is important for the entrepreneur to plan for a liquidity event as an exit strategy.

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

c. Orient the plan to the present.

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

c. to identify the target market.

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

d. Determine the strengths and weaknesses of the entrepreneur.

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

d. a tool for communicating with financial sources.

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

d. the cash flow statement

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

d. the pro forma balacne sheet

Most crucial part of the plan

executive summary

Should be written after the business plan is completed

executive summary

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

false

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

false

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

false

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

false

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

false

Provides a budget

financial segment

Provides balance sheet and income statement

financial segment

Identifies target markets

marketing segment

Discusses the advantages of location

operations segment

Explains proximity to suppliers

operations segment

Explains costs involved in testing

r and d segment

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

true

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

true

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

true

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

true

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

d. marketing segment

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

d. organizational structure

Describes legal structure of the venture

mgmt segment

Describes any prototypes developed

milestone schedule segment

Sets forth timetables for completion of major phases of the venture

milestone schedule segment

Shows the relationship between events and deadlines for accomplishment

milestone schedule segment

Discusses price-cutting by the competition

critical risk segment

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. The plan identifies critical risks.

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

a. a written document that details the proposed venture.

Contains support material such as blueprints and diagrams

appendix