Chapter 6: Writing a Business Plan (Week 1 L)

1) Which of the following is the main purpose for writing a business plan?

• A) The plan helps the company develop a "road map" to follow.

• B) The plan introduces potential investors and other stakeholders to the business opportunity.

• C) Both A and B are equally important.

• D) Neither A nor B captures the true purpose of a business plan.

• E) Reason A is the most important for experienced entrepreneurs and reason B is the most important for inexperienced entrepreneurs.

2) According to the textbook, a business plan is best described as a(n) ________.

• A) narrative description of a new business

• B) contract

• C) budget

• D) agreement

• E) marketing initiative

3) A business plan is important as it forces the founding team to systematically think through every aspect of their new venture, and it ________.

• A) is a budget

• B) is a public relations document that can be used to promote the firm

• C) is a contract that is signed by the founders of the firm

• D) is a financial analysis

• E) communicates the merits of a new venture to outsiders, such as investors and bankers

4) The document that does the best job of introducing potential investors and other stakeholders with the business opportunity the firm is pursuing and how it plans to pursue it is the ________.

• A) business plan

• B) feasibility analysis

• C) opportunity analysis

• D) industry analysis

• E) marketing plan

5) The two primary audiences for a business plan are ________ and ________.

• A) a firm's employees; officials with the SEC

• B) a firm's customers; its competitors

• C) investors; other external stakeholders and public relations firms

• D) officials with the SEC; public relations firms

• E) a firm's employees and investors; other external stakeholders

6) The two primary audiences for a business plan are investors and other external stakeholders and ________.

• A) officials with the SEC

• B) a firm's employees

• C) a firm's competitors

• D) a firm's customers

• E) public relations firms

7) The three types of business plans are ________.

• A) functional business plan, full business plan, feasibility plan

• B) summary business plan, contingency plan, full business plan

• C) functional business plan, contingency plan, full business plan

• D) opportunity plan, feasibility plan, full business plan

• E) summary business plan, full business plan, operational business plan

8) Sarah Parks is in the very early stages of putting together a business startup, and is thinking about writing a business plan to request funds to conduct a feasibility analysis and write a more complete business plan. What type of business plan should Sarah write at this point?

• A) Full business plan

• B) Tactical business plan

• C) Summary business plan

• D) Operational business plan

• E) Strategic business plan