ENT - Ch 4

Which of the following statement is INCORRECT about business plans?

• Writing a business plan forces a firm's founders to systematically think through each aspect of their new venture.

• For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.

• A business plan is typically 25 to 35 pages long.

• A large percentage of entrepreneurs do not write business plans for their new ventures.

• The business plan should be written while the feasibility analysis is being completed.

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:

• business plan

• feasibility analysis

• opportunity analysis

• industry analysis

• marketing plan

There are two primary audiences for a business plan:

• a firm's employees and officials with the SEC

• a firm's customers and its competitors

• investors and other external stakeholders and public relations firms

• officials with the SEC and public relations firms

• a firm's employees and investors and other external stakeholders

There are two primary audiences for a business plan: investors and other external stakeholders and:

• officials with the SEC

• a firm's employees

• a firm's competitors

• a firm's customers

• public relations firms

Which of the following is NOT an individual, group or institution that normally reads a company's business plan?

• board of directors

• potential alliance partners and major customers

• state and local government officials

• key recruits for jobs with the new firm

• rank-and-file employees

Which of the following is NOT a recommended guideline for writing a business plan?

• To make the best impression, a business plan should follow an unconventional structure and stand out in some dramatic way.

• A business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture.

• For most plans, 25 to 35 pages is sufficient.

• A business plan should look sharp, but not a lot of money should be spent on the physical appearance of the plan.

• Shy away from using a lot of boldfaced type, italics, clip art, and different font sizes and colors when preparing a business plan.

The ________ is a short overview of the entire business plan.

• summary statement

• executive summary

• managerial review

• founder's introduction

• abstract

Which of the following statements is INCORRECT regarding the executive summary of a business plan?

• It is a short overview of the entire business plan.

• In many instances an investor will first ask for a copy of a firm's executive summary and will request a copy of the full business plan only if the executive summary is sufficiently convincing.

• It is arguably the most important section of the business plan.

• It should not exceed two single-spaced pages.

• The executive summary is the first thing that should be written in preparing a business plan.

Paul Hempken just spoke to an investor, who is interested in his business idea. Paul offered to send the investor a copy of his full business plan, but the investor asked for a short overview of the business plan instead. What portion of his business plan should Paul send the investor?

• marketing plan

• executive summary

• elevator pitch

• company description

• operations plan

Operating leverage is highest in companies that have:

• a service rather than a manufacturing emphasis

• virtually no fixed costs

• equal variable costs and fixed costs

• a high proportion of variable costs relative to their fixed costs

• a high proportion of fixed costs relative to their variable costs