Question 1

The following are all key elements in the company and management team section of the business plan EXCEPT ________.
A) description of which companies will provide the materials to manufacture the product
B) explanation of what economic trends are emerging and how they will affect future growth
C) description, if applicable, of the board members for the business
D) explanation of why the business has the unique opportunity to impact the industry
E) the mission and vision statements

Accepted Answer

While describing the companies that provide materials is important to the overall production process, it may not be relevant to the management team section of the business plan.

Question 2

Rick's business plan cover sheet includes basic company information,the month and year of the business plan,and the names of the people who prepared his plan.What key information did Rick not include on the cover sheet?
A) brief description of the business
B) unique record number
C) brief description of the owner(s)
D) the mission statement
E) anticipated challenges and planned responses

Accepted Answer

B

Question 3

The following are all components of a business plan EXCEPT ________.
A) the chapter summary
B) product descriptions
C) sales and promotion details
D) the table of contents
E) the executive summary

Accepted Answer

All of the other options listed (B, C, D, and E) are common components of a business plan, while a chapter summary is not typically included.

Question 4

Which section contains an analysis of whether there will be enough customers to purchase the product in the future?
A) market research
B) market investment
C) competitive assessment
D) promotional plan
E) financials

Accepted Answer

The section that analyzes whether there will be enough customers to purchase the product in the future is usually included in the market research section. This section involves gathering data about potential customers, their needs, preferences, behaviors, and demographics, as well as analyzing the size, growth, trends, and competition of the target market. Based on this analysis, the entrepreneur can assess the demand for the product and the viability of the business idea. The market research section also includes information about pricing, distribution channels, promotion, and sales forecasts.

Question 5

Robyn's business has an expiring patent that could negatively affect her ability to secure investors.In which section of the business plan should Robyn disclose the expiring patent information?
A) Robyn should include it in the executive summary.
B) Robyn should include it in the company and management team section.
C) Robyn should include it in the sales and promotion section.
D) Robyn should include it in the market analysis section.
E) Robyn should not mention the expiring patent because it hasn't expired yet.

Accepted Answer

The expiring patent information could affect investors' perceptions of the management team and the company. Therefore, it is best to include it in the company and management team section to address any potential concerns and demonstrate transparency.

Question 6

When writing a market analysis of your business plan,you should include all of the following EXCEPT ________.
A) explanation of the advantage of using business's product or service
B) identification of age and location of potential customers
C) description of methods that will be used to promote the business
D) description of the potential growth for the good or service
E) a clear understanding of your competition

Accepted Answer

The market analysis should include information about the target market, potential growth, competition, and the advantages of the business's product or service. However, the description of methods used to promote the business is typically covered in the marketing plan section of the business plan.

Question 7

Which of the following statements is TRUE about the components of a business plan?
A) Potential business owners can use a common template to write a business plan because all plans share the same components.
B) Business plans all have the same key components; however, some may be included in a different order.
C) All business plans discuss the specific product before analyzing how the product fits the market.
D) All business plans are different depending on the business; however, most have a few components in common.
E) All business plans are unique and share no common characteristics or components.

Accepted Answer

While business plans will vary depending on the specific business and industry, there are certain components that are commonly included, such as an executive summary, market analysis, financial projections, and a description of the product or service.

Question 8

Which of the following statements is MOST correct about the writing of business plans?
A) Smart entrepreneurs always write business plans before they start businesses.
B) Smart entrepreneurs tend to write business plans one month after staring businesses.
C) Smart entrepreneurs do not write business plans.
D) Smart entrepreneurs write business plans at different times.
E) Smart entrepreneurs don't need business plans.

Accepted Answer

Smart entrepreneurs know that the timing of writing a business plan can differ based on the nature of the business, the stage of the business, and the entrepreneur's goals. While some entrepreneurs may write a business plan before starting their business, others may write it after they have already started or even after they have been in business for a period of time. Therefore, option D is the most correct statement as it acknowledges the variety of approaches that smart entrepreneurs can take when writing a business plan.

Question 9

Companies should put their financials through a ________ by showing how they expect the business to perform in different situations.
A) budget test
B) cash flow test
C) dry run
D) stress test
E) reality check

Accepted Answer

Stress testing involves putting a company's financials through different scenarios to see how it would perform under adverse conditions. This test helps to identify vulnerabilities in the company's financial structure, allowing management to take corrective measures before actual stress events occur. Thus, stress testing is necessary for a company to ensure its financial resilience and long-term success.

Question 10

Which of the following entrepreneurs would MOST likely start their business as quickly as possible,spending little time on a business plan?
A) Madison is starting a business to provide makeshift shelters to natural disaster victims.
B) Stacia is starting a housecleaning business for working couples with children.
C) Danisha is starting a personal coaching business for senior high school girls wanting to be computer software developers.
D) Luke is starting a café business that will operate from 11pm to 3am Monday through Thursday.
E) Domenica is starting an interior design firm specializing in restaurant interiors.

Accepted Answer

Madison's business addresses an urgent need for natural disaster victims, requiring rapid deployment and less initial planning.

Question 11

Eva is planning to buy raw materials from an international supplier for her educational toy company.Where would she include this information in her business plan?
A) company profile
B) product
C) appendix
D) sales and promotion
E) This information does not have to be included in the plan.

Accepted Answer

The "product" section of a business plan typically includes details about the materials and suppliers needed for production.

Question 12

Lucia is working on her executive summary.Which financial information should she include?
A) expected growth rate
B) predicted future profits
C) projected yearly sales
D) amount of and uses for capital
E) all of the above

Accepted Answer

All of the financial information listed (expected growth rate, predicted future profits, projected yearly sales, and amount of and uses for capital) are important components to include in an executive summary. Together, they provide insight into the financial standing and future prospects of the business.

Question 13

In which section of a business plan would you find a statement that another company charges more money for a similar product?
A) executive summary
B) market analysis
C) product
D) sales and promotion
E) financials

Accepted Answer

The market analysis section of a business plan typically includes research on competitors, including their pricing strategies. Therefore, a statement about another company charging more money for a similar product would likely be found in this section.

Question 14

Zach plans to promote his fly fishing business through an aggressive Internet marketing campaign by utilizing search engine optimization strategies.How should he incorporate the information in his business plan?
A) Zach should include the details in the market analysis section.
B) Zach should describe the campaign in the executive summary.
C) Zach should add this to the sales and promotion section.
D) Zach should mention this strategy in the appendices.
E) Zach should not include this information in the business plan.

Accepted Answer

The best choice is to add this information to the sales and promotion section. This section is specifically designed to detail the plans for promoting and selling the business's product or service, which is in line with the strategy Zach plans to use for his fly fishing business. Including this information in the sales and promotion section will give readers a clear understanding of how Zach plans to reach his target audience and grow his business.

Question 15

When investors read an executive summary,they usually look for all of the following EXCEPT ________.
A) the business's purpose
B) details about the pricing of company products
C) information about the business's operating methods
D) anticipated profitability of the business
E) the business's value

Accepted Answer

Investors usually look for information related to the purpose of the business, its operating methods, its anticipated profitability, and its overall value. Pricing details are not typically included in an executive summary, as this information is often more detailed and included in other sections of a business plan or pitch.

Question 16

Which section of a business plan lists what a company thinks customers would be willing to pay for the merchandise?
A) financials
B) sales and promotion
C) product
D) market analysis
E) executive summary

Accepted Answer

The product section of a business plan lists what a company thinks customers would be willing to pay for the merchandise.

Question 17

What should a potential owner do BEFORE writing a business plan?
A) determine whether personal goals and business goals are aligned
B) ensure that the key components of the plan will be addressed
C) determine the best location and pricing structure for the business
D) make sure there is enough information to prepare financial statements
E) decide which appendices to include in the final pages

Accepted Answer

Aligning personal goals with business goals is crucial to ensure that the business will be fulfilling and sustainable for the owner.

Question 18

A potential investor wants to know if the proposed auto body shop will be offering warranties on its service.In which section of the business plan should the investor look?
A) product
B) appendices
C) sales and promotion
D) company profile and strategy
E) market analysis

Accepted Answer

The warranties on the service offered by the auto body shop fall under the product section, which includes details about the features, benefits, and guarantees of the products or services offered by the business.

Question 19

When investors read a business plan,which of the following key points would MOST likely entice them to consider investing in the company?
A) business's purpose
B) strategies to reduce expenses
C) anticipated profitability
D) an unusual product
E) resumes of key managers

Accepted Answer

Anticipated profitability is the most important key point for investors as they are primarily interested in making a profit on their investment. A business plan that shows a potential for high profitability is likely to attract investors. Other key points such as the business's purpose, strategies to reduce expenses, unusual product, and resumes of key managers are important, but they are not as crucial as profitability.

Question 20

Which of the following points does the existence of a business plan demonstrate?
A) The business process has been carefully planned.
B) The business will be financially successful.
C) The business fulfills an important market need.
D) The business has full-time employees.
E) The business has a unique idea.

Accepted Answer

The existence of a business plan demonstrates that the business process has been carefully planned out, including strategies for marketing, operations, and financials. It does not necessarily guarantee financial success, fulfilling a market need, having full-time employees, or having a unique idea.

Quiz 18: Constructing an Effective Business Plan

The following are all key elements in the company and management team section of the business plan EXCEPT ________.

Rick's business plan cover sheet includes basic company information,the month and year of the business plan,and the names of the people who prepared his plan.What key information did Rick not include on the cover sheet?

The following are all components of a business plan EXCEPT ________.

Which section contains an analysis of whether there will be enough customers to purchase the product in the future?

Robyn's business has an expiring patent that could negatively affect her ability to secure investors.In which section of the business plan should Robyn disclose the expiring patent information?

When writing a market analysis of your business plan,you should include all of the following EXCEPT ________.

Which of the following statements is TRUE about the components of a business plan?

Which of the following statements is MOST correct about the writing of business plans?

Companies should put their financials through a ________ by showing how they expect the business to perform in different situations.

Which of the following entrepreneurs would MOST likely start their business as quickly as possible,spending little time on a business plan?

Eva is planning to buy raw materials from an international supplier for her educational toy company.Where would she include this information in her business plan?

Lucia is working on her executive summary.Which financial information should she include?

In which section of a business plan would you find a statement that another company charges more money for a similar product?

Zach plans to promote his fly fishing business through an aggressive Internet marketing campaign by utilizing search engine optimization strategies.How should he incorporate the information in his business plan?

When investors read an executive summary,they usually look for all of the following EXCEPT ________.

Which section of a business plan lists what a company thinks customers would be willing to pay for the merchandise?

What should a potential owner do BEFORE writing a business plan?

A potential investor wants to know if the proposed auto body shop will be offering warranties on its service.In which section of the business plan should the investor look?

When investors read a business plan,which of the following key points would MOST likely entice them to consider investing in the company?

Which of the following points does the existence of a business plan demonstrate?