Chapter 6: The Business Plan: Visualizing the Dream

Question 1

A document that outlines the basic concept underlying a business, what problem will be solved, and how you will execute your plan to solve the problem

Answer 1

Business plan

Question 2

A tool to be used by company insiders for the direction and to aid in the development of relationships with outsiders

Answer 2

Business plan

Question 3

A business plan is a tool to be used by these for the direction

Answer 3

Company insiders

Question 4

A business plan is a tool to aid in the development of relationships with whom

Answer 4

outsiders

Question 5

The entrepreneur must convince outsiders to do what?

Answer 5

Become linked with the firm

Question 6

Investors need evidence that the entrepreneur will what?

Answer 6

Be around in the future

Question 7

Only if you do this does the business plan have a chance of making a difference

Answer 7

Effectively execute it

Question 8

An entrepreneur must find a balance between these

Answer 8

Planning and becoming operational

Question 9

More often than not, entrepreneurs resist writing a business plan because

Answer 9

they lack the discipline to do so

Question 10

If you want to capture the future potential of an opportunity and make a difference in lives, planning is the

Answer 10

rule, not the exception

Question 11

What are the two basic choices when writing a business plan?

Answer 11

Short or comprehensive plan

Question 12

What are the main issues found in the short plan?

Answer 12

Problem needing to be solved
Strategy
Measures used to gauge success
Milestones to be met
Tasks and responsibilities of the team
Business model

Question 13

When is a comprehensive plan beneficial?

Answer 13

Describing a startup
Facing significant change
Explaining a complex business situation

Question 14

What part of writing a business plan is usually the hardest?

Answer 14

Getting started

Question 15

Three elements must be evident in the feasibility analysis before starting a business plan

Answer 15

Strong market potential
An attractive industry
Right individual or team to execute the plan

Question 16

These two issues are of primary concern with the business plan

Answer 16

Content and format of the plan

Effectiveness of the written presentation

Question 17

The opportunity should reflect this

Answer 17

The potential and the attractiveness of the market and the industry

Question 18

Critical resources include what?

Answer 18

Money, human assets, and hard assets

Question 19

The entrepreneurial team must possess what?

Answer 19

Integrity, and breadth and depth of experience

Question 20

The goal of the financing structure is to find

Answer 20

A win-win deal

Question 21

The context of an opportunity includes what?

Answer 21

External factors

Question 22

The business plan should give consideration to these

Answer 22

Opportunity
Critical resources
Entrepreneurial team
Financing Structure
Context

Question 23

The business plan needs to demonstrate that the entrepreneur has done what?

Answer 23

Pulled together the right opportunity, resources, people, and financing structure, all within the right context

Question 24

What should the cover page include?

Answer 24

Company name and information
Tagline and logo
Name of contact person with information
Date of preparation
Confidentiality disclaimer
Number of copy

Question 25

This provides a sequential listing of the sections of the plan

Answer 25

Table of contents

Question 26

A one to three page overview of the significant points, intended to motivate the reader to continue reading

Answer 26

Executive Summary

Question 27

Key characteristics of the industry, including different segments, and the niche where you can compete

Answer 27

Industry, Target Customer, and competitor Analysis

Question 28

Company objectives, the nature of the business, its primary product or service, its current status and history, and the legal form of the organization

Answer 28

Company Description

Question 29

Justification for why people will buy the product or service, based on its unique features

Answer 29

Product/service plan

Question 30

Marketing strategy, including the methods of identifying and attracting customers, selling approach, type of sales force, distribution channels, types of sales promotions and advertising, and credit and pricing policies

Answer 30

Marketing Plan

Question 31

Operating and manufacturing methods, operating facilities, quality-control methods, procedures to control inventory and operations, sources of supply, and purchasing procedures

Answer 31

Operations and Development Plan

Question 32

Description of the management team, outside investors and/or directors, and plans for recruiting and training employees

Answer 32

Management Team

Question 33

Any known inherent risks in the venture

Answer 33

Critical Risks

Question 34

How much capital the entrepreneur needs and how the money will be used

Answer 34

Offering

Question 35

Ways an investor and the entrepreneur may be able to harvest their business investment

Answer 35

Exit Strategy

Question 36

Contemplated sources of financing | Any historical financial statements

Answer 36

Financial Plan

Question 37

Various supplementary materials and attachments to expand the reader's understanding of the plan

Answer 37

Appendix of supporting documents

Question 38

This briefly covers all aspects of the business plan

Answer 38

Synopsis

Question 39

This tells a story, conveying greater excitement than the synopsis

Answer 39

Narrative

Question 40

At the most basic level, prospective investors have a single goal:

Answer 40

To maximize potential return while minimizing the risk they are taking

Question 41

How are investors oriented?

Answer 41

More market oriented than product oriented

Question 42

What is the essence of the entrepreneurial process?

Answer 42

To identify new products or services that meet an identifiable customer need

Question 43

How should your product/service be described in the business plan?

Answer 43

Lay terms

Question 44

Four key elements that make up the business model

Answer 44

Revenue model Cost Structures Maximum investment Business model risk

Question 45

Revenue stream in which a firm's revenues come from a single product or service

Answer 45

Single Stream

Question 46

Revenue stream in which a business realizes revenues from a combination of multiple products and services

Answer 46

Multiple Stream

Question 47

A revenue stream where a company's revenue comes from selling one or more products and/or services as a way to generate revenues from other products and/or services

Answer 47

Interdependent Streams

Question 48

Revenue stream in which one or several revenue streams are sold at a loss in order to create sales in a profitable revenue stream

Answer 48

Loss Leader

Question 49

Costs that do not vary at all with volume, such as rent expenses

Answer 49

Fixed Costs

Question 50

Expenses that vary directly and proportionately with changes in volume

Answer 50

Variable Costs

Question 51

Expenses that include both variable costs and fixed costs, which vary in direction of changes in the volume of sales

Answer 51

Semi-Variable Costs