WEEK 4 (chapter 6)

Question 1

What is a business plan?

Answer 1

A written narrative (typically 25–35 pages) explaining

1. what the business aims to accomplish
2. how it plans to achieve that.

Question 2

When should a business plan be written?

Answer 2

Not too early, only after the business idea has been validated enough to support your claims

Question 3

why write a business plan?

Answer 3

internal reason: helps the founder think systematically through every aspect of the venture

external reason: Communicates the value of the business idea to investors, banks, partners, etc, serves as a SELLING DOCUMENT for potential stakeholders

Question 4

what’s the relationship between a business plan and the selling document

Answer 4

a business plan serves as a selling document for potential stakeholders

Question 5

Why do employees read a business plan?

Answer 5

To gain clear direction and consistent purpose, and to help organize and guide a young firm.

Question 5

What do investors and stakeholders look for in a business plan?

Answer 5

Realism (not overconfidence), proof of business viability, and better potential returns than other opportunities.

Question 6

What three things should a business plan show to investors?

Answer 6

1. VALIDATION of the idea
2. Market UNDERSTANDING
3. awareness of LIMITATIONS and risks

Question 7

Why must a business plan be well-written and professional?

Answer 7

Because it is often the first impression investors get of the business

Question 8

What are key guidelines for writing a business plan?

Answer 8

Be mindful of tone

keep it clear and concise

use a conventional structure

avoid vague or overly creative formats.

Question 9

What are three key features of a good business plan structure?

Answer 9

It should be clear, logical, and easy to follow, and reflect anticipation and excitement about the venture.

Question 10

What is the typical length of a summary business plan?

Answer 10

10–15 pages — used for very early-stage ideas.

Question 11

What is the typical length of a full business plan?

Answer 11

25–35 pages — used for investors and detailed strategic planning.

Question 12

What is the typical length of an operational business plan?

Answer 12

40–100 pages — used internally to manage operations.

Question 13

What is the purpose of the cover letter that accompanies a business plan?

Answer 13

To briefly explain why the plan is being sent and who it is from.

Question 14

Why should entrepreneurs recognize flexibility in business planning?

Answer 14

Because plans often change during the writing process, and adaptability is important.

Question 15

What is the modern view of business planning?

Answer 15

Planning should be ADAPTIVE, and TRIAL-AND-ERROR learning (e.g., feedback loops) is just as valuable as the initial structure.

Question 16

What is operating leverage?

Answer 16

The ratio of fixed to variable costs, high leverage means high fixed costs.

Question 17

What is the purpose of the marketing plan section in a business plan?

Answer 17

To explain how the firm will market and sell its product or service.

Question 18

What should the marketing strategy describe?

Answer 18

The firm’s overall market positioning and unique identity.

Question 19

What are the four key areas covered in a marketing plan?

Answer 19

1. Price
2. Promotion
3. Sales process
4. Distribution strategy

Question 20

What does promotion refer to in a marketing plan?

Answer 20

The methods used to build AWARENESS — such as advertising, PR, and social media.

Question 21

Why is price important in a marketing plan?

Answer 21

It affects both PROFITABILITY and PERCEIVED VALUE of the product or service.

Question 22

What is the sales process in a marketing plan?

Answer 22

A step-by-step plan for closing deals with customers.

Question 23

What is a distribution strategy?

Answer 23

The approach to delivering the product or service to the customer.

Question 24

What must a marketing plan clearly show regarding competitors?

Answer 24

How the business differentiates itself from them.

Question 25

What is the goal of the product or service design and development plan?

Answer 25

To describe the current development stage and technical details of the product or service, especially if it’s new or innovative.

Question 26

What is a product prototype?

Answer 26

A physical version of the product used for feedback and testing.

Question 27

What is a virtual prototype?

Answer 27

A digital or 3D model of the product.

Question 28

What should be included regarding challenges and risks?

Answer 28

A clear outline of major technical or market-related risks.

Question 29

What intellectual property considerations should be included?

Answer 29

Information about patents, trademarks, or copyrights if applicable.

Question 30

What is the purpose of the operations plan?

Answer 30

To describe how the business will run on a day-to-day basis.

Question 31

What does the production section of the operations plan include?

Answer 31

Where and how the product is made or the service is delivered.

Question 32

What are ‘back stage’ operations?

Answer 32

Internal processes customers don’t see, such as supply chain or logistics.

Question 32

What are ‘front stage’ operations?

Answer 32

Customer-facing experiences, like service interaction or the user interface.

Question 32

What should be covered under location and facilities?

Answer 32

Geographic location, and the tools or equipment needed to operate.

Question 33

What should be included in the management team and company structure section?

Answer 33

Founders, managers, organizational chart, and (if applicable) boards.

Question 34

Who are considered key personnel in a business plan?

Answer 34

Founders and top managers, with brief bios detailing their qualifications.

Question 35

What is the role of the board of directors?

Answer 35

Elected by shareholders to oversee operations and make high-level decisions

Question 36

What is the role of the board of advisors?

Answer 36

Provide expert advice and guidance but do not have formal control.

Question 37

What is an organizational chart?

Answer 37

A visual that shows roles, reporting lines, and responsibilities within the business.

Question 38

What is the purpose of the overall schedule in a business plan?

Answer 38

To show major milestones critical to launching and growing the business.

Question 39

What kinds of milestones are shown in the overall schedule?

Answer 39

Product development phases, key hires, launch deadlines, and regulatory steps.

Question 40

How should the overall schedule be presented?

Answer 40

As a timeline or a table for clarity and easy reference.

Question 41

What are pro forma financial projections?

Answer 41

Forward-looking financial statements showing what is expected to happen, not what has already occurred.

Question 42

What does the Sources and Uses of Funds Statement show?

Answer 42

How much capital is needed, where it will come from, and how it will be used.

Question 43

What is the purpose of the assumptions sheet?

Answer 43

To state the assumptions behind the financial projections, such as costs, sales, and market size.

Question 44

What are the three main pro forma financial statements?

Answer 44

1. Income statement 2. Balance sheet 3. Cash flow statement

Question 45

Why are pro forma statements important in a business plan?

Answer 45

They prove financial viability and support investor decision-making.

Question 46

How are pro forma statements typically analyzed?

Answer 46

Using ratio analysis to compute performance metrics from the projections.

Question 47

What is included in the appendix of a business plan?

Answer 47

Supporting materials that don’t fit naturally into the main sections, such as technical drawings, résumés, or legal documents.

Question 48

What happens if a business plan generates investor interest?

Answer 48

The next step is usually a live meeting and presentation with the founders.

Question 49

What is the goal of presenting the business plan to investors in person?

Answer 49

To convince the investor to fund the business.

Question 50

What is the typical format of a business plan presentation to investors?

Answer 50

* 20-minute formal pitch * ~12 clean, uncluttered slides * 40-minute Q&A with investors

Question 51

What is often more important than the business plan during the pitch?

Answer 51

The personal impression made by the founders

Question 52

Why is the oral presentation considered critical in the fundraising process?

Answer 52

Because it is often the make-or-break moment for securing funding.

Question 53

Which type of business plan is intended for internal use only?

Answer 53

Operational business plan

Question 54

When is a firm’s operating leverage the highest?

Answer 54

When a large portion of the firm's costs are fixed and a small portion are variable