87) Defining the target market is one of the hardest and most important things the entrepreneur
can do in the business plan.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
88) Some feel the worst mistake an entrepreneur can make is to fail to define the target market.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
89) In the marketing strategy portion of the business plan, the entrepreneur should explain the
promotional strategy, pricing strategy and distribution strategy.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
90) How the product will be distributed should be explained in the plan of operation.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
91) The focus of the “competitor analysis” section of the business plan should be demonstrating
how the company has an advantage over its competitors.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
92) The business plan needs to address, in the management section, how important officers will
be encouraged to remain with the company.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
93) Essential pieces of information for potential investors and lenders are the assumptions the
entrepreneur used to derive forecasts, projections, etc.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
20
94) General requests for funds e.g., “working capital” are sufficient for most loan offices.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
95) Entrepreneurs should artificially inflate the amount of a loan request and expect the loan
officer to “talk them down.”
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
96) A business plan’s financial forecasts should reflect the company’s ability to repay loans.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
97) An entrepreneur should not include an exit strategy as a way to “cash out” for investors in the
initial plan.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
98) A business plan should always have a cash flow projection.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
99) Always tell the truth, even if it’s bad news, in the business plan.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
100) The internal competitive test focuses on management’s ability to create a company that will
gain a competitive edge.
Topic: Three Tests That Every Business Plan Must Pass
AACSB: Analytic Skills
21
101) The reality test of a business plan is the explanation of how much of a return is expected,
and when investors can expect it.
Topic: Three Tests That Every Business Plan Must Pass
AACSB: Analytic Skills
102) The business plan presentation should be slow, methodical, and detailed to show the depth
of understanding and preparation the entrepreneur has gone to.
Topic: Making the Business Plan Presentation
AACSB: Analytic Skills
103) Regardless of how good the plan or its presentation, the entrepreneur should always be
prepared for questions when he/she presents the venture.
Topic: Making the Business Plan Presentation
AACSB: Analytic Skills
104) The entrepreneur should begin the presentation with an explanation of the opportunity, the
benefit to the investors, and what the new venture is.
Topic: Making the Business Plan Presentation
AACSB: Analytic Skills
105) In today’s financial climate, more banks are becoming the primary and often only source of
capital for new ventures.
Topic: What Lenders and Investors Look for in a Business Plan
AACSB: Analytic Skills
106) A common reason cited by banks which reject small business loan applications is
“undercapitalization or too much debt.”
Topic: What Lenders and Investors Look for in a Business Plan
AACSB: Analytic Skills
22
107) Most loans banks make to start-up businesses are not secured by collateral but by the
character of the entrepreneur.
Topic: What Lenders and Investors Look for in a Business Plan
AACSB: Analytic Skills
108) Even though it is an intangible factor, the entrepreneur’s “character”—and the quality of the
presentation—are important factors in evaluating a loan proposal.
Topic: What Lenders and Investors Look for in a Business Plan
AACSB: Analytic Skills
109) The conditions in the business environment have little influence on lenders’ decision to
invest in a business start-up.
Topic: What Lenders and Investors Look for in a Business Plan
AACSB: Analytic Skills
110) While every business plan will be unique, there are several areas of information that should
be common to all good business plans.
Topic: What Lenders and Investors Look for in a Business Plan
AACSB: Analytic Skills
111) A benefit is a descriptive fact about a product or service.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
112) Business prototyping recognizes that every business idea is a hypothesis that needs to be
tested before an entrepreneur takes it to full scale.
Topic: Cost Structure
AACSB: Analytic Skills
113) Lenders and investors look for the experience, qualifications and age of the people who will
breathe life into the plan.
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
23
114) Lean startup is the process of rapidly developing simple prototypes to test key assumptions
by engaging real customers.
Topic: Cost Structure
AACSB: Analytic Skills
115) To summarize the presentation to each potential financial institution or investor, the
entrepreneur should write an executive summary. It should be concise—a maximum of four
pages—and should summarize all of the relevant points of the proposed deal.
Topic: Executive Summary
AACSB: Analytic Skills
116) The executive summary is a written version of what is known as “the elevator pitch.”
Topic: Executive Summary
AACSB: Analytic Skills
117) Executive summary is the broadest expression of a company’s purpose and defines the
direction in which it will move.
Topic: Mission Statement
AACSB: Analytic Skills
118) It is not necessary for the industry analysis to address the profitability of the businesses in
the targeted market segment.
Topic: Business and Industry Profile
AACSB: Analytic Skills
119) Objectives are short-term, specific performance targets that are attainable, measurable, and
controllable.
Topic: Objectives
AACSB: Analytic Skills
24
120) A benefit is a descriptive fact about a product or service (e.g., “an ergonomically designed,
more comfortable handle”).
Topic: Description of Firm’s Product/Service
AACSB: Analytic Skills
121) A benefit is what the customer gains from the product or service feature.
Topic: Description of Firm’s Product/Service
122) Why does the entrepreneur need to develop a business plan? What functions does it fulfill?
Topic: The Benefits of a Business Plan
AACSB: Analytic Skills
123) Outline the elements of the feasibility plan with a one to two sentence explanation of each
element.
Topic: Introduction
AACSB: Analytic Skills
124) What are the components of a successful business plan?
Topic: The Elements of a Business Plan
AACSB: Analytic Skills
25
125) What should be included in the section on the firm’s product/service? How should the
product or service be described?
Topic: The Elements of a Business Plan: Description of a Firm’s Product/Service
AACSB: Analytic Skills
126) What are the primary steps to proving that a market exists in the market strategy section?
What should an effective market analysis include?
Topic: The Elements of a Business Plan: Marketing Strategy
127) What financial data will lenders want to see in your financial section?
Topic: The Elements of a Business Plan: Financial Forecasts
AACSB: Analytic Skills
26
128) What are the three tests any business plan should be put to? Name and explain the purpose
of each.
Topic: Three Tests That Every Business Plan Must Pass
AACSB: Analytic Skills
129) Review the business plan process, outlining the important elements of the presentation.
Topic: Making the Business Plan Presentation
AACSB: Reflective Thinking
130) What are the five Cs that creditors look for in the business plan? Name and explain each.
Topic: What Lenders and Investors Look for in a Business Plan
AACSB: Reflective Thinking
27
131) What information should be included in the executive summary? Outline the main points.
Topic: Suggested Business Plan Elements
AACSB: Communication
28