Entrepreneurship: Successfully Launching New Ventures, 6e (Barringer/Ireland)
Chapter 6 Writing a Business Plan
1) Athletic Propulsion Labs, the company profiled in the opening feature of Chapter 6, makes
athletic shoes that give the wearer extra bounce. One of factors that made the founders’ initial
business plan seemingly unrealistic was the price point. The price point in the original business
plan was $________.
A) 300
B) 200
C) 100
D) 25
E) 40
2) Peter Watson is thinking about launching a small business consulting company. To get advice
on how to proceed, he stopped by his local Small Business Administration (SBA) office. The
SBA advisor told Peter that one of the first things he needs to do is to sit down and write a 25 to
35 page narrative that describes what his new business plans to accomplish and how it plans to
accomplish it. The SBA advisor is telling Peter to write a(n) ________.
A) tactical plan
B) marketing plan
C) operations plan
D) business plan
E) feasibility analysis
3) Which of the following is the main purpose for writing a business plan?
A) The plan helps the company develop a “road map” to follow.
B) The plan introduces potential investors and other stakeholders to the business opportunity.
C) Both A and B are equally important.
D) Neither A nor B captures the true purpose of a business plan.
E) Reason A is the most important for experienced entrepreneurs and reason B is the most
important for inexperienced entrepreneurs.
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4) According to the textbook, a business plan is best described as a(n) ________.
A) narrative description of a new business
B) contract
C) budget
D) agreement
E) marketing initiative
5) A 2015 Wells Fargo/Gallup Small Business Index Survey found that only ________ percent
of business owners have a formal business plan.
A) 10
B) 15
C) 27
D) 33
6) A business plan is important as it forces the founding team to systematically think through
every aspect of their new venture, and it ________.
A) is a budget
B) is a public relations document that can be used to promote the firm
C) is a contract that is signed by the founders of the firm
D) is a financial analysis
E) communicates the merits of a new venture to outsiders, such as investors and bankers
7) A commercialization plan is a written narrative that describes what a new business plans to
accomplish and how it plans to accomplish it.
8) According to studies cited in the book, a large percentage of entrepreneurs write business
plans for their ventures.
9) For most new ventures, the business plan is a dual-purpose document used both inside and
outside the firm.
10) A business plan can usually be completed in one to three days.
11) Which of the following statements is incorrect about business plans?
A) Writing a business plan forces a firm’s founders to systematically think through each aspect of
their new venture.
B) For most new ventures, the business plan is a dual-purpose document used both inside and
outside the firm.
C) A business plan is typically 25 to 35 pages long.
D) A large percentage of entrepreneurs do not write business plans for their new ventures.
E) The business plan should be written while the feasibility analysis is being completed.
12) 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 ________.
A) business plan
B) feasibility analysis
C) opportunity analysis
D) industry analysis
E) marketing plan
13) The two primary audiences for a business plan are ________ and ________.
A) a firm’s employees; officials with the SEC
B) a firm’s customers; its competitors
C) investors; other external stakeholders and public relations firms
D) officials with the SEC; public relations firms
14) The two primary audiences for a business plan are investors and other external stakeholders
and ________.
A) officials with the SEC
B) a firm’s employees
C) a firm’s competitors
D) a firm’s customers
E) public relations firms
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15) Which of the following is NOT an individual, group or institution that normally reads a
company’s business plan?
A) Board of directors
B) Potential alliance partners and major customers
C) State and local government officials
D) Key recruits for jobs with the new firm
E) Rank-and-file employees
16) Which of the following is NOT a recommended guideline for writing a business plan?
A) To make the best impression, a business plan should follow an unconventional structure and
stand out in some dramatic way.
B) A business plan needs to project a sense of anticipation and excitement about the possibilities
that surround a new venture.
C) For most plans, 25 to 35 pages is sufficient.
D) A business plan should look sharp, but not a lot of money should be spent on the physical
appearance of the plan.
E) Shy away from using a lot of boldfaced type, italics, clip art, and different font sizes and
colors when preparing a business plan.
17) The two primary audiences for a firm’s business plan are a firm’s employees and investors
and other external stakeholders.
18) What are the two main reasons for writing a business plan?
19) Which of the following is NOT one of the “red flags” listed in the textbook that raises
questions about one or more aspects of a company’s business plan?
A) Founders with none of their own money at risk
B) Defining the market size too narrowly
C) A poorly cited plan
D) Sloppiness in any area
E) Overly aggressive financials
20) Which of the following is one of the “red flags” listed in the textbook that raises questions
about one or more aspects of a company’s business plan?
A) Takes several days or weeks to complete
B) Founders that have their own money at risk
C) Defining the market size too broadly
D) Less than 50 pages long
E) Directed towards both an external and an internal audience
21) To make the best impression, a business plan should follow a ________.
A) conventional structure for companies with standard business models and a nonconventional
structure for firms with disruptive business models
B) conventional structure for manufacturing firms and a nonconventional structure for service
firms
C) conventional structure
D) nonconventional structure
E) nonconventional structure for manufacturing firms and a conventional structure for service
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22) For most business plans, ________ pages are sufficient.
A) 40 to 50
B) 30 to 40
C) 15 to 20
D) 25 to 35
E) 5 to 10
23) The three types of business plans are ________.
A) functional business plan, full business plan, feasibility plan
B) summary business plan, contingency plan, full business plan
C) functional business plan, contingency plan, full business plan
D) opportunity plan, feasibility plan, full business plan
E) summary business plan, full business plan, operational business plan
24) Sarah Parks is in the very early stages of putting together a business startup, and is thinking
about writing a business plan to request funds to conduct a feasibility analysis and write a more
complete business plan. What type of business plan should Sarah write at this point?
A) Full business plan
B) Tactical business plan
C) Summary business plan
D) Operational business plan
E) Strategic business plan
25) A(n) ________ business plan, which is typically 25 to 35 pages long, works best for new
ventures who are at the point where they need funding or financing.
A) tactical
B) strategic
C) summary
D) full
E) operational
26) A(n) ________ business plan, which is intended to be a blueprint for a company’s operations,
is 40-100 pages long and is meant primarily for an internal audience.
A) operational
B) full
C) deliberate
D) summary
E) tactical
27) Kevin Andrews has decided to write a business plan that is intended to be read primarily by
his staff, which will present a blueprint for his company’s entire operation and will provide
guidance to operational managers. Kevin should write a(n) ________ business plan.
A) operational
B) tactical
C) strategic
D) summary
E) functional
28) Which of the following business plans matches with its appropriate length?
A) Operational business plan — 10-15 pages
B) Full business plan — 25-35 pages
C) Summary business plan — 25-35 pages
D) Full business plan — 40-100 pages
E) Operational business plan — 25-35 pages
29) Which of the following business plans matches with its appropriate emphasis?
A) Summary business plan works best for companies who are at the point where they need
funding or financing; serves as a “blueprint” for the company’s operations.
B) Operational business plan works best for companies in the early stages of development that
want to “test the waters” to see if investors are interested in their idea.
C) Full business plan works best for companies in the early stages of development that want to
“test the waters” to see if investors are interested in the idea.
D) Summary business plan is meant primarily for an internal audience and works best as a tool
for creating a blueprint for a company’s operations and providing guidance to operational
managers.
E) Summary business plan works best for companies in the early stages of development that
want to “test the waters” to see if investors are interested in their idea.
30) To make the best impression, a business plan should follow a conventional structure.
31) For most business plans, 25 to 35 pages are sufficient.
32) According to the textbook, the executive summary is arguably the most important section of
the business plan.
33) The executive summary is a lengthy overview of the entire business plan.
34) A company’s industry analysis and target market analysis are usually included in the same
section of its business plan.
35) Fragmented industries are more receptive to new entrants than industries that are dominated
by a handful of large firms.
36) A tagline is a phrase that a business uses to reinforce its position in the marketplace.
37) A competitor analysis, which is a detailed analysis of a firm’s competitors, should be
included in the market analysis section of its business plan.
38) The major revenue drivers, which are the ways a business earns money, should be first
identified in “The Economics of the Business” section of the business plan.
39) A firm’s operating leverage is an analysis of its debt versus its equity.
40) The management team and company structure section of a business plan is one of the lesser-
read sections.
41) An organizational chart is a graphic representation of how authority and responsibility are
distributed within a company.
42) A sources and uses of funds statement is a document that lays out specifically how much
money a firm needs, where the money will come from, and what the money will be used for.
43) The pro forma financial statements are the heart of the operations section of a business plan.