Questions for Chapter 8
True/False
1) The chapter takes the view that the self-examination required to develop a tight, well
written business plan is more important than the plan itself. (pg. 219)
2) An important end result of the business planning process is that it allows the
entrepreneur to articulate the business opportunity to various stakeholders in the most
effective manner. (pg. 219)
3) The business plan must establish that there is an opportunity worth exploiting and
must detail how to take advantage of it. (pg. 219)
4) It’s a common misperception that a business plan is primarily used for raising
capital. (pg. 219)
5) Business planning, in a literal sense, begins when you start to look for external funds.
(pg. 220)
6) Your business plan should be designed to be flexible, to allow for rapid adjustments
as more information becomes available. (pg. 221)
7) The cover of the plan should include the following information: company name,
tagline, contact person, address, phone, email, date, disclaimer, and copy number.
(pg. 222)
8) Interestingly, the executive summary is the least important part of the business plan.
(pg. 223)
9) Since the executive summary is the most important part of the finished plan, an
224)
10) New ventures will have better chances for success in an emerging market, on the
verge of rapid growth. (pg. 224)
11) Market analysis looks at current underserved gaps in the market, but most
importantly, trends that are shaping the future. (pgs. 224-225)
12) Both positive and negative trends will help shape the businesses. (pg. 225)
13) Competitive profile matrices can aid in identifying underserved or vulnerable parts of
the market susceptible to a new entrant. (pg. 227)
14) The best way for savvy entrepreneurs to gather competitive information is through
talking to their family members. (pg. 228)
15) As mentioned in earlier chapters and reiterated in this chapter, “cost plus” pricing is
the best strategy, because it wastes the least amount of time. (pg. 230)
16) Your distribution strategy can define your company’s fortune as much as the product
itself. (pg. 230)
17) Examining how customers currently acquire similar products is a poor use of time for
an entrepreneur launching an innovative, new product. (pg. 231)
18) It is appropriate to discuss the geographic location of production facilities and how
this enhances your firm’s competitive advantage. (pg. 233)
19) The Scope of Operations section should discuss partnerships with vendors, suppliers,
and partners. (pg. 234)
20) A development strategy includes a schedule that highlights major milestones for the
venture. (pg. 235)
21) An ‘A’ entrepreneur with a ‘B’ idea is better than a ‘B’ entrepreneur with an ‘A’
22) A simple, flat organization chart is often useful to visualize what roles you have
filled and what gaps remain. (pg. 235)
23) The Board of Directors’ primary role is to oversee the company on behalf of the
employees, and to that end the board has the power to replace top executives if it
feels doing so would be in the best interests of the staff. (pg. 237)
24) Strategic partners are required by law to be offered seats on your Board of Directors.
(pg. 237)
25) It is important to explain why the team’s compensation is appropriate. (pg. 237)
26) The biggest risk any new venture faces is dilution of equity. (pg. 238)
27) Entrepreneurs often enter markets and find, to their surprise, either that direct
competition does not exist, or that it is complacent and slow to react. (pg. 238)
28) All plans have risks, and a solid business plan should acknowledge critical
assumptions made, the risk of those assumptions proving false, and a plan to
confirm/deny those assumptions in a timely manner. (pgs. 237-238)
29) The business plan should identify the factors that may hinder development and
assure that you will be able to develop the product on time and on a budget. (pg. 238)
30) The appendices of a business plan can include anything and everything that you think
adds further validation to your concept but does not fit in the main parts of the plan.
(pg. 239)
31) The biggest difference between an internal operation plan and the one that you might
present to a potential investor is the level of detail, which tends to be greater in the
disclosure to the investor. (pg. 240)
32) The key to creating a successful presentation is to use the most slides possible (pg.
241)
Multiple Choice
1) Which of the following is the primary purpose of the business planning process? (pg.
219)
2) Which of the following is NOT a goal of business planning? (pgs. 219-220)
3) The best way to develop a winning business plan is to: (pg. 221)
E. Financial Plan
5) A proper organization is critical to making a business plan easy to read. Thus, it
should include which of the following? (pg. 224)
6) Which of the following subsections is traditionally NOT placed in the executive
summary? (pgs. 223-224)
D. Competitive advantage
E. Team and offering
7) Which of the following is NOT a standard subsection of a marketing plan? (pg. 224)
8) Many of the big names in retail revolutionized and unified fragmented markets.
Which of the following should NOT be on such a list? (pg. 225)
E. All should be on the list
9) To truly understand your customers, you MUST ___ (pg. 226)
10) When an entrepreneur understands who his customers are, he can assess _____: (pg.
226)
11) A company’s sales channels can include all of the following except: (pg. 226)
12) Entrepreneurs should focus on the key success factors that often lead a customer to
buy one product over another, such as___. (pg. 227)
A. Price
B. Quality
C. Speed
13) Which of the following is not in the contents of marketing plan? (pgs. 229-233)
A. Marketing communications
14) Advantages of a price skimming are; (pg. 230)
15) If business planning predicts that your gross margins will be small, you would be
E. None of the above
16) Which of these identifies how your product will reach the customer? (pg. 230)
17) What are the two methods of forecasting future revenues, as stated in the chapter?
E. None of the above
18) The ______ models the sales forecast after what other companies have achieved and
then adjusts these numbers for differences in things such as the age of the company
D. random method
E. precise method
19) In the _______, the entrepreneur identifies all the possible revenue sources of the
business and then estimates how much of each type of revenue the company can
generate during a given period of time. (pg. 232)
20) Which of the following is a common subsection of an Operations plan? (pgs. 233-
234)
21) Which of the following is NOT in the operations plan? (pgs. 233-234)
22) The Scope of Operations section should discuss partnerships with _____? (pg. 234)
23) In the development plan, which issue should be the focus? (pgs. 234-235)
24) Which of the following should NOT appear in the compensation section? (pg. 237)
D. None of the above
E. Why the compensation for each employee is appropriate
25) How can entrepreneurs minimize risk? (pg. 238)
26) Considering competitor actions and reactions, which of the following would be
dangerous for entrepreneurs? (pg. 238)
E. All of the above
27) Which of the following is NOT a common category in the critical risks section? (pg.
238)
28) Detailed information which expands upon main areas of your business plan should
be included in which portion of the plan? (pg. 239)
29) One of the most pressing challenges for entrepreneurs is to maintain adequate levels
of cash. Which of the following is the best way to ensure that a lack of cash does not
bankrupt your startup? (pg. 239)
30) Considerations in your offering section should include (pg. 239)
A. Asking for enough money to last 12-18 months
B. Not asking for more money than you need
C. Not detailing the sources and uses of funds over time
31) Which of the following is the key to creating visual catch-points in a business plan?
(pg. 240)
32) When writing a business plan it is best to: (pg. 240)
1) Inexperienced entrepreneurs often believe the misconception that a business
plan is solely designed as a brochure for investors. The financial benefits of using
a business plan to raise capital are well known. What are some additional
benefits? (pgs. 219-220)
Although a good business plan assists in raising capital, the primary goal of the process is
to help entrepreneurs gain a deeper understanding of their venture and their opportunity:
2) Generally speaking, what is the greatest benefit of the business planning
process? (pg. 219)
The business planning process provides the entrepreneur with the deep understanding she
needs to answer the critical questions various stakeholders will ask. Completing a well-
founded business plan gives the entrepreneur credibility in the eyes of each group.
3) What would be a counter-argument to the critique that business plans are
obsolete soon after they are finished? (pg. 221)
4) What factors should be kept in mind when we are preparing the cover of the
business plan? (pgs. 222-223)
5) What kind of information in the Executive Summary do entrepreneurs need to
provide? (pg. 223)
6) What are the key issues in the Industry Section? (pgs. 224-225)
a) The goal of the Industrial Section is to illustrate the opportunity and how
entrepreneurs intend to capture it, thus:
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
• Entrepreneurs need to provide a context, including both the current market
size and how much you expect it to grow in the future.
• Entrepreneurs need to indicate what kind of market they’re facing.
• Another key attribute to explore is industry economics.
• Finally, entrepreneurs need to describe the overall industry in terms of
revenues, growth and future trends that are pertinent.
7) Why should entrepreneurs go out and interview potential customers, especially
in the early conceptualization stages? (pg. 226)
8) How should entrepreneurs introduce the basic details of their company, before
moving on to a more detailed analysis of the marketing and operations plans?
(pgs. 228-229)
9) What are the critical risks entrepreneurs need to identify in the business plan?
(pgs. 238-239)
10) What slides are useful in oral presentations of your business? (pg. 241)
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
8. Team description
9. Current status with timeline
10. Summary, including how much capital the venture needs and how that
investment will be used
11) What are some of the critical outcomes of competitive profile and product
attribute analysis in terms of your initial business plan. (pgs. 227-230)
12) Explain the importance of finding an entry point in the market analysis that
holds a substantial gross margin for a new venture. (pg. 229)
13) What are the primary components of marketing plan section in a business plan?
Describe them. (pg. 229-233)
14) Describe the two different methods for sales forecasting. (pg. 232)
15) Discuss the importance of critical risks management in your business plan. (pgs.
237-238)