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Chapter 7 the Business Plan: Creating And

Chapter 7 the Business Plan: Creating And

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Published by: beargreat on Mar 15, 2010
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Chapter 7 The Business Plan: Creating and Starting the Venture
True/False Questions
1.Planning the new venture is a process that never ends.Answer: True Page: 199 Difficulty: Easy2.The business plan addresses both short term and long term decision making.Answer: True Page: 199 Difficulty: Easy3.To maintain objectivity, the business plan should not be written by the entrepreneur.Answer: False Page: 200 Difficulty: Medium4.The business plan is a private document and should not be read by employees andcustomers.Answer: False Page: 201 Difficulty: Medium5.In the business plan the entrepreneur should address the needs of the entrepreneur andthe needs of the market; the investor's perspective is not important.Answer: False Page: 201 Difficulty: Medium6.The process of writing the business plan provides a self-assessment for theentrepreneur.Answer: True Page: 201 Difficulty: Easy7.The best way to address the concerns of all potential audiences when writing the business plan is to rely exclusively on a computer software package.Answer: False Page: 202 Difficulty: Medium8.The business plan serves as an important tool in helping to obtain financing.Answer: True Page: 202 Difficulty: Easy9.The four Cs of credit are computers, capital, compromise, and collateral.Answer: False Page: 202 Difficulty: Medium
52Hisrich, Entrepreneurship, Seventh Edition
 
Chapter 7 The Business Plan: Creating and Starting the Venture
10.Venture capitalists demand high rates of return for their investment in the newventure.Answer: True Page: 203 Difficulty: Medium11.In preparing the business plan, entrepreneurs can provide their own perspective andneed not consider the needs of external sources.Answer: False Page: 203 Difficulty: Medium12.A quick feasibility study should be conducted before preparing the business plan touncover possible barriers to success.Answer: True Page: 204 Difficulty: Medium13.In building a marketing plan, the entrepreneur should use a process designed as a pyramid, starting with narrow data and working down to broader-based information.Answer: False Page: 205 Difficulty: Hard14.Most entrepreneurs have difficulty with gathering market information and do not oftenknow where to begin.Answer: True Page: 205 Difficulty: Medium15.When gathering financial information, the entrepreneur should develop a budget thatincludes expected sales and expense figures for the first year.Answer: True Page: 208 Difficulty: Medium16.To determine the figures in the budget, the entrepreneur should identify benchmarks or norms in the industry.Answer: True Page: 208 Difficulty: Easy17.Pro forma financial statements should be prepared monthly for the first year of theventure.Answer: True Page: 208 Difficulty: Medium
53Hisrich, Entrepreneurship, Seventh Edition
 
Chapter 7 The Business Plan: Creating and Starting the Venture
18.The Internet is a useful tool to access information but is generally not a good vehiclefor marketing goods and services.Answer: False Page: 208 Difficulty: Medium19.Newsgroups are too closely controlled by competitors to be useful for informationgathering.Answer: False Page: 209 Difficulty: Medium20.The executive summary section of the business plan should be written first, beforeother sections are developed.Answer: False Page: 211 Difficulty: Medium21.An evaluation of cultural changes is irrelevant to the venture and should not beincluded in the business plan.Answer: False Page: 212 Difficulty: Medium22.The executive summary section is only meant to highlight key factors and motivate the person holding the plan to read it in its entirety.Answer: True Page: 212 Difficulty: Medium23.The entrepreneur need not concentrate on environmental analysis since most of theexternal factors are generally uncontrollable.Answer: False Page: 212 Difficulty: Easy24.If a venture is not a manufacturing firm, an operations plan is not necessary.Answer: False Page: 213-214 Difficulty: Medium25.The organizational plan section of the business plan should describe the venture's formof ownership.Answer: True Page: 218 Difficulty: Medium26.Letters from customers, distributors, or subcontractors are examples of informationthat should be included in the executive summary of a business plan.Answer: False Page: 219 Difficulty: Medium
 Hisrich, Entrepreneurship, Seventh Edition54

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