Building Your Dream 10Th Canadian Edition By Walter Good - Test Bank

Building Your Dream 10Th Canadian Edition By Walter Good - Test Bank   Instant Download - Complete Test Bank With Answers     Sample Questions Are Posted Below   Stage 05 Business Plans     Multiple Choice Questions Another term used to describe a business plan is: A.A feasibility plan B. A game plan C. A financial …

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Building Your Dream 10Th Canadian Edition By Walter Good – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Stage 05

Business Plans

 

 

Multiple Choice Questions

  1. Another term used to describe a business plan is:
    A.A feasibility plan
    B. A game plan
    C. A financial plan
    D. A progress plan

The business plan can be thought of as your new venture’s “game plan”.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

  1. The business planning process focuses on the:
    A.Present
    B. Past
    C. Future
    D. Customers

The business planning process focuses on the future. It enables you to relate what you wish to achieve to what your business concept or idea can deliver.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

 

  1. The _______ lays out the “super goal” that you would like your business to achieve.
    A.Concept statement
    B. Financial statement
    C. Mission statement
    D. Vision statement

A vision statement focuses on the “what” of your business and should describe your idealized perception of what your business will look like under perfect conditions, if all your goals and objectives have been met. It lays out the “super goal” that you would like your business to achieve.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

  1. The _______ defines the “super strategy” of your business.
    A.Mission statement
    B. Vision statement
    C. Concept statement
    D. Financial statement

A mission statement defines the purpose of your venture, outlines the reason for the existence of your business, and provides some understanding of how your business will be operated. It is, in fact, the “super strategy” of your business.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

  1. The length and detail of your business plan will depend on all of the following, except:
    A.The type of business
    B. The expectations of stakeholders
    C. The expectations of competitors
    D. The expectations of your financial institution

There is no single way to write a business plan. Its length and detail will depend on the type of business and the expectations of stakeholders such as investors or financial institutions.

 

Difficulty: Medium
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

 

  1. At the heart of the capital-raising process is:
    A.Your business plan
    B. Your statement of cash flows
    C. Your feasibility study
    D. Your income statement

Any knowledgeable banker or prospective investor will expect you to be professional in your approach, fully prepared, and armed with a thoroughly researched, well-written business plan when seeking their support.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

  1. Rather than using page count as a way to measure the length of a business plan, expert Tim Berry recommends that you measure a plan based on:
    A.Readability and grammar
    B. Sentence structure and summarization
    C. Readability and summarization
    D. Sentence structure and grammar

Page count is not a good way to measure length of a business plan according to Tim Berry, founder of Palo Alto Business Plans. You should measure a plan by readability and summarization.

 

Difficulty: Hard
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

  1. According to Tim Berry, business planning has become:
    A.Lengthy and complex
    B. Leaner and more agile
    C. Long-winded and overly formal
    D. Short and lacking in depth

Tim Berry states, “Regardless of the name or label, business planning has in fact changed in recent years. It has become leaner and more agile.” The long-winded formal business plan is obsolete.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

 

  1. Which of the following components of a business plan will answer the question, “is there a need and demand?”?
    A.Executive summary
    B. Market opportunity and competitive advantage
    C. Goals and business strategy
    D. Detailed financials

The determination of market need and demand will be addressed in the market opportunity and competitive advantage section of your business plan.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

  1. Financial institutions are likely to read the executive summary of your business plan, and then skip directly to the section pertaining to:
    A.The competition
    B. Financials
    C. Competitive advantage
    D. Incorporation

Once they have made it past the executive summary they will skip to the financials. They are looking for projected sales for a minimum of two years.

 

Difficulty: Easy
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

  1. Many financial institutions will accept a ________ for use by early-Chapter businesses in applying for a bank loan.
    A.Cash flow statement
    B. Feasibility study
    C. Consultant’s perspective
    D. Summary business plan

Summary business plans commonly run about 10 pages. Summary business plans have become increasingly popular and accepted for use by early-Chapter businesses in applying for a bank loan.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

 

  1. A _________ gives the title of the plan or the name of your business, and outlines the major features of your plan that may be of interest.
    A.Letter of Transmittal
    B. Letter of Expression
    C. Letter of Purpose
    D. Letter of Intent

The letter of transmittal officially introduces your business plan to the reader.

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Which part of the business plan should capture the attention of the reader, stimulate interest, and get the reader to keep on reading?
    A.Letter of Transmittal
    B. Title Page
    C. Table of Contents
    D. Executive Summary

The summary has to make the reader comfortable that the entrepreneur knows what they are doing. If you achieve this then the reader may very well jump right to the financials.

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. All of the following websites offer outlines, instructions, and templates for developing a business plan, except:
    A.Canada Business Network
    B. Canadian Bank Association
    C. Business Development Bank of Canada
    D. Industry Canada

Industry Canada does not assist with business plan development.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. Which part of the business plan will include information about the goals and objectives of the business?
    A.Letter of transmittal
    B. Executive summary
    C. Body of the plan under “Company and the Industry
    D. Body of the plan under “Market Analysis

See Figure 5.2 – A Typical Business Plan.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Which part of the business plan will describe the profile of your principal target customers?
    A.Body of the plan under “Product/Service Offering
    B. Body of the plan under “Your Development Plan
    C. Body of the plan under “Company and the Industry
    D. Body of the plan under “Market Analysis

See Figure 5.2 – A Typical Business Plan.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Letters of reference and copies of legal documents can be found in which component of a business plan?
    A.Letter of transmittal
    B. Executive summary
    C. Body of the plan under “Company and the Industry
    D. Appendices

See Figure 5.2 – A Typical Business Plan.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. In which part of the business plan will information about outstanding regulatory, testing, or other requirements be found?
    A.Body of the plan under “Product/Service Offering
    B. Body of the plan under “Your Development Plan
    C. Body of the plan under “Company and the Industry
    D. Body of the plan under “Market Analysis

See Figure 5.2 – A Typical Business Plan.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Which part of the business plan will contain estimates pertaining to sales and market share?
    A.Body of the plan under “Product/Service Offering
    B. Body of the plan under “Your Marketing Plan
    C. Body of the plan under “Company and the Industry
    D. Body of the plan under “Market Analysis

See Figure 5.2 – A Typical Business Plan.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Which part of the business plan will contain information about the name, address, and contact numbers as well as key company contacts?
    A.Letter of Transmittal
    B. Executive Summary
    C. Title Page
    D. Table of Contents

See Figure 5.2 – A Typical Business Plan.

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. All of the following should be included in the marketing plan section of the business plan, except:
    A. Pricing
    B. Sales and distribution
    C. Proprietary issues
    D. Service and warranty

Proprietary issues are typically found in the development plan section.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Which of the following is most likely found under the development plan section of the business plan?
    A.Facilities and equipment
    B. Sales and distribution
    C. Costs
    D. Service and warranty

Costs are typically found in the development plan section.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Under which section of the business plan are environmental issues most likely to be described?
    A.Market Analysis
    B. Marketing Plan
    C. Development Plan
    D. Production/Operations Plan

Environmental issues are typically described within the production plan.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. Under which section of the business plan is the profile of the principal target customers described?
    A.Market Analysis
    B. Marketing Plan
    C. Development Plan
    D. Production/Operations Plan

Primary target markets are identified under the Market Analysis section.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Eric Ries is the author of:
    A.The Business Model Canvas
    B. The Lean Startup
    C. Canvas Modelling Tool
    D. The Summary Plan

Eric Ries, author of the Lean Startup, is the driving force behind changing how businesses start their business.

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. In the Lean Startup, author Eric Ries says that rather than wasting time creating elaborate business plans:
    A.Businesses should create a prototype to market their concept to investors.
    B. Businesses should rely on potential stakeholders to collaborate on a business plan.
    C. Businesses should be testing their vision continuously
    D. Businesses should test market their concept internationally.

Eric Ries, author of the Lean Startup, is the driving force behind changing how businesses start their business. Eric says rather than wasting time creating elaborate business plans they should be testing their vision continuously.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. All of the following are included in the nine elements of the Business Model Canvas, except:
    A.Cost Structure
    B. Key Partnerships
    C. Value Propositions
    D. Conduct Codes

Codes of Conduct are likely not yet established at this Chapter of the business and are not one of the nine key elements.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. A small, one person business can easily use the ______, while larger, multiple employee companies are more likely to use the _______.
    A.Business Model Canvas; Lean Model Canvas
    B. Lean Model Canvas ; Business Model Canvas
    C. Lean Model Canvas; Summary Business Plan
    D. Summary Business Plan; Operational Business Plan

The Lean Model Canvas can be easily used by a one person business where the Business Model Canvas is for larger companies where many employees can be given access to the plan for giving their input.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

True / False Questions

  1. Your mission statement should be short (a sentence or two). It should also be easy to understand and easy to remember.
    FALSE

Your vision statement should be short (a sentence or two). It should also be easy to understand and easy to remember.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

 

  1. The typical business plan is roughly 20 pages in length.
    FALSE

There is no such thing as a “typical” business plan. There is no single way to write a business plan. Its length and detail will depend on the type of business and the expectations of stakeholders such as investors or financial institutions.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

  1. Your business plan should lay out the details so that everyone can see precisely where you are now, where you are going, and how you plan to get there.
    TRUE

A business plan presents everything about you and what you intend to do-your goals and objectives, opportunities and threats facing you, your business strengths and weaknesses, and so on.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

  1. The operational business plan is typically over 40 pages in length and is the most frequently used form of business plan.
    FALSE

The operational plan is used only infrequently.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

  1. A budget is generally included in the full business plan.
    TRUE

Often the full business plan is used for board approval but never used to manage the company.

 

Difficulty: Easy
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

 

  1. Contingency plans are not described in a business plan.
    FALSE

Contingency plans should be described in the risk and assumptions section of the business plan.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. If you have used professional advisers, such as lawyers, accountants, insurance brokers, etc., you should provide their names and contact information in your business plan under the heading “Management team”.
    TRUE

You should also disclose any fees or retainers that may have been paid to any of these people.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. It is not necessary to mention whether employees of your potential business will be unionized or not.
    FALSE

It is important to indicate whether your employees will be union or non-union. If employees will be members of a union, describe the principal terms of their contract and when it expires.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Patents and trademark information should be described in the Production/Operations Plan.
    FALSE

Patents and trademark information should be described in the Development Plan.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. The characteristics of your location in relation to market size, traffic flows, local and regional growth rates, income levels, and similar market-related factors is presented as part of the production/operations plan.
    TRUE

Your production/operations plan outlines the operating side of your business. It should describe your plant location, the kind of facilities needed, space requirements, capital equipment needed, and your labour requirements.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Although your operations plan should indicate your planned facilities, it is not necessary to detail the machinery and equipment that is required for your manufacturing process.
    FALSE

It is important to detail the machinery and equipment that is required for your manufacturing process. Is this highly specialized or general-purpose equipment? Is it leased or purchased? New or used? What is the cost? What will it cost for equipment set up and facility layout? What is its expected life? Will it have any residual or scrap value?

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. The Lean Startup has been an international phenomenon however it is only used by small scale companies.
    FALSE

The Lean Startup has been an international phenomenon and is being adapted by both small and large scale companies.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Successful new ventures do not go to market with their first idea; instead, the product/ service usually goes through several iterations before arriving at the final version.
    TRUE

Similarly, organizations are more sustainable if they have considered several business models before deciding on a particular one.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

 

Short Answer Questions

  1. Outline the key components of the vision statement.

The key components of your vision statement will be:

· Name of your planned business venture
· Product/service offering you plan to provide
· Target market(s) you intend to serve

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

  1. Outline the key components of the mission statement.

The key components of your mission statement will describe:

· What your business will do
· Its market focus, niche, or particular image
· Your planned location and the geographic market served
· How you plan to grow the business
· Your sustainable uniqueness, or what will distinguish your business from others and will continue to do so on a long-term basis

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

 

  1. In what ways can an effective business plan serve you externally, or outside of the immediate internal planning function.

Externally, your business plan can serve as an effective sales document and is considered by many experts to be the heart of the capital-raising process. Financial institutions and investors will expect you to be professional in your approach, fully prepared, and armed with a thoroughly researched, well-written business plan when seeking their support.

 

Difficulty: Hard
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

  1. Compare a Summary Business Plan to an Operational Business Plan.

Summary business plans commonly run about 10 pages. A summary plan is a more “to the point” plan. This plan can be used for all types of business. A summary business plan may be sufficient to whet the appetite of friends, relatives, and other private investors who might subsequently request a copy of the full plan if they are sufficiently interested. The operational business plan will usually exceed 40 pages in length but is used only infrequently, such as when a business is planning to grow very rapidly and must try to anticipate a wide variety of issues.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

 

  1. Why is the executive summary thought to be the most important part of a business plan?

The executive summary is the most important part of your business plan. It must capture the attention of the reader, stimulate interest, and get the reader to keep on reading the rest of your plan. In two or three pages or less, the summary should concisely explain your business’s current status; describe its products or services and their benefits to your customers; provide an overview of your venture’s objectives, market prospects, and financial forecasts; and, if you are using the plan to raise external financing, indicate the amount of financing needed, how the money is to be used, and the benefits to the prospective lender or investor. The summary has to make the reader comfortable that the entrepreneur knows what they are doing.

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. If your potential business is a manufacturing business, what items should be addressed in the production/operations plan?

Your production/operations plan outlines the operating side of your business. It should describe your plant location, the kind of facilities needed, space requirements, capital equipment needed, and your labour requirements. If your plan is for a manufacturing business, you should also discuss such areas as your purchasing policy, quality control program, inventory control system, production cost breakdown, and whether you plan to manufacture all subcomponents of the product yourself or have some of them produced for you by someone else.

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. Provide examples of the kind of material that might be contained within the appendix of your business plan.

Answers may vary. Examples include:

1. Product specifications and photographs
2. Detailed résumés of the management team
3. Lists of prospective customers
4. Names of possible suppliers
5. Job descriptions for the management team
6. Consulting reports and market surveys
7. Copies of legal documents such as leases, franchise and licensing agreements, contracts, licences, patent or trademark registrations, and articles of incorporation
8. Letters of reference
9. Relevant magazine, trade journal, and newspaper articles

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Identify and describe three of the “seven deadly sins for business plans”.

Answers will vary. Among the answers should be three of the following sins: Sin #1: The plan is poorly prepared and has an unprofessional look; Sin #2: The plan is far too slick; Sin #3: The executive summary is too long and rambling-it doesn’t get right to the point; Sin #4: It’s not clear where the product is in terms of development-does it exist or not? Can it be readily manufactured?; Sin #5: No clear answer is provided to the question: “Why would anyone ever want to buy one?”; Sin #6: It gives no clear statement of the qualifications of the management team; Sin #7: Financial projections are largely an exercise in wishful thinking.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. Outline the nine elements of the Business Model Canvas.

1.Customer Segments: Who are the customers? What do they think? See? Feel? Do?
2.Value Propositions: What’s compelling about the proposition? Why do customers buy, use?
3.Channels: How are these propositions promoted, sold and delivered? Why? Is it working?
4.Customer Relationships: How do you interact with the customer through their ‘journey’?
5.Revenue Streams: How does the business earn revenue from the value propositions?
6.Key Activities: What uniquely strategic things does the business do to deliver its proposition?
7.Key Resources: What unique strategic assets must the business have to compete?
8.Key Partnerships: What can the company not do so it can focus on its Key Activities?
9.Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. What three things does the Business Model Canvas fundamentally deliver, according to Alexander Cowan?

Focus: Stripping away the 40+ pages of ‘stuff’ in a traditional business plan, I’ve seen users of the BMC improve their clarity and focus on what’s driving the business (and what’s non-core and getting in the way).
Flexibility: It’s much easier to tweak the model and try things (from a planning perspective) with something that’s sitting on a single page.
Transparency: Your team will have a much easier time understanding your business model and be much more likely to buy in to your vision when it’s laid out on a single page

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

 

  1. Compare the business model canvas to the lean model canvas based on the elements of target, focus and customers.

 

Element Business Model Canvas Lean Model Canvas
Target New and existing businesses Startup businesses purely
Focus Customers, Investors, Entrepreneurs, Consultants, Advisors Entrepreneurs purely
Customers Lays emphasis on customer segments, channels and customer relationships for all businesses Does not lay much emphasis on customer segments because startups have no known or tested products to sell

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

  1. Compare the business model canvas to the lean model canvas based on the elements of approach, competition, and application.

 

Element Business Model Canvas Lean Model Canvas
Approach It lays down the infrastructure, lists the nature and sources of financing and the anticipated revenue streams of the business It begins with the problem, a proposed solution, the channels to achieving the solution, costs involved and the anticipated revenue streams
Competition It focuses on value proposition in quantitative and qualitative terms as way to stay smart in the market It assesses whether the business has an unfair advantage over the rest and how to capitalize on it for better grounding
Application It fosters candid understanding, creativity, discussion and constructive analysis It is a simple problem-solution oriented approach which enables the entrepreneur to develop step-by-step

 

Difficulty: Medium
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

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