Originally Posted by Blue123
I have decided that it is now or never to start up...
I have been working in private practice for someone else now for 4 years and would like some advice on where to start?
Is there any financial help to small business start ups, government initiatives etc?
What basic Equipment do i need, who is the best supplier etc?
How much would i expect to pay to rent a GP or private room?
I am looking at the UK, in particular Stratford on Avon market...
What do i do on day one with zero patients???
How have you all done and overcome this while building and still paying the mortgage??
Under capitalised / under funded new businesses tend to fail early, which should help you to answer and understand your final question.
Research and understand the answers to these questions below and you will be in a much better place to decide whether or not to start your business and, if you decide to go ahead, predict how it might grow and progress.
MGNT 351 midterm study guide
1. Research on the career choices of college seniors shows that:
a. prior to graduation 30% have started or are planning to start their own companies.
b. 1 in 10 male college graduates goes directly into his/her own businesses.
c. nearly half of all minority college seniors plan to start their own companies.
d. nearly a third of women college seniors are interested in starting their own companies.
2. According to the Hayberg Consulting Groups study, which of the following is a characteristic of a typical entrepreneur?
a. A preference for high risk
b. A desire for immediate profit
c. A strong present orientation
d. A high degree of commitment
3. Juan is able to work well in a constantly changing atmosphere and has little concern for what tomorrow will bring. Juan demonstrates which of the following characteristics of a typical entrepreneur?
a. The willingness to take extreme risks
b. A desire for immediate feedback
c. A tolerance for ambiguity
d. A future orientation
4. Surveys show that owners of small businesses believe that:
a. they work harder on their own than if they worked for someone else.
b. they earn less than if they worked for someone else.
c. they are less satisfied than if they worked for someone else.
d. venture capital is relatively easy to raise.
5. Mary and Ted are discussing starting a new business and are asking themselves a series of questions like; "What is the worst that could happen if we fail?" "How likely is that to happen?" They are assessing which potential drawback of small business ownership?
a. The long hours and hard work involved
b. The risk of losing their entire investment
c. The lower quality of life they'll experience
d. The uncertainty of their income
6. Potential drawbacks of small business ownership include:
a. a relatively low guaranteed income.
b. a significantly freer personal schedule but less personal income and assets with which to enjoy the more relaxed schedule.
c. a high likelihood of a lower quality of life while starting and establishing the small business.
d. relatively limited potential for further personal development.
7. More businesses are started by individuals between ____ than another age.
8. The growth of entrepreneurship is being fed by:
a. the return to a manufacturing-based economy.
b. technological advancements.
c. diminished opportunities in overseas markets for larger corporations.
d. the vilifying of large corporations in society.
9. The service sector of American business accounts for ___ percent of all jobs and ___ percent of the gross domestic product.
a. 50, 65
b. 30, 45
c. 70, 80
d. 90, 85
10. Online commerce between 1997 and 2001 will:
c. increase five-fold.
d. increase seven-fold.
11. Women entrepreneurs:
a. are starting businesses at twice the rate of men.
b. own 28% of all U.S. businesses.
c. will own about 50% of all U.S. businesses by the year 2000.
d. find it much easier to find start-up capital than men.
12. Part-time entrepreneurship has an additional advantage over starting up a company full-time in that:
a. it is a much lower risk for the entrepreneur.
b. it doesn't require having a business plan.
c. the entrepreneur can change products and markets more easily.
d. the entrepreneur doesn't need to know the industry as well.
13. Currently, nearly _____ entrepreneurs operate their businesses from home.
a. 10.3 million
b. 17.6 million
c. 23.5 million
d. 30.7 million
14. Which of the following is true about home-based businesses?
a. Over 2/3 of all home-based businesses are owned by minority males.
b. Home-based businesses tend to focus on blue-collar, lower skill industries.
c. The growth of technology has significantly slowed the growth of home-based businesses.
d. The average home-based business earns over $50,000 a year.
15. Approximately ____% of family businesses survive the transition of the leadership to the second generation.
16. More businesses fail because of __________ than for any other reason.
a. incompetent management
b. theft by employees
c. insufficient capital
d. poor choice of location
17. Entrepreneurial businesses fall victim to this circumstance because they think it only benefits large companies. Without it, a firm has no sustainable basis for survival.
a. A lack of strategic planning
b. Poor financial controls
c. Uncontrolled growth
d. Lack of inventory control
18. Startup companies will tend to outgrow their capital base each time their sales increase:
19. The key ingredient-the crucial element-to avoiding the failure of a new business is:
a. the business plan.
b. knowing the business.
c. technical expertise regarding the product.
d. differentiating the business and product from the competition.
20. The key to effective financial management in a start-up is:
a. excellent controls.
b. the use of ABC accounting processes.
c. having sufficient start-up capital.
d. having an adequate inventory on hand.
21. The strategic management process:
a. is especially difficult for the small business because of its limited resources.
b. divides mass markets into smaller, less homogeneous units.
c. provides the small business owner with the tools for managing the uncontrollable elements in the external business environment.
d. helps a small business develop the game plan that guides it in creating its mission, vision, goals, and objectives.
22. The primary output of the strategic management process should be:
a. a matching of its strengths and weaknesses to the opportunities and threats in the environment.
b. an enticement to outside investors and lenders to put money into the business.
c. a complete explanation of the company's product or service.
d. a description of the company's competitive situation.
23. The strategic planning process for small businesses is:
b. the same as it is for a large company.
c. generally done by top management with little or no participation by employees.
d. product-focused and similar to that for large companies.
24. Which of the following is true about successful entrepreneurs and their vision?
a. It is created independently of their market or their customers.
b. It includes their understanding of the competition and their key market segments.
c. They are able to communicate it and their enthusiasm for it to all those around them.
d. They create it in cooperation with their employees.
25. Answering the question "What business am I in?" defines the company's:
b. assessment of its own strengths and weaknesses.
c. external opportunities and threats.
d. goals and objectives.
26. The key to the success of the strategic plan is:
a. a thorough competitive analysis.
b. building the core competencies and focusing on them.
c. an accurate SWOT analysis.
d. properly segmenting the target market for maximum effectiveness.
27. _______ involves carving the mass market up into smaller, more homogeneous units and then attacking each segment with a specific marketing strategy designed to appeal to its members.
a. Competitive analysis
b. Market segmentation
c. Product differentiation
d. Strategic management
28. _______ are positive internal factors that contribute towards accomplishing the company's objectives.
29. _______ are negative external forces that inhibit the firm's ability to achieve its objectives.
30. A small business owner would conduct a competitive analysis in order to:
a. influence customers' perceptions of the company and products' image.
b. avoid surprises from existing competitors and to identify potential new competitors.
c. divide the market into smaller, homogeneous units.
d. scan the environment for weaknesses and strengths on which to capitalize.
31. Joan is seeking to answer a series of questions such as: How do competitor's cost structures compare to ours, what new competitors are entering the industry, what do our customers say about competitors, etc. By asking these questions, Joan is:
a. conducting a SWOT analysis.
b. identifying her company's key success factors.
c. formulating strategic options for her company.
d. performing a competitive analysis.
32. When Josh and Michael Bracken operated their Nursery and Garden Center, they decided the key to survival against the mega-nursery centers was:
a. their ability to compete on the basis of price.
b. to differentiate themselves by offering a local tailored selection of products.
c. in their moving to a more accessible location.
d. to merge with another local nursery and compete based on size.
33. ________ are the broad, long-range attributes the small business seeks to accomplish; _______ are the specific, measurable milestones the company wants to achieve.
a. Goals; objectives
b. Goals; strategies
c. Objectives; goals
d. Strategies; goals
34. The small firm's "game plan" is its:
c. competitive edge.
35. The principle behind a _______ strategy is to select one or more market segments, identify customers' special needs, and approach them with a good or service designed to excel in meeting these needs.
36. Small businesses tend to have which of the following competitive advantage(s) due to their size?
a. Lower operating and manufacturing costs
b. Quick response to customer needs
c. The ability to gain significant market share due to a concentration of resources
d. A depth of management expertise
37. Small bookstores have a giant killer of a competitive advantage in their:
a. lower costs.
b. better locations.
c. customer service.
d. large selection.
38. The operational strategies that a small company uses:
a. are developed early in the strategic planning process.
b. are always focused on one generic strategy.
c. should be indirect and nonaggressive in the chosen markets.
d. should be directly related to its competitive advantages in the markets it serves.
39. The ____ is a set of measures unique to the company that gives managers a quick and comprehensive view of how the business is doing and includes both financial and operational factors.
a. core competencies
b. key success factors
c. balanced scorecard
d. action plan
40. It is important for the small business owner to remember that the strategic planning process is:
a. an ongoing process that must be repeated.
b. a top management process completed only once every two years.
c. a process which involves all the employees once every five years.
d. one that should produce a detailed, elaborate plan for running the business over the next 3-5 years.
41. The key to choosing the "right" form of ownership is:
a. knowing the cost factor in time and money.
b. understanding how each form affects both business and personal circumstances.
c. having an experienced attorney and accountant to advise you in the choice.
d. the fact you can not change the form of ownership once your company is established.
42. Which of the following questions influence an entrepreneur's choice of a business form of ownership?
a. Do I understand the advantages and disadvantages of each type of ownership?
b. What are my succession and retirement plans?
c. To what extent am I willing to be personally responsible for the debts of the business?
d. How much of my business can I outsource to make up for my lack of expertise?
43. The most common form of business ownership is the:
a. sole proprietorship.
44. The name chosen for a small business is very important because:
a. it reflects on the owner's personality because the owner is the business.
b. it can attract the attention of potential customers and encourage people to think about the business.
c. names are expensive to create and copyright.
d. it determines where the business will be listed in the classified pages of the telephone directory.
45. A small business's name should have which of the following characteristics?
a. Complex and sophisticated to fit the business as it grows
b. Similar to what other businesses in the same product line use
c. Sufficiently long to completely describe what the company does
d. Short and easy to remember
46. The most critical disadvantage of the sole proprietorship is:
a. unlimited personal liability.
b. limited access to capital.
c. lack of continuity.
d. limited skills and capacities of the owner.
47. Probably the most important feature of a partnership agreement is:
a. that it identifies the name of the partnership.
b. that it states the purpose and location of the business.
c. that it determines how the partnership will pay taxes and fees.
d. that it resolves potential sources of conflict.
48. The three key elements of any partnership are:
a. common ownership in the business, sharing the business' profits or l losses, and the right to participate in managing the business.
b. equal ownership in the business, sharing its profits and losses, and the right to participate in managing the business.
c. equal ownership in the business, sharing its profits and losses, and the right to limited liability for all partners.
d. common ownership in the business, sharing its profits and losses, and the right to limited liability for all partners.
49. In her partnership, Ana has unlimited liability for the partnership's debts. She would be the __________partner.
50. A significant disadvantage of a partnership is:
a. the unlimited personal liability for all partners.
b. the inability to attract either additional capital or new partners due to the complexity of rewriting the agreement.
c. the difficulty of disposing a partnership interest without dissolving the partnership.
d. the regulatory complexity under which a partnership must be formed and operated.
51. In a general partnership:
a. each partner is held responsible for an agreement or a decision made by any one of the partners.
b. partners can be held responsible only for decisions they make personally.
c. no partner can be held legally responsible for decisions since the partnership itself is a legal entity.
d. no decision is binding unless all partners agree to it in writing.
52. A __________ is a relatively new form of ownership that resembles a corporation without many of the restrictions.
a. joint venture
b. master limited partnership
c. limited liability company
d. limited partnership
53. The __________ is a separate legal entity apart from its owners and may engage in business, make contracts, sue and be sued, and pay taxes.
a. sole proprietorship
d. joint venture
54. A corporation receives its authority to operate from:
a. the federal government.
b. the state.
c. the board of certification.
d. the stockholders.
55. The primary reason entrepreneurs choose to incorporate is because of:
a. the corporation's ability to attract capital.
b. the need to attract top quality management talent to grow the business.
c. the lower tax rates inherent in the corporate form of ownership.
d. the limited liability of stockholders.
56. The form of ownership with the greatest ability to accumulate capital is the:
a. sole proprietorship.
c. joint venture.
57. Which of the following is a disadvantage of the corporation form of ownership?
a. An inability to accumulate capital
b. The unlimited liability to the members of the board
c. Double taxation on profits and individuals
d. The lack of continuity
58. This form of ownership is the same as a corporation in terms of legal characteristics even though Congress is considering legislation that would further simplify its formation and running. Its distinction from a corporation is made for federal income tax purposes only.
b. master limited partnership
c. sole proprietorship
d. limited liability company
59. Jeff is forming a company. If he chooses a/an __________ form of ownership, he can have no more than 35 stockholders and must have only one class of stock.
d. master limited partnership
60. An S-corporation form of ownership overcomes which disadvantage of the regular or "C"
corporation form of ownership?
a. The double taxation issue
b. The expense and difficulty of formation
c. The amount of regulation and red tape involved in its operation
d. The potential loss of control by the founder
61. A business plan for the small business owner:
a. is of relatively little importance due to the dynamic nature of the marketplace.
b. is synonymous with the marketing plan.
c. tends to stress how the entrepreneur will operate rather than detailing what he/she wants to accomplish.
d. contains both a marketing plan and a financial plan.
62. Small businesses can compete with larger rivals with bigger budgets by employing unconventional, low-cost creative techniques known as:
a. market research.
b. astonishing customer service.
c. guerrilla marketing techniques.
63. The marketing plan should include certain key objectives, such as:
a. determining product costs through market research.
b. pinpointing the specific target markets a small business will serve.
c. determining what costing strategies to use.
d. discovering what the company's ETDB index is.
64. A demographic trend is like a train for the small business owner in that:
a. he/she needs to catch it and ride it to wherever it is going.
b. he/she needs to discover where it is going early and decide whether or not to get on board.
c. the small business will be "run over" if it doesn't get out of the way and try to work with the "spin-offs" from the trend.
d. it is a slow process that is easily caught at several points, and the small business owner has lots of time to consider his/her options.
65. Market research answers what important question for the small business owner?
a. How shall I set up my distribution system?
b. What should my goals and objectives be in my marketing plan?
c. Who are my customers and what are they looking for?
d. What form of business ownership would be most effective in this market?
66. The primary goal of marketing research is to:
a. discover potential competitors.
b. reduce the risks associated with business decisions.
c. determine how to allocate distribution resources.
d. help management choose the appropriate promotional tool.
67. The first, and most critical, step in conducting market research is to:
a. define the research problem clearly.
b. collect data from available sources.
c. design questionnaires and surveys.
d. choose how to collect the data.
68. Effective one-to-one marketing involves:
a. identifying your best customers.
b. seeing customer complaints as an opportunity to improve service.
c. learning what the customers' buying cycle is.
d. all of these.
69. Most marketing experts contend that the greatest marketing mistake small businesses make is:
a. failing to identify the target market.
b. spending too little on advertising.
c. underpricing their products and services.
d. spending too little on quality improvement.
70. When it comes to the target market, most successful businesses:
a. have broad target markets, permitting them to offer a wide variety of products.
b. have little concern for the image of their company, focusing solely on how their products meet target market needs.
c. have well-defined "portraits" of the customers they want to attract.
d. don't have a clue as to their target market but put forth enough effort to succeed anyway.
71. The majority of customers who stop patronizing a particular store do so because:
a. its prices are too high.
b. its quality is too low.
c. an indifferent employee treated them poorly.
d. it failed to advertise enough.
72. _______% of dissatisfied customers never complain about rude or discourteous service, but ______% will not buy from that business again.
a. 10; 55
b. 26; 75
c. 45; 67
d. 96; 91
73. Attracting a new customer costs ______ as much as keeping an existing one.
b. five times
74. To build an effective customer service program, it is important to:
a. offer low prices.
b. train key employees to watch for and intervene when there are problems.
c. swiftly discipline employees who mistreat customers.
d. let managers wait on customers occasionally.
75. Which company would rate the highest on an "Easy to do Business With" index?
a. Thomas's bakery won't take credit cards.
b. Louies Lower Level sandwich shop is in the basement of a building with an alley entrance.
c. Jane's Tailor shop is open from 10 am to 10 pm six days a week.
d. Country Tom Motors service department only allows the service manager to answer the phone.
76. Small businesses are able to maintain a leadership role in innovation by:
a. using their size, flexibility, and speed to their advantage.
b. spending much more money on R & D than large companies do.
c. foreseeing trends better and far enough in advance that they can spread innovation costs over several years.
d. making better use of technology than large companies.
77. Small companies with limited financial resources can often use __________ as a way to differentiate themselves from larger competitors.
b. lower prices with higher quality
c. high price and high quality
d. customer service
78. Numerous surveys have concluded that the most important element of service is:
a. the personal touch.
b. convenient business hours.
c. speedy transactions.
d. innovative product design.
79. Well-designed web pages:
a. have extensive graphics and make heavy use of pictures and clip art.
b. are interactive and offer question and answer capability.
c. focus on product and price information.
d. do not use links to avoid misdirecting the customer.
80. Currently, the average web user is:
a. male, 18-23, in college, with an annual income of $27,000 to $33,000.
b. female, over 40, some college, with an annual income of less than $ $43,500.
c. of either gender, between 12-17, in high school, with an annual income of $6,000-$12,000.
d. male, 35, has a college degree and an annual income over $69,000.
81. Killer web sites:
a. offer customers links to other sites.
b. include a 1-800 phone number option.
c. have a complex and colorful design.
d. have all of these elements.
82. About ___ of all entrepreneurs report they do not spend adequate time tracking their financials.
a. 10% b. 33%
c. 50% d. 75%
83. The ______ shows what assets the business owns and what claims creditors and owners have against those assets.
a. balance sheet
b. income statement
c. sources and uses of funds statement
d. pro forma
84. John is reviewing the company's costs and expenses against revenue for the last year. John is reviewing the firm's:
a. balance sheet.
b. income statement.
c. sources and uses of funds statement.
d. pro forma.
85. The statement of cash flow:
a. compares costs and expenses against a firm's sales.
b. is built on the basic accounting equation: Assets = Liabilities + Capital.
c. shows what assets the business owns and what claims creditors and owners have against those assets.
d. shows changes in working capital by listing sources and uses of funds.
86. One of the most important tasks facing an entrepreneur is:
a. establishing a large enough reserve of capital.
b. earning enough the first year to provide an adequate return on i investment.
c. the deferment of taxes.
d. determining the funds needed for a company start-up.
87. Michelle Becker's target income in her business for the upcoming year is $78,500. The company's gross profit margin averages 32.6% of sales, and its total operating expenses run 24.7% of sales. To achieve her target income, sales of Michelle's company should be:
88. If Michelle Becker expects her company's cost of goods sold for the upcoming year to be $669,734, and its average inventory turnover to be 5.3 times, she should expect an average inventory level of:
d. cannot be determined with information provided.
89. A technique that allows the small business owner to perform financial analysis by understanding the relationship between two accounting elements is called:
a. creating the pro forma.
c. break-even analysis.
d. ratio analysis.
90. As a general rule, financial analysts suggest that a small business maintain a/an ______ ratio of at least 2:1.
a. debt-to-net worth
c. inventory turnover
91. The Shell Shop has a current ratio of 2.61:1. Its owner could liquidate its current assets at _____ of their book value and still manage to pay its current liabilities in full.
d. insufficient information given to determine
92. When a company is forced into liquidation, owners are most likely to incur a loss when selling:
a. accounts receivable.
c. marketable securities.
d. real estate.
93. ________ is one indication that a small business may be undercapitalized.
a. A current ratio below 1:1
b. A quick ratio above 2:1
c. A debt-to-net worth ratio above 1:1
d. A net-sales-to-working capital ratio equal to 3:1
94. Which of the following would be a sign that a company is overextended in its debt?
a. A low debt ratio compared to the industry average
b. A debt-to-net worth ratio of 0.12 to 1
c. A times-interest-earned ratio that is far below the industry average
d. A high inventory turnover ratio
95. An above average inventory turnover indicates that the business:
a. has an illiquid inventory.
b. is healthy, with a salable inventory.
c. needs to review its pricing policies.
d. has below average performance and is facing bankruptcy if not corrected quickly.
96. A business that turns its receivables over 5.9 times a year would have an average collection period of about
a. 30 days.
b. 2/10, net 30.
c. 71 days.
d. 62 days.
97. A business with a payables turnover ratio of 10.4 times a year would have an average payable period of about
a. 3 days.
b. 30 days.
c. 35 days.
d. 62 days.
98. _______ publishes key business ratios for 22 retail, 32 wholesale, and 71 industrial business categories.
a. Robert Morris Associates
b. Boston Consulting Group
c. Bank of America
d. Dun and Bradstreet, Inc.
99. ______ publishes Annual Statement Studies, showing ratios and other financial data for over 350 different industrial, retail, and wholesale categories.
a. Robert Morris Associates
b. Boston Consulting Group
c. Bank of America
d. Dun and Bradstreet, Inc.
100. The break-even point occurs where:
a. the firm's fixed expenses equal its variable expenses.
b. the creditors' interest equals the owner's interest in the business.
c. total revenue equals total expenses.
d. assets and liabilities are equal on the balance sheet.
101. A survey of small business owners revealed that the greatest financial obstacle to their companies success was:
a. the inability to obtain bank loans.
b. uneven cash flow.
c. slow payment of receivables.
d. the burden of state and federal taxes.
102. The first step in managing cash more effectively is:
a. having an adequate cash reserve for emergency expenditures.
b. rapid payment of accounts payable.
c. speeding up payment of accounts receivable.
d. understanding the company's cash flow cycle.
103. __________ companies are most likely to suffer cash shortages.
104. Which of the following items appear on a cash budget?
b. bad debt expenses
c. noncash items not involving cash transfers
d. cash receipts and disbursements
105. Once the owner determines an adeaquate minimum cash balance, what is the next step in creating a cash budget?
a. Forecasting profits
b. Forecasting sales
c. Forecasting cash receipts
d. Forecasting cash disbursements
106. A cash budget is only as accurate as the __________ forecast from which it is derived.
107. Which of the following would be a potential source of information for a sales forecast?
a. past records
b. trade associations and the Chamber of Commerce
c. similar firms
d. all of these
108. The fact that the cash budget illustrates the flow of cash in a business helps the owner to:
a. accelerate accounts payable payments.
b. get a seasonal line of credit rather than an annual line of credit.
c. slow accounts receivable payments.
d. track the effect of depreciation and bad debt.
109. One recent study showed that about __________ of small businesses used formal techniques to track their cash balances.
110. The "big three" of cash management include:
a. accounts receivable, overhead, and inventory.
b. accounts payable, accounts receivable, and taxes.
c. accounts receivable, accounts payable, and inventory.
d. accounts receivable, prices, and expenses.
111. The first step to building a workable credit policy is:
a. screening customers carefully before granting them credit.
b. establishing a firm credit policy in writing.
c. developing a policy for pursuing past-due accounts.
d. creating a thorough credit application.
112. Which of the following are credit reporting services a small business owner could use to check a customer's credit?
a. National Association of Credit Management
c. Dun & Bradstreet
d. All of these
113. When a small business is writing off more than __________ % of its sales as bad debts, it needs to tighten its credit and collection policies.
114. Once a small business has established a firm written credit policy and communicated it, the next step in building an effective credit policy is to:
a. send invoices promptly.
b. determine what percentage of sales are being written off as bad debt.
c. create a simple credit application.
d. create a "tracking file" of events.
115. Once a credit account becomes past due, a small business owner should:
a. wait patiently; the customer will most likely pay the bill sooner or l later.
b. turn the account over to a collection agency the day it becomes past due.
c. contact the customer immediately, ask for full payment, and set a deadline.
d. call the "deadbeat" in the middle of the night and make harassing and threatening remarks until he pays.
116. If a small business owner receives a "Notice of Filing" from a customer, he should:
a. send a second notice.
b. ask that customer for a portion of the purchase price up front.
c. arrange for a lockbox for future payments from that customer.
d. immediately file a proof-of-claim.
117. When managing your accounts payable, as a small business owner you should:
a. take advantage of any float you have before your check is cashed.
b. send second notices when payables are only 15 days past due.
c. pay payables as early as possible.
d. stretch out all payables as long as possible.
118. Exchanging goods and services for other goods and services, or __________, is an effective way for a small business to conserve cash.
d. credit sales
119. Nearly __________ of U.S. companies use leasing as a cash management strategy.
120. When investing surplus cash, the small business owner's key objectives should be:
a. high yields.
b. current income.
c. liquidity and safety.
d. long-term yield.
121. A business plan:
a. is developed through an intuitive process by which the entrepreneur records his/her plans for the business in the future.
b. focuses on the internal elements of the business.
c. forces an entrepreneur to think a business idea through, considering both its positive and its negative aspects.
d. is a strategic plan for a business that must be supplemented by operational plans once financing is secured.
122. The primary purpose of building a business plan is to:
a. raise capital.
b. attract potential employees.
c. provide direction, to create a "target" to shoot for.
d. meet SEC requirements designed to protect lenders and investors.
123. The second essential purpose for creating a business plan is:
a. to guide the operation of the company by charting its future course and devising a strategy for following it.
b. to attract lenders and investors.
c. to file with the SEC before making a public stock offering.
d. to attract potential managers and employees to run the new venture.
124. A business plan:
a. reduces the risk and uncertainty involved in starting a new company.
b. is a guarantee of success for the small company.
c. should be done by professional writers in consultation with the owner.
d. should be kept in outline form to avoid overstructuring the company.
125. The _____________ is the first part of the business plan. It summarizes all the relevant points of the deal, but it should be the last part written.
a. executive summary
b. mission statement
c. industry analysis
d. marketing strategy
126. ___________ are short-term, specific targets which are attainable, measurable, and controllable.
d. Standard operating procedures
127. Defining the target market's potential and describing its characteristics is part of the:
a. description of the product line.
b. marketing strategy portion of the business plan.
c. competitive analysis.
d. business strategy section of the business plan.
128. The focus of the competitor analysis section of the business plan is to:
a. demonstrate the existence of the market for your product.
b. show that your experienced management team is better than your competitors'.
c. demonstrate your company's advantage over competitors.
d. describe your overall product line.
129. Investors look for which of the following when reviewing the experience of the management team of a new venture?
a. Assets that can be used as collateral for the loan/investment
b. Experience, talent, and integrity
c. Plans for keeping the management team in place
d. A hiring strategy that has the customer clearly in focus
130. Which of the following is true about the financial data included in the business plan?
a. Some venture bankers discount owners' projections by 50%.
b. Only the realistic forecast must be included, although the pessimistic and optimistic forecasts should be available if requested.
c. The data must be accurate because it is often accepted without further verification.
d. It should include only the pro forma and the firm's financial statement from the previous year.
131. An equity investor's objective with the early stage financing of a business is to earn a ______ annual return over the life of the investment.
a. 30% to 50%
b. rate that is 10% more than going bank rates
c. 60% to 75%
d. 15% to 25%
132. An external test of a business plan that revolves around proving that a market exists is the:
a. competitive test.
b. consumer test.
c. value test.
d. reality test.
133. When the entrepreneur presents his/her business plan, he/she usually:
a. takes 1/2 of a day.
b. only gets 15 to 30 minutes.
c. takes one hour.
d. takes several days, and does it in sections.
134. According to Dean Suposs, the best business presentations:
a. are kept low key, clear, complete with lengthy and detailed explanation.
b. focus on the written document and verbal explanation.
c. emphasize technical jargon to show the entrepreneur's expertise.
d. cover the highlights while answering the question, "What's in it for the investor?"
135. When presenting the business plan it is important to:
a. show enthusiasm for the venture.
b. use visual aids.
c. avoid technical jargon.
d. do all of these.
136. Which of the following is true about banks as a source of capital for new ventures?
a. Banks are rarely the sole source of capital for a new venture.
b. Banks are looking for an annual return of 30-50% on loans to new ventures.
c. A bank's risk is limited to 50% of the loan since the balance of the loan is always covered by owner collateral.
d. Banks are usually the first source of capital for entrepreneurs and new ventures.
137. The executive summary should contain which of the following information?
a. A brief statement of the financial needs of the business and what the money would be used for
b. A short description of potential buyers
c. A brief history of the business
d. A complete description of your business
138. Which of the following elements should be identified in the business plan's market analysis?
a. A brief description of the strategic actions you will take to make your firm a success
b. Who your existing competitors are
c. How your products stand up against existing products in the market
d. External market influences, such as economic factors, social factors, and the like
139. If your product is a consumer product, in the market analysis section you should address:
a. what competitors might try to enter your market.
b. what is the nature of the buying cycle.
c. the question about what makes your company unique.
d. a projection of the cost of operation.
140. Your cash budget and an explanation of how much money you need to make your company and product a long-term success are the subject matter of the:
a. financial plan.
b. strategic plan.
c. business strategic plan.
d. strategic action plan.