mgmt375 t3 ch6 – Flashcards
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What are the functions of the business plan?
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it guides the company's operations by charting its future course and devising a strategy for folliwng it and to attract lenders and investors
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Whats the primary purpose of building a business plan?
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serves as a strategic compass that keeps a business on course as it travels into an uncertain future
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What's the second essential purpose for creating a business plan?
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essential to raising the capital needed to state a business
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The Real Value in preparing a business plan is int the
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creative process the entreprenuer has to go through
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Reality Test
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revoles around proving that a market for the product or service really does exist
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Competitive Test
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evalutes the company's relative position to its key competitors
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Value Test
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to convince lenders and investors to put their money into the venture, a business plan must prove to them that it offers high probability of repaymentor an attartice rate or return
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What things should you remember when you actually present a busines plan to potential investors or employees?
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that every potential lender and investor you talk to is things whtas in it for be. be sure to answer the question in your presentation
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5 Cs of credit
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carpital, capacity, collateral, character, and conditions
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Capital
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lenders expect small businesses to have an equity base of investment by the owners that will help support the venture during times of finacial strain
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Capacity
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a synonym for cash flow. the bank must be convinced of the firms ability to meet its regular finacial obligations and to repay the bank loan, and that takes cash
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Collateral
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includes the assests the owner pledges to the bank as security for repayment of the loan
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Character
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before approaving a loan to a small business, the banker must be satisfied with the owners character
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Conditions
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interest rates, the health of the nation's economy, industry growth rates, etc--surronding a loan request also affect the owners chance of recieving funds
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Whats the difference bertween benefits and feautres?
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features are characteristics that physically describe your product or service. benefits describe how your product or service will actually help the customer solve his or her problem
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What are the three interrellated componets of a feasability analysis?
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industry and market, product or service, and financial
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Industry and Market
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industry data such as market size, growth trends, and the relative economic and competitve str4ength of the major firms in the industry set the stage for a better understanding of the viability of a new business
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Product or Service
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