sbm2 – Flashcard
Unlock all answers in this set
Unlock answersquestion
a business plan is a written document that sets out the basic idea underlying a business and its related startup considerations
answer
t
question
One of the primary functions of a business plan is to serve as a selling document to convince key individuals that the venture has real potential.
answer
t
question
The business plan is used primarily to aid in the development of relationships with outsiders and not so much with insiders.
answer
f
question
a business plan is used to provide a statement of goals and strategies for use by company outsiders, and aid in the development of relationships with insiders
answer
f
question
A business plan should always be written before deciding to go forward with a startup business idea.
answer
f
question
An extensive business plan that is not followed is more valuable than no business plan at all.
answer
f
question
10. Once the decision is made to prepare a business plan, it should always be a comprehensive plan.
answer
f
question
A written business plan helps to ensure systematic, complete coverage of the important factors to be considered in starting a new business.
answer
t
question
Pro forma financial statements reflect the past financial performance of a firm.
answer
f
question
Though all financial statements are important, the cash flow statement deserves special attention.
answer
t
question
Business plans should provide facts to support the statements and not just tell a story.
answer
t
question
Investors are more product-oriented than market-oriented.
answer
f
question
Describing a product or service should be in lay terms even if the product is technical in nature.
answer
t
question
Highly sensitive information should not be included in the business plan; the entrepreneur should submit only an initial summary of the plan to potential investors to avoid exposing important details.
answer
f
question
A business model explains how a business will generate profit and cash flow from its revenue streams considering its cost structure and investment size.
answer
t
question
16. Incubator organizations can provide advice on structuring a new business.
answer
t
question
With the right assistance from professional sources (e.g., attorneys, accounting firms, incubator services), the entrepreneur can avoid direct involvement in developing the business plan.
answer
f
question
business model
answer
a design for the successful operation of a business, identifying revenue sources, customer base, products, and details of financing.
question
business plan
answer
a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals.
question
comprehensive plan
answer
process that determines community goals and aspirations in terms of community development. The outcome of comprehensive planning is the Comprehensive Plan which dictates public policy in terms of transportation, utilities, land use, recreation, and housing.
question
cost structure
answer
refers to the types and relative proportions of fixed and variable costs that a business incurs. The concept can be defined in smaller units, such as by product, service, product line, customer, division, or geographic region.
question
excecutive summary
answer
a short document or section of a document, produced for business purposes, that summarizes a longer report or proposal or a group of related reports in such a way that readers can rapidly become acquainted with a large body of material without having to read it all.
question
exit strategy
answer
a preplanned means of extricating oneself from a situation that is likely to become difficult or unpleasant
question
feasibility analysis
answer
An analysis and evaluation of a proposed project to determine if it (1) is technically feasible, (2) is feasible within the estimated cost, and (3) will be profitable. Feasibility studies are almost always conducted where large sums are at stake. Also called feasibility analysis.
question
financial plan
answer
a financial plan is a comprehensive evaluation of an individual's current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans.
question
pro forma statement
answer
based on certain assumptions and projections. For example, a corporation might want to see the effects of three different financing options. Therefore, it prepares projected balance sheets, income statements, and statements of cash flows.
question
operations and development plan
answer
the process of planning strategic goals and objectives to tactical goals and objectives. ... An operational plan is the basis for, and justification of an annual operating budget request.
question
Regardless of the type of business, the consumer-oriented marketing philosophy is the best choice among the competing alternatives.
answer
t
question
Because many small business owners have strong production skills, they often attend mostly to the marketing side of the business to compensate.
answer
f
question
A detailed analysis of competitors is an important part of a firm's formal marketing plan.
answer
t
question
It is best to write a marketing plan before collecting marketing research data.
answer
f
question
Marketing research is defined as the gathering, processing, reporting, and interpreting of marketing information.
answer
t
question
Small businesses typically conduct less marketing research than big businesses, partly because they lack an understanding of the basic marketing research process.
answer
t
question
Personal interview surveys are attractive as a marketing research method because these are inexpensive to conduct.
answer
f
question
Small business owners can now buy inexpensive personal computer software that can perform statistical calculations and generate report-quality graphics.
answer
t
question
Marketing research is an effective supplement, but not a replacement, for the intuitive judgment of entrepreneurs.
answer
t
question
Determining market potential is the process of locating and investigating buying units that have purchasing power and needs that can be satisfied with the product and/or service being offered.
answer
t
question
When a strategist divides the total market for a product and/or service into groups with similar needs, so that each group is likely to respond to the same marketing strategy, he or she is engaging in a practice called market segmentation.
answer
t
question
Because of the relatively inconsequential amount of sales conducted by a typical small business, the majority of entrepreneurs need not be concerned with formulating accurate sales forecasts.
answer
f
question
Because sales forecasts revolve around specific target markets, the market should be defined as precisely as possible.
answer
t
question
The income statement shows a firm's financial position on a specific date.
answer
t
question
Jan's bank has asked her to show them how her firm's financial position has changed in the past year. She should provide the company's balance sheet.
answer
f
question
The income statement answers the question: "How profitable is the business?"
answer
f
question
The terms earnings, profits and income refer to different amounts on the income statement.
answer
f
question
Profits reward owners for investing in a company, but they do little to promote future growth.
answer
f
question
The balance sheet shows a firm's assets, liabilities, and owners' equity at a specific point in time.
answer
t
question
Assets that can be converted to cash relatively quickly are said to be liquid.
answer
t
question
Accounts payable consist of payments due from a firm's customers.
answer
f
question
Ownership equity represents the owner's investment in the company, which can be either his/her cash invested in the company or money borrowed from a bank to purchase fixed assets.
answer
f
question
Jane is determining the overall financial situation for her business. Since she has to report to a group of investors, she should just give them the income statement.
answer
f
question
The cash flow statement answers the questions "From where did the cash come?' and "Where did the cash go?"
answer
t
question
A new business needs to manage cash flows carefully because if a firm runs out of cash, it is out of business.
answer
t
question
A profitable company may not have positive cash flows.
answer
t
question
Liquidity represents the degree to which a firm can meet maturing short-term debt obligations with available working capital.
answer
t
question
The best financial ratio to determine a company's ability to pay debt is the debt ratio.
answer
f
question
A conventional measure of a firm's liquidity is a comparison of current assets to current liabilities.
answer
t
question
Increasing debt levels is a proven way to increase the owner's return on equity.
answer
t
