Prepare for your Entrepreneurship exam with these business plan practice questions. This guide covers business plan components, executive summaries, market analysis, and financial projections.
Q: A business plan provides detailed financial information that shows how your business will succeed in earning a profit.
Answer: True
Q: Writing a business plan is one of the easiest things you will do as an entrepreneur.
Answer: False
Q: To convince investors that the idea is solid, you will need a completely new product or service or one that is less expensive than products or services that already exist.
Answer: True
Q: A good business plan should describe what products or services will be introduced over the next five years.
Answer: True
Q: The backgrounds and experience of the leadership team of your company help lenders make financing decisions.
Answer: True
Q: Not all new businesses need a business plan.
Answer: False
Q: Lenders require a business plan before they will consider financing a business.
Answer: True
Q: Once your business is up and running, you will rarely use your business plan.
Answer: False
Q: A business plan shoulda. explain who will supply your business with goods.b. show how your business will win over customers from competitors.c. explain who will run your business.d. all of these
Answer: d.
Q: A business plan explains how your product or servicea. will be produced.b. will be sold.c. is either new or better than existing products or services.d. all of these
Answer: d.
Q: Long-term sales projections area. for ten years in the future.b. for two to four years after startup.c. not included in a business plan.d. for five years in the future.
Answer: d.
Q: Before lenders will loan money to a new business,a. they will want to interview all potential employees.b. the new business must have at least two years’ worth of work already lined up.c. they need to be convinced that the leadership team of the business have the skills and characteristics necessary to succeed.d. all of these
Answer: c.
Q: Which of the following is not a purpose of a business plan?a. To describe the backgrounds and experience of the leadership team of the businessb. To describe the backgrounds and experience of your suppliersc. To explain the idea behind your businessd. To explain how you expect to achieve specific objectives
Answer: b.
Q: Before they will consider financing a business, lenders requirea. an organizational chart that lists all of your employees.b. a business plan.c. the history and background of your product.d. all of these
Answer: b.
Q: Working on a business plan helps youa. think through business strategies.b. identify problems that you may encounter.c. recognize limits.d. all of these
Answer: d.
Q: A business plan is important for all of the following reasons excepta. it helps you communicate your ideas to others.b. it helps you decide what to sell.c. it can help you secure financing for your business.d. it makes you think about all aspects of your business.
Answer: b.
Q: Regardless of the business, all business plans serve the same basic purposes.
Answer: True
Q: Only corporations need to include a section detailing the form of ownership in a business plan.
Answer: False
Q: The marketing section of your business plan should describe the location of your business.
Answer: True
Q: A financial statement based on projected revenues and expenses is called an informal financial statement.
Answer: False
Q: The financial management section of your business plan should state how much money you need to borrow and how you plan to use the money.
Answer: True
Q: A brief explanation of why you are asking for a loan and what you plan to do with the money is called an executive summary.
Answer: False
Q: The executive summary appears after the body of the business plan.
Answer: False
Q: A handwritten business plan is acceptable if it is neat, well organized, and inviting to read.
Answer: False
Q: The introduction section of a business plan contains all of the following excepta. an identification of risks.b. a description of the nature of the business.c. the legal structure of the business.d. the advantages your business has over your competitors.
Answer: a.
Q: The marketing section of your plan explainsa. how you plan to enter the market.b. who your prospective customers are.c. how you plan to deal with competition.d. all of these
Answer: d.
Q: Which of the following is not an element of the financial management section of your plan?a. Funding request and return on investmentb. Distribution of profits and lossesc. Identification of risksd. Financial statements
Answer: b.
Q: In the financial management section of its business plan, a new business must includea. projected financial statements.b. copies of all rental agreements.c. current financial statements.d. all of these
Answer: a.
Q: Information about necessary equipment for your business is included in a business plan’sa. operations section.b. marketing section.c. concluding statement.d. financial management section.
Answer: a.
Q: A business plan’s title page includes all of the following excepta. the owner’s name.b. the name of the company.c. a brief description of the business.d. the date.
Answer: c.
Q: An executive summarya. includes supporting documents that back up statements made in the body of the report.b. should be no longer than one or two paragraphs.c. should be written before the business plan is completed.d. states how much you want to borrow
Answer: d.
Q: The appendix of a business plan might includea. tax returns of the business owner.b. letters of recommendation.c. a copy of required licenses.d. all of these
Answer: d.
Q: To convince readers that you have come up with a practical business idea, you must include information and data from objective sources.
Answer: True
Q: The Small Business Administration (SBA) has at least one office in every U.S. state.
Answer: True
Q: SCORE is cosponsored by the SBA.
Answer: True
Q: Entrepreneurs can hire experts from trade associations to help them prepare business plans.
Answer: False
Q: A local chamber of commerce can provide information on trends affecting local businesses, local resources, and zoning and licensing information.
Answer: True
Q: The Internet is not a trusted source of information on how to develop a business plan.
Answer: False
Q: An undefined target market can ruin a business plan.
Answer: True
Q: Never reveal your competitors’ strengths in your business plan—focus only on what they have done wrong.
Answer: false
Q: The only person who should read a business plan is the owner and potential investors.
Answer: False
Q: The SBAa. is an independent agency of the federal government.b. provides loans and loan guarantees to entrepreneurs and small businesses.c. has at least one office in every U.S. state.d. all of these
Answer: d.
Q: Small Business Development Centers (SBDCs)a. are often located at community and state colleges.b. are made up of working and retired business professionals.c. provide real-world advice and know-how for a small fee.d. all of these
Answer: a.
Q: SCORE isa. cosponsored by the federal government.b. made up of working and retired business professionals.c. a for-profit association.d. an independent agency of the federal government.
Answer: b.
Q: Trade associations provide all of the following to entrepreneurs excepta. small loans.b. networking opportunities.c. education.d. valuable information
Answer: a.
Q: Online business resourcesa. are not as reliable as print resources.b. should not be used in a business plan.c. are not available from the SBA.d. can be found via search engines.
Answer: d.
Q: Financial projections in a business plan shoulda. not be included if you could not locate reliable financial information.b. be based on solid evidence.c. be very optimistic so that investors will be impressed.d. based on your best guess.
Answer: b.
Q: Your business plan musta. clearly define your market.b. never overlook the competition.c. be consistent.d. all of these
Answer: d.
Q: Which of the following is least likely to be a helpful resource for your business plan?a. SBA publicationsb. books on entrepreneurshipc. Entrepreneur magazined. National Geographic
Answer: d.