Business Planning
Final Exam Questions
Course Introduction
Business Planning is a comprehensive course designed to equip students with the knowledge and practical skills necessary to develop, analyze, and implement effective business plans. Through a blend of theoretical frameworks and real-world case studies, students learn to conduct market research, assess competitive environments, identify target audiences, and create strategic objectives. Emphasis is placed on financial forecasting, risk analysis, operations planning, and sustainable growth strategies. By the end of the course, students will be capable of crafting well-structured business plans that can attract investors, guide startup launches, and support the expansion of existing enterprises.
Recommended Textbook
New Venture Creation Entrepreneurship for the 21st Century 9th Edition by Stephen Spinelli
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Chapter 1: The Global Entrepreneurial Revolution for a Flatter World
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Q1) While leading U.S.venture capital firms are interested in establishing relationships and operations in China,the Chinese government continues to resist such overtures.
A)True
B)False
Answer: False
Q2) Entrepreneurship training works well in schools of business and engineering,but has not proven to be useful in fields such as architecture,medicine,and life sciences.
A)True
B)False
Answer: False
Q3) While the U.S.investment and capital markets have been an integral part of the entrepreneurial revolution in the U.S. ,it is more important to recognize the long-term ________ of the system.
Answer: resilience
Q4) Innovation + Entrepreneurship = Prosperity and ________.
Answer: Philanthropy
Q5) What should always be done following an interview with an entrepreneur?
Answer: Write a thank you note
3
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Chapter 2: The Entrepreneurial Mind: Crafting a Personal
Entrepreneurial Strategy
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Q1) In what ways is having Courage an important part of being an entrepreneur?
Answer: Courage has at least three important aspects in entrepreneurship.First,moral strength and principles:the character and the personal integrity to know right from wrong,and the will and commitment to act accordingly (to do the right thing).The second is being a fearless experimenter:a restlessness with convention and a rejection of the status quo.This relentless experimentation is enhanced by a third aspect of courage:a lack of fear of failing at the experiment-and most undertakings for that matter-and a lack of fear of conflicts that may arise.In other words,there is a mental toughness that is quite impervious to fears but is not ignorant or oblivious to possible consequences.
Q2) The ________ is the need to excel and for measurable personal accomplishment. Answer: need for achievement
Q3) The average age of entrepreneurs starting high-potential businesses is in the mid-40s.
A)True
B)False
Answer: False
Q4) Successful entrepreneurs are not gamblers;they take ________.
Answer: calculated risks
Page 4
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Chapter 3: The Entrepreneurial Process
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Sample Questions
Q1) A successful start-up venture,in addition to the strong leadership from the main entrepreneur,almost always involves building a team with ________.
Answer: complementary talents
Q2) The most effective entrepreneurial leaders of fast-growth companies practice top-down management and administration.
A)True
B)False Answer: False
Q3) The entrepreneurial process starts with the: A) Strategy B) Networks
C) Team
D) Opportunity
Answer: D
Q4) As depicted in the Timmons Model,the entrepreneurial process can be appreciated as a constant balancing act,requiring continual assessment,revised strategies and tactics,and an ________ approach.
Answer: experimental
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Page 5
Chapter 4: Clean Commerce Is an Opportunity Sea Change
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Q1) Included in green chemistry tools is the idea of the ________,which would have manufacturers make as full use as possible of every input molecule in the final output product.
Q2) In the US,buildings with Leadership in Energy and Environmental Design (LEED)certification realize which of the following benefits?
A) Cost reductions
B) Productivity gains
C) Employee retention
D) All of the above
Q3) Define sustainability.
Q4) Conditions for global competition have changed,and ________ are now a primary source of new business growth and opportunity.
Q5) Weak ties lie outside the traditional network of relationships.
A)True B)False
Q6) An E-factor measurement indicates how many weight units of output per weight unit of input.
A)True B)False
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Chapter 5: The Opportunity:
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Q1) The context in which the sale or acquisition of a company occurs is largely driven by the ________ at that particular time.
Q2) The impact on firm performance of industry structure is strongly mitigated by controllable factors such as the strategy selected for entry.
A)True
B)False
Q3) What do Federal Express and Cingular Wireless have in common with regard to how those opportunities came about?
A) Early venture capital commitment
B) Regulatory changes
C) Entrepreneurial leadership
D) Fragmented industries
Q4) The primary reason that first-time entrepreneurs run out of cash at a faster rate than they bring in customers and profitable sales is that they have not focused on the right opportunity.
A)True
B)False
Q5) In general,when do business plans become obsolete?
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Chapter 6: Screening Venture Opportunities
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Q1) Which of the following is not an aspect of new venture success?
A) Failing quickly
B) Relieving pain
C) Discount pricing
D) All of the above are important aspects of new venture success.
Q2) The venture opportunity screening exercise creates the foundation for the development of ________.
Q3) The single largest factor contributing to stillborn ventures and to those who will ripen as lemons is lack of focus on profitability and cash flow.
A)True
B)False
Q4) With regard to screening new venture opportunities,why is time the ultimate ally and enemy of the entrepreneur?
Q5) Name three sources of information that entrepreneurs can use to develop their venture opportunity profile.
Q6) First-time entrepreneurs tend to overestimate sales and delivery dates.What do they tend to underestimate?
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Chapter 7: Opportunities for Social Entrepreneurship
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Q1) Unlike traditional start-ups,social ventures do not typically use bootstrapping as a means of resource acquisition.
A)True
B)False
Q2) Corporate social responsibility (CSR),which emphasizes doing good and serving communities while still making a profit,provide good examples of hybrid models.
A)True
B)False
Q3) Why is access to capital an increasing challenge to social entrepreneurs?
A) Investors prefer more traditional venture models.
B) Scalability issues.
C) Competition from other social ventures.
D) All of the above.
Q4) Social innovations can have negative consequences for entire groups of stakeholders.
A)True B)False
Q5) The focus of a ________ fund is typically economic development and job creation in impoverished areas.
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Chapter 8: The Business Plan
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Q1) Why is it important to develop a business plan?
Q2) The entrepreneurial team should tailor their business plan to the likes and dislikes of the target investor group.
A)True B)False
Q3) Your team is in the middle of writing your business plan to present to a key investor next month.In the process,a sales opportunity arises that will provide some positive cash flow.You should:
A) Put the business plan on hold and service the customer
B) Put the customer off until you have met with the investor
C) Hire an outside consultant to keep the plan on schedule while you service the client
D) Seek advice from the key investor
Q4) Developing a business plan sets the mood for internal relationships and negotiations.
A)True B)False
Q5) The business plan should identify several alternative sources of financing. A)True B)False
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Chapter 9: The Entrepreneurial Leader and the Team
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Q1) Entrepreneurial leaders need a sound foundation in "new management techniques" such as capital asset pricing models,beta coefficients,and linear programming.
A)True
B)False
Q2) What are the most challenging times for the founding entrepreneur?
A) Leadership transitions
B) Startup funding
C) Competitive responses
D) Going public
Q3) Name two ways entrepreneurs acquire expertise and skills they do not currently possess but which are needed to build their business.
Q4) At what stage of entrepreneurial transition do conflicts between founders most often arise?
A) Planning
B) Doing
C) Leading
D) Leading Managers
Q5) What are the five fundamental realities with nearly any new venture?
Q6) What are some of the challenges that growing ventures can expect to face?
Page 11
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Chapter 10: Ethical Decision Making and the Entrepreneur
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Q1) Which approach to ethics holds that the ethical person will always choose actions that will provide for the greatest good (or least bad)for the greatest number of people?
A) Utilitarianism
B) Aristotle's approach
C) Kantism
D) Deontology
Q2) Whose approach to ethics poses the question;"What is virtuous,and how does one learn what a virtuous person would do in a given situation?"
A) J.Stewart Mill
B) Aristotle
C) Carnegie
D) Kant
Q3) Ethical decision making is affected by the depth and scope of which of the following?
A) Experiences
B) Self-interests
C) Beliefs
D) All of the above
Q4) The ________ construct classifies moral judgment into six stages of development.
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Chapter 11: Resource Requirements
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Q1) Which of the following legal issues should be of least concern to an entrepreneur building a high-growth venture?
A) Employee plans
B) Federal and state regulations
C) Merger and acquisitions
D) Tax planning and review
Q2) Describe some ways of using other people's resources.
Q3) Effective entrepreneurs are more likely than others to undertake actions toward increasing their network density and ________.
Q4) When deciding on a bank or lender,it is better for entrepreneurs to choose an excellent financial institution with just an OK banker or lender than an OK financial institution with an excellent banker or lender.
A)True
B)False
Q5) What is the best referral system for locating consultants?
Q6) In choosing a board of directors,entrepreneurs tend to value financial expertise over operating experience.
A)True
B)False
Page 13
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Chapter 12: Franchising
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Q1) The capital outlay requirements to become a franchisee with a dominant national player are generally less than what it costs to join a regionally successful operation.
A)True
B)False
Q2) With regard to national media buys,"best efforts" relates to the quality and diversity of the advertising and PR support.
A)True
B)False
Q3) Since operations are expanded by adding owner-operated units across a broad geography,retail franchising is not considered to be as pure a form of entrepreneurship as say,a medical device venture.
A)True
B)False
Q4) What are the three major profiles used to define the primary target audience?
Q5) The service delivery system is the basis for a franchise venture's competitive advantage.
A)True B)False
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Chapter 13: Entrepreneurial Finance
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Q1) The core concept in determining the external financing requirements of the venture is ________.
Q2) Banks are typically willing to provide long-term debt to new ventures if the business has a substantial asset base of property and equipment.
A)True
B)False
Q3) What funding structure provides a sound financial foundation for growth without excessive dilution of an entrepreneur's equity?
Q4) A new or existing business needs to obtain both equity and debt financing if it is to have a sound financial foundation.
A)True
B)False
Q5) What is the most likely source for early stage equity capital under $250,000?
A) Informal investors
B) SBICs
C) Corporations
D) Private placements
Q6) What are the three core principles of entrepreneurial finance?
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Chapter 14: Obtaining Venture and Growth Capital
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Q1) What is the best way for an entrepreneur to learn about the reputation of a particular venture capital firm?
Q2) In the majority of the high-technology startups and early-stage companies,debt is normally secured to fund research and development,prototype development and product marketing,launch,and cover early losses.
A)True
B)False
Q3) Private companies that get into financial trouble can opt to raise funds through a private placement.
A)True
B)False
Q4) Interest from a venture capitalist can be predicted by the amount needed and the required rate of return expected.
A)True
B)False
Q5) Discuss how timing is a critical aspect of raising risk capital.
Q6) Name three non-monetary capabilities a venture capitalist brings to an investment.
Q7) An investment at a lower price than the previous round is called a ________.
Page 16
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Chapter 15: The Deal: Valuation, structure, and Negotiation
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Q1) While follow-on rounds can severely dilute the equity of the founders,early-round investors are insulated from that risk.
A)True
B)False
Q2) By ________ their capital contributions,venture capitalists preserve the right to abandon a project whose prospects look dim.
Q3) In the venture capital valuation method,terminal value is found by multiplying net income and the P/E ratio.
A)True
B)False
Q4) _______ are defined as economic agreements between at least two parties.
Q5) Discuss some of the inherent conflicts that exist between users of capital (entrepreneurs)and suppliers of capital (investors).
Q6) Staged investments are a method used to manage risk. A)True
B)False
Q7) A venture capitalist is investing $5 million to acquire 200,000 shares.What is the price per share?
17
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Chapter 16: Obtaining Debt Capital
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Q1) Effective entrepreneurs think of the process of obtaining a loan as a sales job.
A)True
B)False
Q2) Unlike equity investors,banks place very little weight on the quality of the management team.
A)True
B)False
Q3) Why do startups have a more difficult time borrowing money than existing businesses?
Q4) Time-sales financing is a way for a seller to generate cash from a long-term installment accounts receivable.
A)True
B)False
Q5) Identify the two most likely sources of debt financing for a startup company.
Q6) Loan covenants are designed so as not to hinder a company's growth.
A)True
B)False
Q7) In a standard factoring arrangement,the factor buys the client's receivables outright,without ________,as soon as the client creates them,by shipment of goods to customers.
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Chapter 17: Leading Rapid Growth, crises, and Recovery
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Q1) In highly successful ventures,leadership is based on ________ rather than on authority.
Q2) Studies have shown that as long as proper systems are in place,organizational culture is not a major factor in how well a particular firm will deal with growth.
A)True
B)False
Q3) Which of the following is a primary cause of trouble in a company?
A) Sea changes
B) Management
C) Regulatory changes
D) Competitive pressure
Q4) Bankruptcy is a tremendous source of ________ power for a troubled company.
Q5) In rapid growth situations where cash burn rates are racing ahead of collections,what measures need to be in place to avoid chaos and possible collapse?
Q6) The prospect of bankruptcy can provide a foundation for bargaining with creditors in a turnaround situation.
A)True B)False
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Chapter 18: The Family As Entrepreneur
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Q1) Organizational strategy is only as effective as the leadership and relationships in the family and organization.
A)True
B)False
Q2) Discuss why a financial mindset is more effective than an operational mindset.
Q3) Which of the following is not a characteristic of entrepreneurial methods for enterprising?
A) Allocating disproportionate resources to new business opportunities.
B) Creating a core competency in innovation at the business unit level.
C) Having institutionalized the entrepreneurial process in the organization.
D) Having informal routines for gathering and disseminating market intelligence.
Q4) Most of the small and mid-sized family-owned businesses in the US are modest,'mom and pop' operations.
A)True
B)False
Q5) Families have the natural potential to build relationship capital better than other social group.
A)True
B)False
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Chapter 19: The Harvest and Beyond
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Q1) Which harvest option can have the negative attribute of forcing the leadership team to focus on short-term profits and performance results?
A) MBO
B) ESOP
C) IPO
D) Strategic Alliance
Q2) Which of the following is not a near-term advantages of going public?
A) The ability to fund rapid growth
B) Access to long-term capital
C) Liquidity
D) All are advantages
Q3) The authors write,"If impatience is the enemy of an attractive harvest,then greed is its executioner." To what are they referring to?
Q4) ________ are harvest vehicles through which founders can realize some liquidity from their stock by sales to the plan and other employees.
Q5) What are some of the disadvantages of being a public company?
Q6) Identify four avenues by which a company can realize a harvest from the value it has created.
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