Business Plan Business Plan 4 — Questions and Answers
Question 1: Which scenario best justifies writing a full traditional business plan instead of a lean plan?
- Applying for an SBA-backed bank loan (Correct answer)
- Brainstorming ideas with a co-founder over coffee
- Choosing a company logo
- Testing a landing page for demand
Correct answer: Applying for an SBA-backed bank loan
Lenders and formal investors typically require a complete traditional plan with detailed financials.
Question 2: In financial projections, which statement shows a company's assets, liabilities, and owner's equity at a single point in time?
- Sales forecast
- Balance sheet (Correct answer)
- Cash flow statement
- Income statement
Correct answer: Balance sheet
The balance sheet is a snapshot of what the company owns and owes on a specific date.
Question 3: A plan's milestone schedule states 'reach 1,000 paying subscribers by Q3.' This goal is effective mainly because it is:
- Vague enough to allow flexibility
- Based only on the founder's intuition
- Focused on competitors rather than customers
- Specific, measurable, and time-bound (Correct answer)
Correct answer: Specific, measurable, and time-bound
Effective milestones follow SMART criteria, combining a concrete metric with a deadline.
Question 4: Which item is a variable cost in a food truck's business plan?
- The monthly truck loan payment
- Fixed monthly commissary rent
- Ingredient costs that rise with each meal sold (Correct answer)
- Annual business license fee
Correct answer: Ingredient costs that rise with each meal sold
Variable costs change in direct proportion to sales volume, like ingredients per meal.
Question 5: A competitive analysis matrix in a business plan compares companies across price, quality, and service. Its main purpose is to:
- Set the company's payroll schedule
- Replace the need for financial projections
- Guarantee competitors will exit the market
- Identify gaps in the market the new business can exploit (Correct answer)
Correct answer: Identify gaps in the market the new business can exploit
Comparing rivals feature-by-feature reveals underserved needs and positioning opportunities.
Question 6: The management section of a plan is weak on industry experience. Which addition best addresses this gap for investors?
- Naming an advisory board of seasoned industry experts (Correct answer)
- Adding more product photos
- Increasing the revenue forecast
- Removing the management section entirely
Correct answer: Naming an advisory board of seasoned industry experts
An experienced advisory board supplements the founding team's credibility without changing ownership.
Question 7: What does a 'use of funds' statement in a business plan tell potential investors?
- Exactly how the requested capital will be spent (Correct answer)
- Which bank holds the company's accounts
- The founder's personal credit score
- The company's tax filing history
Correct answer: Exactly how the requested capital will be spent
The use of funds section itemizes how investment dollars will be allocated, such as equipment, hiring, or marketing.
Business Plan Business Plan 4
Which scenario best justifies writing a full traditional business plan instead of a lean plan?