Business Plan Business Plan 5

Question 1

A business plan should be treated as a 'living document' primarily because:

Accepted Answer

Market conditions and assumptions change, requiring regular updates

Answer

Investors refuse to read documents older than a week

Answer

It expires automatically after 90 days

Answer

Banks require monthly resubmission by law

Question 2

Which ratio would a lender most likely examine in a business plan to judge the company's ability to cover short-term obligations?

Accepted Answer

Current ratio

Answer

Price-to-earnings ratio

Answer

Customer churn rate

Answer

Inventory shrinkage rate

Question 3

A plan describes selling directly through an e-commerce site and also through retail distributors. This part of the plan covers:

Accepted Answer

Distribution channels

Answer

Intellectual property strategy

Answer

Depreciation methods

Answer

Human resources policy

Question 4

When projecting sales for a brand-new product with no history, which forecasting approach is most defensible in a business plan?

Accepted Answer

Bottom-up forecasting built from realistic customer acquisition assumptions

Answer

Assuming 50% market share in year one

Answer

Copying a Fortune 500 competitor's revenue

Answer

Choosing round numbers that look impressive

Question 5

A contingency plan section is included in a business plan to:

Accepted Answer

Outline responses if key risks, like losing a major supplier, materialize

Answer

List employee birthdays and vacation days

Answer

Duplicate the executive summary

Answer

Describe the company's logo color palette

Question 6

Which mistake most commonly undermines a business plan's credibility with experienced investors?

Accepted Answer

Overly optimistic 'hockey stick' projections without supporting evidence

Answer

Acknowledging real competitors

Answer

Citing third-party market research

Answer

Including a table of contents

Question 7

A nonprofit adapting a business plan template should replace the profit motive in its mission section with:

Accepted Answer

A clear statement of social impact and how outcomes will be measured

Answer

A promise of shareholder dividends

Answer

An exit strategy via IPO

Answer

A plan to maximize executive bonuses