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

Plans must be revised as real-world data replaces initial assumptions.

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

The current ratio compares current assets to current liabilities, indicating short-term liquidity.

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

Distribution channels describe the paths products travel to reach customers.

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

Bottom-up forecasts derive revenue from concrete, testable assumptions like leads, conversion rates, and pricing.

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

Contingency planning prepares specific responses for identified risks before they occur.

Business Plan Practice Test