Business Plan Trivia 4 — Questions and Answers
Question 1: An entrepreneur pitching to a bank should emphasize which part of the business plan most?
- Financial projections and repayment ability (Correct answer)
- Office decor plans
- Company slogan options
- Social media follower counts
Correct answer: Financial projections and repayment ability
Banks lend based on demonstrated ability to repay, so realistic financials matter most to them.
Question 2: What is a contingency plan within a business plan?
- A list of charity commitments
- A backup strategy for when things go wrong (Correct answer)
- A schedule of contingent stock options
- A plan to hire contingent workers
Correct answer: A backup strategy for when things go wrong
A contingency plan outlines alternative actions the business will take if key assumptions fail.
Question 3: Which of these is a fixed cost in a typical business plan's financial section?
- Raw material purchases
- Shipping fees per order
- Sales commissions
- Monthly office rent (Correct answer)
Correct answer: Monthly office rent
Rent stays the same regardless of sales volume, making it a fixed cost.
Question 4: What does an exit strategy section describe?
- The building's emergency evacuation routes
- How to close the office each night
- How founders or investors will eventually cash out, such as acquisition or IPO (Correct answer)
- How to fire underperforming staff
Correct answer: How founders or investors will eventually cash out, such as acquisition or IPO
An exit strategy explains how owners and investors plan to realize returns, often via sale, merger, or IPO.
Question 5: In a business plan, gross margin is calculated as what?
- Cash on hand minus rent
- Net profit divided by employee count
- Total assets minus liabilities
- Revenue minus cost of goods sold, divided by revenue (Correct answer)
Correct answer: Revenue minus cost of goods sold, divided by revenue
Gross margin measures the percentage of revenue remaining after subtracting direct production costs.
Question 6: Which scenario best illustrates a business plan assumption?
- Projecting that the market will grow 5% annually (Correct answer)
- Recording last year's audited revenue
- Listing the current office address
- Copying a competitor's logo
Correct answer: Projecting that the market will grow 5% annually
Assumptions are educated estimates about future conditions, like projected market growth, that underpin the plan.
Question 7: What is the purpose of a mission statement in a business plan?
- To declare the company's core purpose and values (Correct answer)
- To list shareholder voting rights
- To define employee dress code
- To itemize monthly expenses
Correct answer: To declare the company's core purpose and values
A mission statement communicates why the company exists and what it stands for.
Business Plan Trivia 4
An entrepreneur pitching to a bank should emphasize which part of the business plan most?