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20 Business Plan Quiz Questions and Answers

A business plan is a comprehensive document that outlines the goals, strategies, and financial projections of a business venture. It serves as a roadmap for entrepreneurs and stakeholders to understand the direction and viability of the business. Here’s an overview of the key components typically included in a business plan:

Executive Summary: This section provides a concise overview of the entire business plan. It highlights the company’s mission, vision, key objectives, and a summary of the proposed business model.

Company Description: Here, you’ll provide a detailed explanation of your business concept. Include the type of business, its legal structure, location, target market, and any unique selling propositions that set your business apart.

Market Analysis: Conduct thorough market research to understand your industry, target market, and competitors. Identify trends, potential opportunities, and challenges. Explain how your product or service will meet the needs of your target audience better than existing solutions.

Organization and Management: Describe the organizational structure of your business, including key team members, their roles, and relevant experience. Investors want to know that you have a capable team driving the venture.

Article overview

Part 1: 30 business plan quiz questions & answers.

1. Question: What is the primary purpose of a business plan? a) Secure funding b) Improve employee morale c) Enhance customer service d) Increase market competition Answer: a) Secure funding

2. Question: Which section of a business plan outlines the company’s mission and vision? a) Marketing strategy b) Financial projections c) Executive summary d) Company overview Answer: d) Company overview

3. Question: Which of the following is NOT a common business plan component? a) Competitive analysis b) SWOT analysis c) Cash flow statement d) Social media strategy Answer: d) Social media strategy

4. Question: What is the purpose of conducting a market analysis in a business plan? a) Determine the company’s competitors b) Develop financial projections c) Define the company’s mission d) Set employee goals Answer: a) Determine the company’s competitors

5. Question: Which section of a business plan highlights the company’s unique selling proposition (USP)? a) Marketing strategy b) Company description c) Competitive analysis d) Financial projections Answer: a) Marketing strategy

6. Question: What financial document shows a company’s revenues and expenses over a specific period? a) Balance sheet b) Cash flow statement c) Income statement d) Profit and loss statement Answer: c) Income statement

7. Question: In a business plan, what does ROI stand for? a) Return on Investment b) Revenue on Investment c) Risk of Inflation d) Rate of Interest Answer: a) Return on Investment

8. Question: Which business plan section outlines the marketing tactics to promote a product or service? a) Financial projections b) Market analysis c) Marketing strategy d) Company overview Answer: c) Marketing strategy

9. Question: What is a break-even analysis used for in a business plan? a) Identifying potential customers b) Calculating potential profits c) Determining the point of profitability d) Analyzing competitor strategies Answer: c) Determining the point of profitability

10. Question: In a business plan, what does the term “SWOT” stand for? a) Strengths, Weaknesses, Opportunities, Threats b) Sales, Workforce, Objectives, Technology c) Strategies, Workflow, Operations, Targets d) Success, Wealth, Objectives, Tactics Answer: a) Strengths, Weaknesses, Opportunities, Threats

11. Question: What is the purpose of an executive summary in a business plan? a) Provide an overview of the company’s history b) Detail the company’s long-term objectives c) Summarize the key points of the entire plan d) Highlight the company’s competitive advantages Answer: c) Summarize the key points of the entire plan

12. Question: Which financing option involves giving up ownership shares of a company in exchange for capital? a) Debt financing b) Equity financing c) Venture capital d) Angel investing Answer: b) Equity financing

13. Question: What does the term “KPI” mean in a business context? a) Key Performance Indicator b) Key Profit Increment c) Key Planning and Implementation d) Key Personnel Improvement Answer: a) Key Performance Indicator

14. Question: What section of a business plan should discuss the company’s organizational structure and management team? a) Market analysis b) Financial projections c) Company overview d) Marketing strategy Answer: c) Company overview

15. Question: What type of business plan primarily targets internal decision-making and planning? a) Startup business plan b) Strategic business plan c) Operational business plan d) Feasibility business plan Answer: c) Operational business plan

Part 2: Download business plan questions & answers for free

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16. Question: What external factor analysis tool helps identify the political, economic, social, and technological influences on a business? a) PEST analysis b) SWOT analysis c) BCG matrix d) Porter’s Five Forces Answer: a) PEST analysis

17. Question: Which statement best describes a vision statement in a business plan? a) Outlines the short-term goals of the company b) Identifies potential risks and challenges c) Describes the company’s future aspirations d) Analyzes the company’s target market Answer: c) Describes the company’s future aspirations

18. Question: What is the purpose of conducting a competitive analysis in a business plan? a) Identify potential partners b) Analyze customer feedback c) Evaluate strengths and weaknesses of competitors d) Forecast financial performance Answer: c) Evaluate strengths and weaknesses of competitors

19. Question: Which financing option involves borrowing money that must be repaid with interest over time? a) Debt financing b) Equity financing c) Venture capital d) Angel investing Answer: a) Debt financing

20. Question: What does the term “ROI” stand for in the context of financial analysis? a) Revenue on Investment b) Return on Innovation c) Risk of Inflation d) Return on Investment Answer: d) Return on Investment

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Business Planning MCQs

Answer these 100+ Business Planning MCQs and assess your grip on the subject of Business Planning. Scroll below and get started!

1: Financial Statements Include

A.   Income Statement

B.   Balance Sheet

C.   All of the above

D.   Cash Flow Statement

2: Which should NOT be included in an executive summary?

A.   Exhibits

B.   Name of founders

C.   Dates

D.   Current investors

3: Estimating capital requirements is important for the:

A.   Break-even analysis

B.   Product management

C.   Product design

D.   Marketing

4: The 4Ps are also known as:

A.   Promotions

B.   Marketing trends

C.   Market demographics

D.   Marketing mix

5: How long should a typical business plan project for?

A.   8-10 years

B.   6 months

C.   12 months

D.   3-5 years

6: What is the first section in a traditional business plan?

A.   Marketing plan

B.   Financials

C.   Management profile

D.   Executive summary

7: What does Market Share mean?

A.   Ownership stake in a public company

B.   Opportunities to share in greater market profits

C.   The portion of a market controlled by a particular company or product.

8: True or False: Narrowing the target for potential clients helps because it concentrates sales efforts to a selective group that is most likely to be most profitable.

A.   True

B.   False

9: In a competitor analysis, what should you focus on?

A.   Barriers to entry

B.   All of these

C.   Component costs

D.   Prime customer motivators

10: New funds can be put toward which of the following?

A.   All of the above

B.   Debt retirement

C.   Working capital

D.   Acquisitions

11: What should organizational structures include?

A.   All of these

B.   Management résumés

C.   Forms of ownership

D.   Percentage of ownership

12: In the financial forecasting, operating profit margin should be:

A.   Negative

B.   Positive

C.   Unchanged

13: Who are the most important readers of a business plan?

A.   Employees

B.   Customers

C.   Competitors

D.   Investors

14: True or False: Start-up companies are almost always succesful in the first few years.

15: true or false a business plan should only focus on short term objectives, 16: potential creditors will often be interested in gaining collateral before lending. true or false, 17: true or false you should have concise bulleted lists in a business plan..

A.   False

B.   True

18: An appendix may include:

B.   Résumés

C.   Letters of reference

D.   Building permits

19: True or False: A partnership is normally run by one entreprenuer

20: legal issues like non-disclosure agreements and patents are not important considerations for the business., 21: it is common for creditors to want historial financial statements, true or false, 22: true or false a business plan should state a value proposition., 23: which of these is an example of a competitive strategy.

B.   Promotion

C.   Pricing

D.   Distribution

24: True or False: The Market Analysis of your business plan should illustrate your industry and market knowledge as well as any of your research findings and conclusions.

25: true or fales: an organization chart is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs., 26: ratio and trend analysis can help to create a better picture of profitability and growth potential. true or false, 27: what is the executive summary of a business plan.

A.   Summary Provided To Bank Executives

B.   A snapshot of your business plan as a whole and touches on your company profile and goals.

C.   Plan of Executive Orders

28: Sales targets should be:

A.   Measurable

B.   Specific

C.   Lofty

D.   Both specific and measurable

29: SWOT Stands for

A.   (none of these)

B.   Strengths, Weakness, Origination, Targets

C.   Strengths, Weaknesses, Opportunities, Threats

D.   Simple While On Target

30: When requesting funding it's important to be clear on:

A.   Time period funding is for

B.   Timing of funds

C.   Type of funding (Equity vs Debt)

D.   All of these

31: What should the prospective financial data include?

A.   Cash flow statements

B.   Income statements

C.   Balance sheets

32: What does the 'T' stand for in SWOT analysis?

A.   Target

B.   Trends

C.   Threat

D.   Technology

33: One common method for selecting prices is called Cost Pricing Strategy. This means:

A.   Calculating the Costs of Production/Service per unit and adding a per unit profit margin

B.   Comparing to market norms and adding/subtracting premium based on perceived quality

C.   Estimating price consumers wish to pay

34: A Business Plan should not include a section about regulatory issues since this is out of the business owners hands. True or False

35: the main reason that business fail is due to not having enough.

B.   Sales Leads

C.   Cash-flow

D.   Inventory On Hand

36: The Purpose of the Company Description in the Business Plan is:

A.   Describe the nature of your business and list the marketplace needs that you are trying to satisfy.

B.   List the specific consumers, organizations or businesses that your company serves or will serve.

C.   (all of these)

D.   Explain how your products and services meet these needs.

37: Financial Projections are done before Market Analysis and objectives are set. True or False.

38: true or false it is acceptable to use business jargon or pop culture references in a business plan., 39: the use of exhibits are intended for:.

A.   Breaking up the writing

B.   Showing your graphing skills

C.   Visual information that is easier to interpret than words

40: What is not included in variable costs?

A.   Technology

B.   Supplies

C.   Direct sales

D.   Packaging

41: In the Competitive Analysis It's important to include:

A.   Potential Barriers to the Market

B.   SWOT Analysis

C.   Financial Statements

42: A pricing strategy where you set your prices high for quick cash and little emphasis on market penetration is called:

A.   Luxury illusion

B.   Top shelf pricing

C.   Market saturation

D.   Price skimming

43: A good way to analyze the external environment is with a(n):

A.   PEST Analysis

B.   VRIO Framework

C.   None of these

D.   SWOT Analysis

44: What is the post-money valuation for a $1.5 million round of investment when the equity stake offered is 25%?

A.   $6 million

B.   $375,000

C.   $4.5 million

D.   $1.5 million

45: In a business plan the Funding Requests portion should include:

A.   Expected Employee Retention

B.   All of the above

C.   Competitors Product Cycle

D.   Strategic Financial Situations

46: What will a VRIO framework help distinguish?

A.   Organizational structure

B.   Financial potential

C.   Competitive potential

D.   Size of the target market

47: The first thing to assess in your market analysis is the:

A.   Competitive analysis

B.   Industry outlook

C.   Target market

D.   Size of primary target market

48: The section of your business plan that is similar to an "elevator pitch" is the:

A.   Market Analysis

B.   Appendix

C.   Company Description

D.   Executive Summary

49: For a typical executive summary, what is the maximum length?

A.   Half a page

B.   2 paragraphs

C.   1 page

D.   3 pages

50: What is meant by Value Proposition?

A.   The same as by marketing strategy

B.   How a company plans to raise capital

C.   How a company plans to price their product

D.   A promise of value to be delivered and a belief from the customer that value will be experienced.

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Business planning

The questions which follow provide a basic knowledge test of selected concepts covered in this learning pathway: Business planning .

The questions published at the end of each learning pathway are re-used for the knowledge test for learners interested in earning a digital badge or certificate of participation for the Introduction to entrepreneurship (IENT102) micro-course. Please consult the Certify participation page for more information.

True - false questions

Indicate whether the following statements are true or false:

• No, business plans are not restricted to raising capital. They are an integral part of many facets of business.
• No, please revisit the course materials for IENT102.
• No, the nature of your specific business context will influence the structure and format of your business plan.
• Correct. Well done.
• Incorrect. Finances are an integral component of a business plan.

Multiple choice questions

• This is one of the purposes of a business plan.
• You’re right. This statement is not correct, and is not mentioned as one of the purposes of a business plan, nor is it a requirement for registering a company.
• This would definitely be included in a business plan. You need to show that you understand the market conditions, customer needs and wants, and have a plan on how to reach those potential customers.
• Correct. This could possibly be included in the appendices of a business plan (if you are launching a technology-based start-up), but you should keep technical details to a minimum in the main body of your plan.
• These would be included as part of the company information in your business plan.
• This would definitely be included in a business plan.
• This is mentioned as one type of business plan, and would be a detailed description of proposed growth, written for internal or external audiences.
• This is mentioned as one type of business plan.
• You’re right! This is NOT addressed as one type of business plan for business start-ups.
• This is correct. Potential investors or partners are often very interested in seeing product prototypes.
• This is incorrect. A prototype is not your final product. Don’t expect it to look like one.
• This is correct. One advantage of prototyping is that it can help you see solutions to problems, and to see new possibilities for your idea.
• This is correct. A prototype can help you fine-tune your idea(s) and think about scalability.

11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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Business Plan MCQ

Products that are returned make up what is called the __________..

Correct Answer: Reverse supply chain

Note: This Question is unanswered, help us to find answer for this one

Production creates _______ utility.

Correct Answer: Form

Product design and process selection are examples of _______ decisions.

Correct Answer: System design

Process choice is _________ driven.

Correct Answer: Demand

What financial information is in a balance sheet?

Correct Answer: Assets and liabilities of the business

What is the purpose of a business plan?

Correct Answer: To test the feasibility of the business

An investor can determine ______ from the profit-and-loss statement.

Correct Answer: The gross margin of the products

A(n) ______ is a two-sentence summary that explains your business quickly.

Correct Answer: Abstract

What makes a business pitch compelling?

Correct Answer: Selling that you are the right person with the right idea.

What critical information does the break-even analysis provide?

Correct Answer: The price of your product you should charge to cover the costs.

Who is the executive summary directed towards?

Correct Answer: Potential investors

A business model identifies ______.

Correct Answer: Sources of revenues

What impression does an investor get from a business plan that is overly optimistic?

Correct Answer: That the entrepreneur did not do his/her homework

An investor can determine ______ from the cash flow statement.

Correct Answer: The timing for when the business collects payment

Which statement best describes why entrepreneurs conduct a feasibility analysis?

Correct Answer: To decide whether the new business is viable

What statement best describes the lean start-up approach to starting a business?

Correct Answer: Produce a product as quickly as possible and get customer feedback in order to redesign the product.

When an investor reviews a management team, what are they typically looking for?

Correct Answer: A team with complementary skills and experience.

What is the purpose of the business model canvas?

Correct Answer: To test hypotheses about a new business idea

In the business model canvas, a value proposition identifies ______.

Correct Answer: A customer problem and solution for the business

Sources and uses of funds is a _____ used by start-up businesses that shows where capital comes from and what it will be used for.

Correct Answer: Financial document

Profit-and-Loss Statement is a financial document that shows ?

Correct Answer: All of the above

_____ is a financial document that shows sales revenues, expenses, and net profit or loss.

Correct Answer: Profit-and-Loss Statement

Feasibility Study is a tool for assessing parts of the business plan and determining if the idea will work.

Correct Answer: All of them

Executive summary is a condensed abstract of a business plan used to ?

_____ is a financial document that shows the amount of money a business has on hand at the beginning of a time period..

Correct Answer: Cash flow Statement

Cash flow statement is a financial document that shows :

Business plan is a document describing a business that is used to test the feasibility of a business idea _____ as a road map for future operations..

Correct Answer: To raise capital, and to serve

Business plan is a document describing a business that is used to test the _____ of a business idea, to raise capital, and to serve as a road map for future operations.

Correct Answer: Feasibility

Balance sheet is a financial document that shows the _____ for a business.

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6 Critical Questions Your Business Plan Must Answer If you want to lay the groundwork for a stable business and attract investors, make sure you're hitting these points.

By Larry Alton • Mar 18, 2015

Opinions expressed by Entrepreneur contributors are their own.

Never underestimate the importance of your business plan . It is the backbone of your company, a foundational pillar from which your enterprise will be built. It's going to serve as the first impression for countless potential partners and investors, and it's going to serve as a roadmap for your whole business -- at least for the first several years.

In some ways, writing a business plan is easy -- there are no rules or requirements for length, format, presentation, or even subject matter. But finding the right answers to the right questions is critical if you want to lay the groundwork for a stable business and attract sufficient attention from investors.

Related: 25 Common Characteristics of Successful Entrepreneurs

1. What need are you addressing?

This is an important question because it extends beyond the simple "What does your business do?" It's one thing to outline your business in general, describing what products you make or what services you offer, but if you want a solid business plan you have to take it to the next level.

It's nice to imagine your business as providing something useful, and if you're excited about the idea, it's that much easier to think about people buying it. But you need to be logical and critical when you consider the driving force behind your customers' purchasing decisions: what fundamental customer need is your business addressing? You'll want to back this up with research that shows the need actually exists.

2. What makes you different?

It's a big world out there, and startups are constantly coming on and off the radar. Chances are, there are multiple businesses out there who are already serving the crucial need you outlined from question one. That doesn't mean you can't serve it better, or serve it in a different way, but therein lies the challenge—figuring out what makes you different.

First, you'll need to acknowledge all the major players in your space, and this is going to require some research. Acknowledge what they're doing right, what they're doing wrong, and how they're going about their business. Identify the differentiating factor that will allow you to stand out, and emphasize it.

Related: Struggling to Define Your Business Goals? Ask Yourself These Questions.

3. Who is your audience?

Here's a hint: the answer can't be "everybody." No matter how useful or practical your product or service is, there's no way you're going to be able to sell to everyone in the world. Think about factors like age, sex, education, geographic location, working status, marital status, and perform some preliminary market research to determine the best path forward.

Your key demographic may evolve over time, so don't stay too committed to one niche. Also remember, that it's easy to expand to other markets once you've established yourself in one, so if you have multiple key demographics, it may be wise to focus on one to start things off.

4. How is your business going to make money?

This seems like an obvious question to answer, but you'd be surprised how many entrepreneurs fail to elaborate on their plan. The brief answer to this question is "sell products/services," but how are you going to sell? Where are you going to sell? How much are you going to sell for?

The other side of the question is what are your operating expenses? Who are you going to pay? What services or partners will you need to pay for? And ultimately, will the amount you sell be able to surpass the amount you owe? When will you break even?

5. How will you promote your business?

Promoting your business is just as important as creating it. Otherwise, people will never know who you are. Your marketing strategy should start off based on what similar businesses before you have done. Do they rely on traditional advertising or online marketing? Do they attend tradeshows and local events, or use technology to spread the word about their existence?

Related: The Ultimate Guide to Writing a Business Plan

6. What do you need to get started?

For many potential partners and investors, this is the bottom line. All businesses have to start somewhere, but that starting line varies dramatically from industry to industry and from entrepreneur to entrepreneur. Do you need any advanced equipment? Who will you need to hire? How much will you need for an initial run? These questions should give you an idea exactly how much capital and what resources you need initially.

It may seem counterintuitive, but answering these questions isn't a one-time process. Your business plan should be a living, changing document that evolves along with your company. Throughout your course of entrepreneurship, you're going to encounter new challenges, new opportunities, and hundreds of factors you never considered as significant to your business when you were writing the initial plan. To survive, you're going to have to revise your answers to these questions and update your business plan accordingly.

Related: The Essential Ingredients to Startup Success

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50+ Unit 3 Solved MCQs

Done Reading?

The Business Plan Quiz: Test!

Business is not as easy as it seems when you just imagine it. The test in front of you is "The Business Plan Quiz." This quiz will see your understanding of the concept of the business plan. This will also provide extra information to you that will help you in the future. Get ready to take this fun and informative quiz that is here. Best of luck with this!

Which section is completed last?

Finance detail

Marketing budget

About your business

Executive summary

Rate this question:

According to research, without a business plan, firms are more likely to close down.

You should describe your products and services and discuss the market that you are ..., if you wish to interest investors, you need to emphasize the company's profit ......... ., the preparation of a business plan is optional for some small businesses., why complete a business plan.

To get finance

To impress your mum

To set out clear goals for your start-up.

To make sure you know what you are doing.

The business goals and competitive advantages can be described by...

Mission statement

Core values

None of these

......... the strong and weak points of any firms in competition with yours and look for marketplace opportunities.

Investigate

SMART means:

Success, Measurable, Achievable, Realistic, Timed

Specific, Measurable, Achievable, Realistic, Timed

Smart, made-up, actual, real, true

You should examine customer... and the benefits of your products and services.

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