a key aspect of financial section of the business plan is mcq

Entrepreneurship Management

181. A key aspect of the financial section of the business plan is ______________.

A statement of management skills.
A realistic sales forecast.
Production capacity.
A description of competitors.

182. Underestimation of project cost leads to ______________.

Time under run.
Cost under run
Time over run.
Cost over run

183. Which of the following is not an aspect of appraisal of term loans by commercial banks?

Financial feasibility.
Technical feasibility.
Economic feasibility.
Societal feasibility.

184. DIC is headed by General Manager in the rank of ______________.

Joint Director of industries.
Assistant Director of industries.
Non-departmental officer.
Departmental officer.

185. Which of the following leads to over-capitalization?

acquiring fixed assets on excessive amounts.
under-estimation of initial rate of earnings.
using lower-rate of capitalization.
under estimation of required funds.

186. Investment in which of the following is most risky?

Equity shares.
Preference shares.
Debentures.

187. A Company is called an artificial person because ______________.

it does not have the shape of a natural person.
it cannot be used in the court of law.
it is invisible and intangible.
it exists only in contemplation of law.

188. ______________, which is included in the project cost, is estimated on the basis of the year when the enterprise breaks even.

working capital
cost of capital
cost of production
cost of equity

189. Business means ______________.

industry and commerce.
trade and commerce.
selling and buying of goods.

190. Large investment is made in fixed assets, the project will be termed as ______________.

Capital Intensive.
Labour Intensive.
Product Intensive.
Market Intensive.

Search MBA MCQ.com

Business Plan MCQs

Business management mcqs topics.

General MCQs

Becoming a Manager MCQs

Making Decisions & implemented in management today MCQs

Ethics & Social Responsibility of management MCQs

Manage the Culture and Change MCQs

Strategic Management and Planning MCQs

Design Management MCQs

Manage Human Resource Systems MCQs

Individuals and Diversity in management MCQs

Motivation in Management MCQs

Management Teams MCQs

Leadership in Management MCQs

Managing in a Global Environment MCQs

Control Budget through management MCQs

Technology and Management Systems MCQs

Management used Scientific Method MCQs

Entrepreneurial Mindset MCQs

Evolution of Management MCQs

Managing Ethics and Social Responsibility MCQs

Management of Organizational Environment and Culture MCQs

Managing Diversity in a Global Community MCQs

Entrepreneurial Manager MCQs

Managing Effective Decisions MCQs

Managing Goals MCQs

Designing and managing Strategies MCQs

Managing Change and Innovation MCQs

Managing Structural Organizations MCQs

Human Side of Management MCQs

Managing Team Performance MCQs

Managing as a Leaders MCQs

Managing Understanding Individual Behavior

Controlling Information and Operations MCQs

Overview of small business MCQs

Small Business Management and Entrepreneurship MCQs

Social Entrepreneurs, Ethics, and Strategic Planning MCQs

Franchising in small business MCQs

Taking Over an Existing Business MCQs

Starting a New Business MCQs

Accounting and Financial in Business MCQs

Finance in Small Business MCQs

Legal Environment in Business MCQs

Research and Strategy in Business MCQs

Location of Small Business Marketing MCQs

Price and Promotions in Business Marketing MCQs

Human Resource Management in small business MCQs

Principles of Management MCQs

Business Intelligence MCQs

Transaction Management MCQs

Try to answer these 20+ Business Plan MCQs and check your understanding of the Business Plan subject. Scroll down and let's begin!

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

A. Assets

B. Liabilities

C. Owner’s equity

D. All of them

2: 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.

A. Feasibility

B. Impossibility

C. Impracticability

3: 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.

A. To raise capital, and to serve

B. To decrease capital, and to serve

C. To demote capital, and to serve

D. Both b and c

4: Cash flow statement is a financial document that shows :

A. Amount of money on hand

B. Receipts coming into the business

C. Money going out of the business

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

A. Cash flow Statement

B. Profit-and-Loss Statement

C. Disclosure Statements

D. None of them

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

A. Spark reader’s interest

B. Highlight crucial information

C. Purpose of report

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

A. Business plans

B. Determining if the idea works

C. Scheduling considerations

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

9: profit-and-loss statement is a financial document that shows .

A. Sales revenues

B. Expenses

C. Net profit or loss

D. All of the above

10: 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.

A. Financial document

B. Transactionals documents

C. Public documents

D. Consumer documents

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

A. Who the most important customers are

B. A customer problem and solution for the business

C. The key resources needed for the business

D. Valuable partners for the business

12: What is the purpose of the business model canvas?

A. To test hypotheses about a new business idea

B. To create a feedback loop with the customer

C. To develop a preliminary cash flow statement

D. To market test the new business idea

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

A. A group of entrepreneurs with very similar backgrounds.

B. A team of people who gets along well.

C. A team with complementary skills and experience.

D. A team of good financial managers.

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

A. Make do with as little resources as possible in order to minimize debt.

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

C. Get the business up and running as quickly as possible in order to start generating revenues.

D. Try to reach profitability as quickly as possible with as few products as possible.

15: Which statement best describes why entrepreneurs conduct a feasibility analysis?

A. To gather competitive intelligence for the new business

B. To match the customer needs and the new business product

C. To match the customer needs and the new business product

D. To decide whether the new business is viable

16: An investor can determine ______ from the cash flow statement.

A. The timing for when the business collects payment

B. How long it takes the products to sell

C. How many customers the business has

D. The amount of total debt the business has

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

A. That the business cannot fail

B. That the entrepreneur did not do his/her homework

C. That the assumptions are correct

D. There are no risks to backing this business

18: A business model identifies ______.

A. Sources of revenues

B. Capital requirements

C. Customer segments

D. Potential investors

19: Who is the executive summary directed towards?

A. Potential customers

B. Potential investors

C. Potential employees

D. Potential consultants

20: What critical information does the break-even analysis provide?

A. The price of your product you should charge to cover the costs.

B. The price of your product you should charge to cover the costs.

C. Whether there is a demand for your product.

D. The cost structure of developing and manufacturing your product.

21: What makes a business pitch compelling?

A. Selling that you are the right person with the right idea.

B. Focusing on the innovativeness of the product.

C. Having a set format for you pitch.

D. Explaining in detail the financials of the business.

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

A. Executive summary

B. Cover page

C. Abstract

D. Elevator pitch

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

A. The gross margin of the products

B. The amount of debt the business has

C. The capital needed for start-up

D. The amount of cash on hand at the end of the month

24: What is the purpose of a business plan?

A. To calculate the cash flow of the business

B. To help find customers for the business

C. To test the feasibility of the business

D. To assess the competition of the business

25: What financial information is in a balance sheet?

A. Assets and liabilities of the business

B. Start-up costs of the business

C. Information about capital and how it will be used

D. Money that enters and exits a business

26: Process choice is _________ driven.

A. Demand

B. Operations

C. Marketing

D. Process

E. Capacity

27: Product design and process selection are examples of _______ decisions.

A. Financial

B. Tactical

C. System design

D. System operation

E. Forecasting

28: Production creates _______ utility.

A. Place

B. Time

C. Form

D. Possession

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

A. Reorder fulfillment.

B. Return logistics.

C. Backflow

D. Reverse supply chain

List of Business Plan MCQs Mul...

Related business plan mcqs:, available in:, latest mcqs:.

History of Management MCQs

Public Economics MCQs

Environmental Economics MCQs

Ecological Economics MCQs

Behavioral Economics MCQs

Popular MCQs:

Business Plan Quiz Questions And Answers

Take our Business Plan Quiz to measure your knowledge and skills in developing a comprehensive plan that could impress investors and guide your startup to success. This quiz is designed for entrepreneurs, business students, and anyone interested in learning more about business strategy. Our quiz covers all the essential elements of a business plan, including market analysis, operational planning, financial forecasting, and strategic objectives. Each question will challenge you to think critically about the various components that are crucial for a business plan's success, providing a practical understanding of what it takes to compile a viable and effective document. Whether Read more you're preparing to launch your own business, studying business management, or simply curious about the planning process, this quiz will provide valuable insights and help reinforce your understanding of effective business planning. Test your knowledge today with our Business Plan Quiz and take a step closer to realizing your entrepreneurial ambitions!

Business Plan Questions and Answers

What is the component of business plan.

Marketing Strategy

Sales Strategy

Executive Summary

All of the above

Rate this question:

The stockholder may read only the executive summary of a business plan to decide about the investment in that business. State true or false.

___________ in a business plan shows the estimated profit and expenses of the venture..

Financial plan

Revenue model

Accounts payable

None of the above

What is a component(s) of a business plan? (You can choose more than one choice)

Financial Plan

Safety Plan

Operation Plan

Which of these business components help in understanding how the business's plans to expand in the future?

Growth strategy

Competitor's analysis

Company description

Revenue plan

Which of the following is NOT a component of the Business Plan?

Company Description

Competitive Analysis

Marketing Plan

Name the strategy which helps in understanding competitors' marketing strategy.

Marketing analysis

Growth plan

Which of these business statements provides an explanation of the organization's reason for existence?

Executive summary

Objective Statement

Mission Statement

The role of a business plan is to identify potential customers within the target market. The process of dividing up the target market is called ____________.

Market segmentation

Industry Analysis

Marketing plan

Market analysis

In general, how many types of business plans are there?

Quiz Review Timeline +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

Current Version
Apr 28, 2024 Quiz Edited by ProProfs Editorial Team
Apr 10, 2015 Quiz Created by Thaiteam2015

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/

As an Amazon Associate we earn from qualifying purchases.

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Access for free at https://openstax.org/books/entrepreneurship/pages/1-introduction

Authors: Michael Laverty, Chris Littel
Publisher/website: OpenStax
Book title: Entrepreneurship
Publication date: Jan 16, 2020
Location: Houston, Texas
Book URL: https://openstax.org/books/entrepreneurship/pages/1-introduction
Section URL: https://openstax.org/books/entrepreneurship/pages/11-4-the-business-plan

© Jan 4, 2024 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

OnlineExamMaker
Candidate Management System
Question Bank Software
Online Proctoring Software
AI Question Generator
Quiz Certification Creator
Online Survey Maker
Online Exam Tools
ELearning Resources
Learning Management
Questions & Answers
Create a Quiz

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.

a key aspect of financial section of the business plan is mcq

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

Download questions & answers for free

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

Part 3: Free online quiz creator – OnlineExamMaker

OnlineExamMaker’s secure, powerful web-based quiz maker is an easy-to-use, intelligent online testing software tool for business, training & educational to create exams & quizzes with ease. With its user friendly interface and extensive range of features, OnlineExamMaker simplifies the process of creation and distributing online quizzes to engage learners, improve knowledge retention, and assess performance.

Create Your Next Quiz/Exam with OnlineExamMaker

Flowers are not just beautiful to look at, they are also full of interesting facts…

Pizza is one of the most popular foods in the world, loved by people of…

Athletics is a collection of sporting events that involve running, jumping, and throwing. It is…

Share this post:

Call Us (877) 968-7147

How to Craft the Financial Section of Business Plan (Hint: It’s All About the Numbers)

Writing a small business plan takes time and effort … especially when you have to dive into the numbers for the financial section. But, working on the financial section of business plan could lead to a big payoff for your business.

Read on to learn what is the financial section of a business plan, why it matters, and how to write one for your company.

What is the financial section of business plan?

Generally, the financial section is one of the last sections in a business plan. It describes a business’s historical financial state (if applicable) and future financial projections. Businesses include supporting documents such as budgets and financial statements, as well as funding requests in this section of the plan.

The financial part of the business plan introduces numbers. It comes after the executive summary, company description , market analysis, organization structure, product information, and marketing and sales strategies.

Businesses that are trying to get financing from lenders or investors use the financial section to make their case. This section also acts as a financial roadmap so you can budget for your business’s future income and expenses.

Why it matters

The financial section of the business plan is critical for moving beyond wordy aspirations and into hard data and the wonderful world of numbers.

Through the financial section, you can:

Forecast your business’s future finances
Budget for expenses (e.g., startup costs)
Get financing from lenders or investors
Grow your business

describes how you can use the four ways to use the financial section of business plan

Growth : 64% of businesses with a business plan were able to grow their business, compared to 43% of businesses without a business plan.
Financing : 36% of businesses with a business plan secured a loan, compared to 18% of businesses without a plan.

So, if you want to possibly double your chances of securing a business loan, consider putting in a little time and effort into your business plan’s financial section.

Writing your financial section

To write the financial section, you first need to gather some information. Keep in mind that the information you gather depends on whether you have historical financial information or if you’re a brand-new startup.

Your financial section should detail:

Business expenses

Financial projections

Financial statements, break-even point, funding requests, exit strategy, business expenses.

Whether you’ve been in business for one day or 10 years, you have expenses. These expenses might simply be startup costs for new businesses or fixed and variable costs for veteran businesses.

Take a look at some common business expenses you may need to include in the financial section of business plan:

Licenses and permits
Cost of goods sold
Rent or mortgage payments
Payroll costs (e.g., salaries and taxes)
Utilities
Equipment
Supplies
Advertising

Write down each type of expense and amount you currently have as well as expenses you predict you’ll have. Use a consistent time period (e.g., monthly costs).

Indicate which expenses are fixed (unchanging month-to-month) and which are variable (subject to changes).

How much do you anticipate earning from sales each month?

If you operate an existing business, you can look at previous monthly revenue to make an educated estimate. Take factors into consideration, like seasonality and economic ups and downs, when basing projections on previous cash flow.

Coming up with your financial projections may be a bit trickier if you are a startup. After all, you have nothing to go off of. Come up with a reasonable monthly goal based on things like your industry, competitors, and the market. Hint : Look at your market analysis section of the business plan for guidance.

A financial statement details your business’s finances. The three main types of financial statements are income statements, cash flow statements, and balance sheets.

Income statements summarize your business’s income and expenses during a period of time (e.g., a month). This document shows whether your business had a net profit or loss during that time period.

Cash flow statements break down your business’s incoming and outgoing money. This document details whether your company has enough cash on hand to cover expenses.

The balance sheet summarizes your business’s assets, liabilities, and equity. Balance sheets help with debt management and business growth decisions.

If you run a startup, you can create “pro forma financial statements,” which are statements based on projections.

If you’ve been in business for a bit, you should have financial statements in your records. You can include these in your business plan. And, include forecasted financial statements.

You’re just in luck. Check out our FREE guide, Use Financial Statements to Assess the Health of Your Business , to learn more about the different types of financial statements for your business.

Potential investors want to know when your business will reach its break-even point. The break-even point is when your business’s sales equal its expenses.

Estimate when your company will reach its break-even point and detail it in the financial section of business plan.

If you’re looking for financing, detail your funding request here. Include how much you are looking for, list ideal terms (e.g., 10-year loan or 15% equity), and how long your request will cover.

Remember to discuss why you are requesting money and what you plan on using the money for (e.g., equipment).

Back up your funding request by emphasizing your financial projections.

Last but not least, your financial section should also discuss your business’s exit strategy. An exit strategy is a plan that outlines what you’ll do if you need to sell or close your business, retire, etc.

Investors and lenders want to know how their investment or loan is protected if your business doesn’t make it. The exit strategy does just that. It explains how your business will make ends meet even if it doesn’t make it.

When you’re working on the financial section of business plan, take advantage of your accounting records to make things easier on yourself. For organized books, try Patriot’s online accounting software . Get your free trial now!

Stay up to date on the latest accounting tips and training

Our Top Picks

Best Small Business Loans
Best Business Internet Service
Best Online Payroll Service
Best Business Phone Systems

Our In-Depth Reviews

OnPay Payroll Review
ADP Payroll Review
Ooma Office Review
RingCentral Review

Explore More

Business Solutions
Entrepreneurship
Franchising
Best Accounting Software
Best Merchant Services Providers
Best Credit Card Processors
Best Mobile Credit Card Processors
Clover Review
Merchant One Review
QuickBooks Online Review
Xero Accounting Review
Financial Solutions

Human Resources

Best Human Resources Outsourcing Services
Best Time and Attendance Software
Best PEO Services
Best Business Employee Retirement Plans
Bambee Review
Rippling HR Software Review
TriNet Review
Gusto Payroll Review
HR Solutions

Marketing and Sales

Best Text Message Marketing Services
Best CRM Software
Best Email Marketing Services
Best Website Builders
Textedly Review
Salesforce Review
EZ Texting Review
Textline Review
Business Intelligence
Marketing Solutions
Marketing Strategy
Public Relations
Social Media
Best GPS Fleet Management Software
Best POS Systems
Best Employee Monitoring Software
Best Document Management Software
Verizon Connect Fleet GPS Review
Zoom Review
Samsara Review
Zoho CRM Review
Technology Solutions

Business Basics

4 Simple Steps to Valuing Your Small Business
How to Write a Business Growth Plan
12 Business Skills You Need to Master
How to Start a One-Person Business
FreshBooks vs. QuickBooks Comparison
Salesforce CRM vs. Zoho CRM
RingCentral vs. Zoom Comparison
10 Ways to Generate More Sales Leads

6 Elements of a Successful Financial Plan for a Small Business

Many small businesses lack a full financial plan, even though evidence shows that it is essential to the long-term success and growth of any business.

For example, a study in the New England Journal of Entrepreneurship found that entrepreneurs with a business plan are more successful than those without one. If you’re not sure how to get started, read on to learn the six key elements of a successful small business financial plan.

What is a business financial plan, and why is it important?

A business financial plan is an overview of a business’s financial situation and a forward-looking projection for growth. A business financial plan typically has six parts: sales forecasting, expense outlay, a statement of financial position, a cash flow projection, a break-even analysis and an operations plan.

A good financial plan helps you manage cash flow and accounts for months when revenue might be lower than expected. It also helps you budget for daily and monthly expenses and plan for taxes each year.

Importantly, a financial plan helps you focus on the long-term growth of your business. That way, you don’t get so caught up in the day-to-day activities that you lose sight of your goals. Focusing on the long-term vision helps you prioritize your financial resources.

The 6 components of a successful financial plan for business

1. sales forecasting.

You should have an estimate of your sales revenue for every month, quarter and year. Identifying any patterns in your sales cycles helps you better understand your business, and this knowledge is invaluable as you plan marketing initiatives and growth strategies .

For instance, a seasonal business can aim to improve sales in the off-season to eventually become a year-round venture. Another business might become better prepared by understanding how upticks and downturns in business relate to factors such as the weather or the economy.

Sales forecasting is also the foundation for setting company growth goals. For instance, you could aim to improve your sales by 10 percent over each previous period.

2. Expense outlay

A full expense plan includes regular expenses, expected future expenses and associated expenses. Regular expenses are the current ongoing costs of your business, including operational costs such as rent, utilities and payroll.

Regular expenses relate to standard business activities that occur each year, such as conference attendance, advertising and marketing, and the office holiday party. It’s a good idea to distinguish essential expenses from expenses that can be reduced or eliminated if needed.

Expected future expenses are known future costs, such as tax rate increases, minimum wage increases or maintenance needs. Generally, a part of the budget should also be allocated to unexpected future expenses, such as damage to your business caused by fire, flood or other unexpected disasters. Planning for future expenses ensures your business is financially prepared via budget reduction, increases in sales or financial assistance.

Associated expenses are the estimated costs of various initiatives, such as acquiring and training new hires, opening a new store or expanding delivery to a new territory. An accurate estimate of associated expenses helps you properly manage growth and prevents your business from exceeding your cost capabilities.

As with expected future expenses, understanding how much capital is required to accomplish various growth goals helps you make the right decision about financing options.

3. Statement of financial position (assets and liabilities)

Assets and liabilities are the foundation of your business’s balance sheet and the primary determinants of your business’s net worth. Tracking both allows you to maximize your business’s potential value.

Small businesses frequently undervalue their assets (such as machinery, property or inventory) and fail to properly account for outstanding bills. Your balance sheet offers a more complete view of your business’s health than a profit-and-loss statement or a cash flow report.

A profit-and-loss statement shows how the business performed over a specific time period, while a balance sheet shows the financial position of the business on any given day.

4. Cash flow projection

You should be able to predict your cash flow on a monthly, quarterly and annual basis. Projecting cash flow for the full year allows you to get ahead of any financial struggles or challenges.

It can also help you identify a cash flow problem before it hurts your business. You can set the most appropriate payment terms, such as how much you charge upfront or how many days after invoicing you expect payment .

A cash flow projection gives you a clear look at how much money is expected to be left at the end of each month so you can plan a possible expansion or other investments. It also helps you budget, such as by spending less one month for the anticipated cash needs of another month.

5. Break-even analysis

A break-even analysis evaluates fixed costs relative to the profit earned by each additional unit you produce and sell. This analysis is essential to understanding your business’s revenue and potential costs versus profits of expansion or growth of your output.

Having your expenses fully fleshed out, as described above, makes your break-even analysis more accurate and useful. A break-even analysis is also the best way to determine your pricing.

In addition, a break-even analysis can tell you how many units you need to sell at various prices to cover your costs. You should aim to set a price that gives you a comfortable margin over your expenses while allowing your business to remain competitive.

6. Operations plan

To run your business as efficiently as possible, craft a detailed overview of your operational needs. Understanding what roles are required for you to operate your business at various volumes of output, how much output or work each employee can handle, and the costs of each stage of your supply chain will aid you in making informed decisions for your business’s growth and efficiency.

It’s important to tightly control expenses, such as payroll or supply chain costs, relative to growth. An operations plan can also make it easier to determine if there is room to optimize your operations or supply chain via automation, new technology or superior supply chain vendors.

For this reason, it is imperative for a business owner to conduct due diligence and become knowledgeable about merchant services before acquiring an account. Once the owner signs a contract, it cannot be changed, unless the business owner breaks the contract and acquires a new account with a new merchant services provider.

Tips on writing a business financial plan

Business owners should create a financial plan annually to ensure they have a clear and accurate picture of their business’s finances and a realistic view for future growth or expansion. A financial plan helps the business’s leaders make informed decisions about purchases, debt, hiring, expense control and overall operations for the year ahead.

A business financial plan is essential if a business owner is looking to sell their business, attract investors or enter a partnership with another business. Here are some tips for writing a business financial plan.

Review the previous year’s plan.

It’s a good idea to compare the previous year’s plan against actual performance and finances to see how accurate the previous plan and forecast were. That way, you can address any discrepancies or overlooked elements in next year’s plan.

Collaborate with other departments.

A business owner or other individual charged with creating the business financial plan should collaborate with the finance department, human resources department, sales team , operations leader, and those in charge of machinery, vehicles or other significant business tools.

Each division should provide the necessary data about projections, value and expenses. All of these elements come together to create a comprehensive financial picture of the business.

Use available resources.

The Small Business Administration (SBA) and SCORE, the SBA’s nonprofit partner, are two excellent resources for learning about financial plans. Both can teach you the elements of a comprehensive plan and how best to work with the different departments in your business to collect the necessary information. Many websites, including business.com , and service providers, such as Intuit, offer advice on this matter.

If you have questions or encounter challenges while creating your business financial plan, seek advice from your accountant or other small business owners in your network. Your city or state has a small business office that you can contact for help.

Business financial plan templates

Many business organizations offer free information that small business owners can use to create their financial plan. For example, the SBA’s Learning Platform offers a course on how to create a business plan. It also offers worksheets and templates to help you get started. You can seek additional help and more personalized service from your local office.

SCORE is the largest volunteer network of business mentors. It began as a group of retired executives (SCORE stands for “Service Corps of Retired Executives”) but has expanded to include business owners and executives from many industries. Advice is free and available online, and there are SBA district offices in every U.S. state. In addition to participating in group or at-home learning, you can be paired with a mentor for individualized help.

SCORE offers templates and tips for creating a small business financial plan. SCORE is an excellent resource because it addresses different levels of experience and offers individualized help.

Other templates can be found in Microsoft Office’s template library, QuickBooks’ online resources, Shopify’s blog and other places. You can also ask your accountant for guidance, since many accountants provide financial planning services in addition to their usual tax services.

Diana Wertz contributed to the writing and research in this article.

Get Weekly 5-Minute Business Advice

B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.

Our mission is to help you take your team, your business and your career to the next level. Whether you're here for product recommendations, research or career advice, we're happy you're here!

Franchise Trends
The Female Founder
The Roadmap
The Small Business Show
U.S. Chamber of Commerce Small Business Update
Company Culture
Customer Experience
Entrepreneurship
Growth Strategy
Recruitment
Small Business Grants
Social Media
Contribute Content Request
Show Appearance Request

From necessity to success: the inspiring journey of Chemin’s Founder, November…

Apple’s controversial ipad ad sparks debate on creativity and ai’s impact…, overcoming financial challenges with the right mindset and research – jarrod…, expert m&a founder on building valuable businesses and learning from mistakes-….

business plan
small busienss
balance sheet

How to Complete the Financial Section of Business Plan

A plan intends to explain the business, introduce critical contributors, products and, services and defines the goals for the future. It paints a picture of the founder’s expectations and helps others see their vision. The financial section of the plan provides the proof behind the story. It is the section that investors and lenders are most interested in, and often the first section they read, despite it being near the end of the plan. It also acts as a roadmap and a guide for the direction the company will take into the future.

Financial Section Elements

While it may sound complicated, the financial section of a business plan only contains three documents and a brief explanation of each. It is necessary to prepare an income statement, cash flow projection and a balance sheet either using spreadsheets, or software that does all of the calculations automatically. Before beginning this statement, it’s necessary to gather the following information:

Business Start-Up Expenses

This list of all of the costs associated with getting the business up and running comprises what primarily are one-time fees such as registering the company. Following is only a partial list of possible start-up costs, every business is unique, and the list may, or may not, contain these items and more.

Business registration fees
Licensing and permits
Product inventory
Deposit on rental property
Down payment to purchase property
Down payment on machines and equipment
Set-up fees for utilities

Business Operating Costs

As the name implies, operating costs are the ongoing expenses that need to be paid to keep the business running. These expenses are usually monthly bills, and for a start-up, estimate six months worth of these costs. A company’s list of operating expenses might include:

Monthly mortgage payment or rent
Logistics and distribution
Marketing and promotion
Loan paymentsRaw materials
Office supplies
Building/vehicle maintenance

The Income Statement

This financial statement details the company’s revenues, expenses, and profit for a set period. Established businesses generated these annually, or semi-annually, based on actual performance. Start-ups with no previous years to look at have to use statistical data within the industry to make reasonable projections. A start-up will also produce monthly versions of this statement to show the forecast of growth. This section will include the data such as:

Gross revenue (sales, interest income and sales of assets)
General and administrative expenses (start-up and operating costs)
Corporate tax rate (expected tax liabilities)

The math is simple here: subtract the expenditures from the revenue, and the remaining number is profit. When put into the proper format, an income statement gives a clear view of the financial viability of a company.

Cash-Flow Projection

This statement shows how you expect cash to flow in to, and out of, your business. It’s an essential internal cash management tool and a source of data that shows what your business’s capital needs will be in the near future. For investors and bank loan officers, it helps determine your creditworthiness and amount you can borrow. The cash-flow projection contains three parts:

Cash revenues — This part details the incoming cash from sales for specific periods of time, usually monthly. It is an estimate, based upon past performance and future projections for current businesses, and industry averages for start-ups.
Cash disbursements — Every monthly bill or other expense that is paid out in cash gets listed in this section. As with revenue, these are estimates, either based upon historical data, current data, or industry data.
Cash flow projection — This merely is a reconciliation of the cash revenues to cash disbursements. Adding the current month’s revenues to the carried-over balance, then subtracting the month’s disbursements creates estimated cash flow.

The Balance Sheet

The final financial statement required for the business plan’s financial section is a balance sheet. This statement is a snapshot of the company’s net worth at a given point in time. Established businesses produce a balance sheet annually. Information from the income statement and cash flow projection are used to complete this statement. It summarizes the business’s financial data into three main categories:

Assets — This is the total of all of the tangible items that the company owns that hold monetary value. That includes equipment, property, and cash-on-hand, for example.
Liabilities — This is the total amount of debt that the company owes its creditors. You’ll include every debt, whether recurring, one-time, fixed, or variable.
Equity — This is merely the difference between the company’s assets, including retained earnings and current earnings, and its liabilities.

Side-Notes and Details

In some cases, it may be necessary to explain details within the financial statements. Denote these instances within the statement and include a brief explanation sheet as an attachment. It may also be useful to add information on the process used to estimate revenues and expenses, which will show interested parties the intent and help them better understand the data.

Don’t Sweat the Process

It’s important to note that the order in which these financial statements is created may vary from the way they are presented here. This is to be expected. In fact, most business plan creators end up going back and forth with these statements as the numbers reveal the business’s financial reality. It paints a crystal clear picture of its economic viability, which can present to a lender, investor, or shareholder with confidence.

All of these financial documents can be created by using accounting and business software readily available online. Even so, some people aren’t entirely comfortable creating financial statements for their business plan, and outsource this critical task to a professional. Even the largest corporations struggle with financial planning and reporting, and they often hire the job out to someone more qualified. It’s merely a matter of making sure that the data is accurate, easy to track, and based on sound accounting practices.

From necessity to success: the inspiring journey of chemin’s founder, november nichols, apple’s controversial ipad ad sparks debate on creativity and ai’s impact – bill harper, overcoming financial challenges with the right mindset and research – jarrod randolph.

Privacy Overview
Strictly Necessary Cookies

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.

Sources of Business Finance
Small Business Loans
Small Business Grants
Crowdfunding Sites
How to Get a Business Loan
Small Business Insurance Providers
Best Factoring Companies
Types of Bank Accounts
Best Banks for Small Business
Best Business Bank Accounts
Open a Business Bank Account
Bank Accounts for Small Businesses
Free Business Checking Accounts
Best Business Credit Cards
Get a Business Credit Card
Business Credit Cards for Bad Credit
Build Business Credit Fast
Business Loan Eligibility Criteria
Small-Business Bookkeeping Basics
How to Set Financial Goals
Business Loan Calculators
How to Calculate ROI
Calculate Net Income
Calculate Working Capital
Calculate Operating Income
Calculate Net Present Value (NPV)
Calculate Payroll Tax

12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

The name and location of your company
Products and services offered by your company
Mission and vision statements
Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

Business location
The legal structure of your business
Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

The geographical location of your target market
Needs of your target market and how your products and services can meet those needs
Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

Industry description and statistics
Demographics and profile of target customers
Marketing data for your products and services
Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

Your competitors' identified advantages in the market
How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
The standout qualities that distinguish you from other companies
Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

Information about how your company plans to carry out its operations.
The base location from which your company intends to operate.
The number of employees to be utilized and other information about your company's operations.
Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

Projected income statements
Cash flow statements
Balance sheets
Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

Legal documents
Licenses and permits
Credit histories
Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

The management team and other stakeholders resume
Marketing research
Permits and relevant legal documents
Financial documents

Was This Article Helpful?

Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

Definitions
Advertising
Absorption Costing
ACAMS Practice Questions
Accounting Basics
Accounting Cycle and Classifying Accounts
Accounting Final
Accounting For Managers
Accounting for Merchandising Activities
Accounting for Pensions
Accounting Information Systems
Accounting Principles
Accounts Receivables
Acquisition
Activity Based Costing
Adjusting Accounts for Financial Statements
Advanced Business Economics
Advertising and Public Relations
Advertising and Sales Promotion
An Overview of International Business
Analysis and Forecasting Techniques
Analyzing and Recording Transactions
Applied Business Research
Asset Demand and Supply under Uncertainty
Auditing and Attestation
Behavioral and Allied Sciences
Bonds and Long Term Notes Payable
Brand Management
Business Analytics
Business Analytics & Technology Management Chapter 2
Business Analytics & Technology Management Chapter 3
Business Analytics & Technology Management Chapter 4
Business Analytics & Technology Management Chapter 5
Business Analytics & Technology Management Chapter 6
Business and Company Law
Business Communication
Business Cycles
Business Economics
Business Environment
Business Essentials
Business Ethics and Governance
Business Ethics Exam
Business Law
Business Law Study guide
Business Mathematics
Business Organisations and Environment
Business organization and systems
Business Process Performance
Business Statistics
Business Strategy
Business Structure
Business Studies
California Real Estate
Capital Assets
Capital Budgeting
Capital Budgeting and Managerial Decisions
Capital Structure
Cash Management
Changes in Accounting Principles
Changing Marketing Environment
Conflict Theory
Consolidated Financial Statements
Consumer Behavior
Contingency
Controlling
Corporate and Business Law
Corporate Finance
Corporate Governance
Corporate Law
Corporate Taxation
Corporation
Cost Accounting Final exam
Cost Accumulation Systems
Cost Allocation Techniques
Cost and Managerial Accounting
Cost Behavior
Cost Management
Cost Measurement
Cost of Capital
Cost Terms and Classifications
Cost Volume Profit Analysis
Currency Exchange Rates
Current Assets
Current Liabilities
Customer Relationships and Value
CVP Analysis and Marginal Analysis
Debt and Bankruptcy
Decision Makers
Decision Makers Household Sector
Decision Making
Deferred Tax
Demand for Money
Depreciation
Derivative Instruments and Hedging Activities
Digital Marketing
Dividend Policy
Dividends and Payout Policy
Dividends, Shares, and Income
Econometrics
Elasticities of Demand and supply
Employee Training and Development
Entrepreneurship
Environments of Business
Error Correction
Essence of Management
Ethical and Professional Standards
Ethics and Social Responsibility
Ethics for Management Accountants
External Financial Statements and Revenue Recognition
Federal Securities Acts
Financial Accounting
Financial and the Nonfinancial Sectors
Financial Decision Making
Financial Instruments
Financial Intermediaries and Financial Markets
Financial Management
Financial Markets
Financial Markets and Securities Offerings
Financial Reporting
Financial Statements
Financial Statements and Accounting Transactions
Fixed Assets
Flexible Budgets and Standard Costs
Florida Real Estate MCQs
Fraud Internal Control and Cash
Fundamental Accounting Principles
Global Finance
Global Marketing
Global Marketing and World Trade
Governmental Accounting State and Local
Gross Estate
Health and Life Comprehensive Exam
Health and Life Practice Questions
Health Insurance
Hedging Instruments
HR Management
Human Resource Management
Human Resource Management HRM
Human Resource Planning
Importance of Business Economics
Individual Taxation
Information Technology
Insurance and Risk Management
Insurance License Texas Life and Health
Intangible Asset
Integrated Marketing Communications and Direct Marketing
Interactive Marketing and Electronic Commerce
Internal Auditing and Systems Controls
Internal Control and Cash
International Business
International Economics
International Finance
International Marketing
International Trade
International Trade and Globalisation
Interpersonal and Organizational Communication
Introduction to Business
Introduction to Human Resource Management
Introduction to Human Resources Assessment
Inventory Management
Investment Risk and Portfolio Management
Job Order Costing
Legal Management
Life and Health Insurance
Life Insurance
Life Insurance Basics
Life Insurance Policies
Life Insurance Policy
Long Term Investment
Long Term Securities
Macro Policy
Macroeconomics
Management and Cost Accounting
Management Science
Managerial Accounting
Managerial Accounting Concepts and Principles
Managerial Economics
Managing Organizational Change
Managing Production and Operations
Managing Products and Brands
Managing Services
Market Segmentation Targeting and Positioning
Marketing and Corporate Strategies
Marketing Channels and Wholesaling
Marketing Management
Master Budgets and Planning
Mergers and Acquisitions
Microsoft Excel
Money and Banking
National Health Insurance
Not For Profit Accounting
Operations Management
Organization and Operation of Corporations
Organization Culture
Organization Effectiveness
Organizational Behavior
Organizational Behavior Essentials
Organizational Markets and Buyer Behaviour
Organizational Structure and Design
Partnership Taxation
Partnerships
Payroll Liabilities
Performance Management
Personal Selling and Sales Management
Present Value
Principles and Practices of Management
Probability Analysis
Process Costing
Production and Operations Management
Professional Practice
Professional Responsibilities
Profit Planning
Profitability Analysis and Analytical Issues
Profitability Analysis and Decentralization
Project Management
Property Plant and Equipment
Property Plant and Equipment Exam
Ratio Analysis
Real Estate
Receivables
Reporting and Analyzing Cash Flows
Reporting and Analyzing Long Lived Assets
Reporting and Analyzing Receivables
Responsibility Accounting and Performance Measures
Revenue Recognition
Risk and Procedures for Control
Secured Transactions
Service Department Costing
Short Term Financing
Short Term Investment
Standard Costs and Variance Analysis
State Health Insurance
Statement of Cash Flow
Statement of Comprehensive Income
Statement of Financial Position
Stock Market and Stock Prices
Stockholders Equity
Strategic Marketing Process
Strategic Planning
Structure of Interest Rates
Succession and Transfer Taxes
Supply Chain and Logistics Management
System Analysis and Design
Systems Controls
Texas Real Estate
The Management Challenge
Total Quality Management
Transfer Pricing
Understanding Exchange Rates
Understanding Interest Rates
Understanding Interest Rates Determinants
Value Added Tax
Variable Costing
Working Capital

A key aspect of the financial section of the business plan is ______________.

Correct answer: (B) A realistic sales forecast.

Related MCQs

? Which one of the following theory has the attribute of moderate risk taking as a function of skill, not chance?
? Foundation companies are formed from:
? All of the following are the broad categories of External forces EXCEPT:
? A ______________ is a professional money manager who makes risk investment from a pool of equity capital to obtain a high rate of return on investment...
? Members of distribution channels are excellent sources for new ideas because:
? Which of the following geographical area is having least interest to U.S. entrepreneurs?
? Andrew Carnegie is an example of entrepreneur of which century:
? The activity which occurs when the new venture is started are called:
? The business plan should be prepared by:
? What is the primary concern of founders who trade equity for capital for their growing venture?

Have an account?

Business planning mcq

15 questions

Introducing new Paper mode

No student devices needed. Know more

Which of the following is an advantage to a new business start-up of producing a business

It will guarantee survival

It will help test financial viability

It will ensure sales targets are met

It will not need to be referred to again by the business owner

In which section of the business plan would you expect to find details about market size

and market research?

Objectives and key targets

Cash flow forecast

Market overview

Forecast revenue, costs and profit

Which of the following best describes a business plan? A written document that describes:

The business, its objectives, strategies, financial forecasts and market

The marketing plan of the business

The objectives and key targets of the business

How the business will produce its products

Which of the following is the formula for total costs?

Total costs minus total variable costs

Total fixed costs plus total variable costs

Total costs plus total variable costs

Total fixed costs minus total variable costs 5

Which of the following is a drawback of business planning?

Reduces risk by providing a guide for the business

The plan will need to be constantly updated

It will help to secure any finance required

Allows the business to review its progress

Which of the following best defines the term variable cost? A cost which:

Stays the same regardless of output

Changes according to output

Changes with time

Changes according to revenue

An existing business may use a business plan to:

Focus on the business idea before start-up

Present to shareholders at the AGM

Secure external finance for business expansion

To share with employees in the business 5

A business makes a profit when:

Total revenue is greater than total costs

Total revenue is less than total fixed costs

Total revenue is greater than total variable costs

Total revenue is less than total costs

Which of the following is a functional area of a business?

Outsourcing

Selling price x quantity is the formula for which of the following?

Total costs

Variable costs

A business sells 12,000 units per year. Fixed costs per year are £50,000 and variable costs

are £2.50 per unit. The business’s total costs are:

Which of the following is a major problem that an entrepreneur might encounter when

writing a business plan for the first time?

To explain the business idea and where it came from

Forecasting product sales accurately

To include details about the owners

To find an appropriate format to present the plan

Which of the following defines the term revenue?

The money the business makes after total costs are deducted

The money the business makes after variable costs are deducted

The money the business makes from selling its goods or services

The money the business makes after fixed costs are deducted

Details regarding how many staff the business will need to employ, their pay rates and job

descriptions would be found in which section of a business plan?

Human resources

The fixed costs of a business are £300,000 per year and variable costs are £2.00 per unit.

The business sells 200,000 units per year at a selling price of £5.00. The profit made per

Explore all questions with a free account

Continue with email

Continue with phone

IMAGES

How to Write the Financial Plan in Business Plan?
Financial Section of Business Plan
Financial aspects of the business plan
How To Write A Financial Plan For A Business?
business plan finance section
Financial Planning

VIDEO

Financial Statements
Five Years Plans in India
Aspects of a Project: Technical, Institutional, Commercial, Financial, Economic & Social
Railway Establishment & Rajbhasha Section Practice Question for LDCE |RAILWAY Group B(70%)Practice
Top 10 MCQs of Economic System and Common Goals of Five Year Plans
Financial Statement Analysis

COMMENTS

Entrepreneurship Management
Practice for BBA or MBA exams using these MCQ. Page 19. ... A key aspect of the financial section of the business plan is _____. A statement of management skills. A realistic sales forecast. ... Business means _____. Commerce. industry and commerce. trade and commerce.
MFT: Entrepreneurship Flashcards
The business planning process sometimes fails because. 1 The planning process is poorly managed. 2 Plans are impractical. 3 Planners lack the appropriate skills. 4 Lack of government support. 1, 2, and 3 only. A key aspect of the financial section of the business plan is______. A realistic sales forecast.
Business Plan MCQs (FREE Multiple Choice Questions)
A. Make do with as little resources as possible in order to minimize debt. B. Produce a product as quickly as possible and get customer feedback in order to redesign the product. C. Get the business up and running as quickly as possible in order to start generating revenues.
The Business Plan Flashcards
components of a business plan. projecting rapid growth beyond the capabilities of the founding team, developing a plan whose success is 100% reliant on the efforts of one entrepreneur, projecting performance that exceeds industry averages, underestimating the venture's need for capital, mistaking tactics for strategy, not personally investing ...
Business Plan Flashcards
A brief explanation of why the writer of a business plan is asking for a loan and what she or he plans to do with the money. Why does a business plan help your business? -A business plan makes you think about all aspects of your business. -It may help you secure financing for your business. -Helps you communicate your ideas to others.
Business Plan MCQ [Free PDF]
Key Points. A business plan is a document that defines in detail a company's objectives and how it plans to achieve its goals. A business plan lays out a written road map for the firm from marketing, financial, and operational standpoints. Important Points Sequence of Steps involved in a business plan are as follows: 1. Executive summary:
Business Plan Quiz Questions and Answers
The components of a business plan include an Executive Summary and a Financial Plan. The Executive Summary provides a concise overview of the business plan, highlighting the key points and objectives. It serves as a snapshot of the entire plan and is usually the first section that potential investors or lenders read.
How to Write the Financial Section of a Business Plan
Use the numbers that you put in your sales forecast, expense projections, and cash flow statement. "Sales, lest cost of sales, is gross margin," Berry says. "Gross margin, less expenses, interest ...
Business Plan Essentials: Writing the Financial Plan
The financial section of your business plan determines whether or not your business idea is viable and will be the focus of any investors who may be attracted to your business idea. The financial section is composed of four financial statements: the income statement, the cash flow projection, the balance sheet, and the statement of shareholders ...
11.4 The Business Plan
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.
Chapter 8: Business Plans: Seeing Audiences and Your Business ...
A (n) ______ plan is a business plan designed to be used internally for management purposes. operatiomal. are the parts of a business or business plan that expose the firm to any kind of loss. Risks. A (n) _____, also called a mini-plan, gives the basic overview of a firm and a detailed look at the firm's financials.
20 Business Plan Quiz Questions and Answers
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.
Basics Of A Business Plan Financials Section
3. Equity: Total assets minus total liabilities (Assets = liabilities + equity.) Analysis. It's good to offer readers an analysis of the three basic financial statements — how they fit ...
Financial Section of Business Plan
Generally, the financial section is one of the last sections in a business plan. It describes a business's historical financial state (if applicable) and future financial projections. Businesses include supporting documents such as budgets and financial statements, as well as funding requests in this section of the plan. The financial part of ...
6 Key Parts of a Small Business Plan
A business financial plan typically has six parts: sales forecasting, expense outlay, a statement of financial position, a cash flow projection, a break-even analysis and an operations plan. A good financial plan helps you manage cash flow and accounts for months when revenue might be lower than expected. It also helps you budget for daily and ...
How to Complete the Financial Section of Business Plan
The math is simple here: subtract the expenditures from the revenue, and the remaining number is profit. When put into the proper format, an income statement gives a clear view of the financial viability of a company. Cash-Flow Projection. This statement shows how you expect cash to flow in to, and out of, your business.
Business Plan Quiz Prep Flashcards
Terms in this set (16) business plan. written description of a new business venture that describes all aspects of the business. executive summary. brief account of the key points in the business plan. management team plan. presents your qualifications and those of any partners you may have, say how to fill gaps of expertise. company descripiton ...
12 Key Elements of a Business Plan (Top Components Explained)
Here are some of the components of an effective business plan. 1. Executive Summary. One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.
A key aspect of the financial section of the business plan is
A key aspect of the financial section of the business plan is _____. A:A statement of management skills., B:A realistic sales forecast. ... Note* : We need your help, to provide better service of MCQ's, So please have a minute and type the question on which you want MCQ's to be filled in our MCQ Bank Submit. A key aspect of the financial ...
A key aspect of the financial section of the business plan is
A key aspect of the financial section of the business plan is _____. Learn Accounting. ≡ MENU. MCQs Papers Definitions Flashcards. MCQs; Papers; Definitions; ... A key aspect of the financial section of the business plan is _____. A statement of management skills. A realistic sales forecast. Production capacity.
Small Business MGMT Ch 6 Flashcards
Study with Quizlet and memorize flashcards containing terms like In the financial plan section of a business plan, pro forma statements should be presented for a. six months. b. one year. c. three to five years. d. seven years., Which of the following is recommended regarding PowerPoint presentations? a. Do not use PowerPoint presentations. b. Limit the presentation to 10-12 slides. c. Make ...
Business planning mcq
1 pt. Which of the following best describes a business plan? A written document that describes: The business, its objectives, strategies, financial forecasts and market. The marketing plan of the business. The objectives and key targets of the business. How the business will produce its products. Answer choices.
Business plan quiz Flashcards
Study with Quizlet and memorize flashcards containing terms like Purpose of Business plan, Business plan, Sections of business plan and more. ... Why is it important to keep accurate financial forms. So you know if you need to change things, and you know where money goes in and out pf your business. Types of financial forms. Income statements ...

Entrepreneurship Management

Search MBA MCQ.com

Business Plan MCQs

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

2: 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.

3: 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.

4: Cash flow statement is a financial document that shows :

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

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

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

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

10: 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.

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

12: What is the purpose of the business model canvas?

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

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

15: Which statement best describes why entrepreneurs conduct a feasibility analysis?

16: An investor can determine ______ from the cash flow statement.

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

18: A business model identifies ______.

19: Who is the executive summary directed towards?

20: What critical information does the break-even analysis provide?

21: What makes a business pitch compelling?

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

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

24: What is the purpose of a business plan?

25: What financial information is in a balance sheet?

26: Process choice is _________ driven.

27: Product design and process selection are examples of _______ decisions.

28: Production creates _______ utility.

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

List of Business Plan MCQs Mul...

Popular MCQs:

Business Plan Quiz Questions And Answers

Business Plan Questions and Answers

The stockholder may read only the executive summary of a business plan to decide about the investment in that business. State true or false.

What is a component(s) of a business plan? (You can choose more than one choice)

Which of these business components help in understanding how the business's plans to expand in the future?

Which of the following is NOT a component of the Business Plan?

Name the strategy which helps in understanding competitors' marketing strategy.

Which of these business statements provides an explanation of the organization's reason for existence?

The role of a business plan is to identify potential customers within the target market. The process of dividing up the target market is called ____________.

In general, how many types of business plans are there?

11.4 The Business Plan

Business Plan Overview

Purposes of a Business Plan

Link to Learning

Types of Business Plans

Brief Business Plan or Executive Summary

Are You Ready?

Full Business Plan

Executive Summary

Business Description

Industry Analysis and Market Strategies

Competitive Analysis

Operations and Management Plan

Marketing Plan

Financial Plan

Entrepreneur In Action

What Can You Do?

Work It Out

20 Business Plan Quiz Questions and Answers

Article overview

Part 2: Download business plan questions & answers for free

Part 3: Free online quiz creator – OnlineExamMaker

Related Posts

Share this post:

How to Craft the Financial Section of Business Plan (Hint: It’s All About the Numbers)

What is the financial section of business plan?

Why it matters

Writing your financial section

Financial projections

Stay up to date on the latest accounting tips and training

Our Top Picks

Our In-Depth Reviews

Explore More

Human Resources

Marketing and Sales

Business Basics

6 Elements of a Successful Financial Plan for a Small Business