Chapter 3 - Chapter 3: 1. How is the business plan of a new...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 3: 1. How is the business plan of a new venture different from the plan of an established business? Answer The precision of the future projections. New ventures are surrounded by uncertainty, which affects the accuracy of the assumptions about the future. On the other hand, for an established business many uncertainties are resolved (capital structure, product and market strategy, organizational structure). Degree of external reliance on the plan. For established business, the plan may be only an internal document. Outside extension of financing will depend mostly on the current financial health of the firm as well as the track record. Unlike established businesses, new ventures rely heavily on the business plan to convince outsiders of the soundness of the venture and to attract outside investment. The breadth of coverage of a start-up business plan. The primary focus of an established venture plan is the product market. New venture plans discuss financing, organizational design, and product and market strategy. The new venture business plan reflects simultaneous consideration of all three components of the strategy. 2 . Aside from factual and quantitative information, any plan that is used to attract outside interest in the venture should contain evidence of which of the following? A) Evidence that the entrepreneur understands the market, the technology, the risks and the potential rewards of the proposed venture B) Evidence that the people involved in the venture are qualified and capable of implementing the plan. C) Evidence that key personnel are committed to the venture D) All of the above Answer: D 3. How can an entrepreneur, who has no track record or reputation, convince outside investors of credibility? Answer: Prepare a thorough business plan, which shows the entrepreneur’s understanding of the market, technology, risks, and potential rewards of the venture. Start the early development of the idea by incurring some sunk cost on consulting,
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Chapter 3 - Chapter 3: 1. How is the business plan of a new...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online