what is the purpose of a business plan mcq

Business Plan MCQs

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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

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20 Business Plan Quiz Questions and Answers

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

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

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

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

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

Article overview

Part 1: 30 business plan quiz questions & answers.

what is the purpose of a business plan 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

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

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

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

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

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

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Business 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?

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Apr 28, 2024 Quiz Edited by ProProfs Editorial Team
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General Business Planning MCQs

1. Financial Statements Include

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

3. Estimating capital requirements is important for the:

4. The 4Ps are also known as:

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

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

7. What does Market Share mean?

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

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

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

11. What should organizational structures include?

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

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

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

15. True or False? A business plan should only focus on short term objectives

16. Potential creditors will often be interested in gaining collateral before lending. True or False

17. True or False? You should have concise bulleted lists in a business plan.

18. An appendix may include:

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

20. Legal issues like non-disclosure agreements and patents are NOT important considerations for the business.

21. It is common for creditors to want historial financial statements, True or False

22. True or False? A business plan should state a value proposition.

23. Which of these is an example of a competitive strategy?

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

25. True or Fales: An Organization Chart is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.

26. Ratio and Trend Analysis can help to create a better picture of profitability and growth potential. True or False

27. What is the Executive Summary of a Business Plan?

28. Sales targets should be:

29. SWOT Stands for

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

31. What should the prospective financial data include?

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

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

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

35. The main reason that business fail is due to not having enough?

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

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

38. True or False? It is acceptable to use business jargon or pop culture references in a business plan.

39. The use of exhibits are intended for:

40. What is not included in variable costs?

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

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

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

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

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

46. What will a VRIO framework help distinguish?

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

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

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

50. What is meant by Value Proposition?

51. Would you ever consider talking to your competitors directly?

52. What market segment is an airline offering no frills targeting?

53. What section of the financial forecast would expenditure on telephones be forecasted under?

54. Which of the following factors would be used in estimating revenue?

55. How detailed should a business plan be?

56. Which of the following would be a value proposition?

57. What is meant by Target Marketing?

58. What is a "Pay Per Click" marketing campaign?

59. What are core competencies?

60. What best describes a cost-leadership strategy?

61. Would a company that produces a complementary product to yours be considered a competitor (e.g. a tennis ball maker and a tennis racket maker)?

62. How might a company learn more about its market and what drives the customers to purchase their product?

63. Why is it important to hire intelligently early on?

64. What is the purpose of creating a valuation statement of the company?

65. What would a Market Follower strategy be distinguished by?

66. In which section of a business plan would the company's mission statement be located?

67. Why is it important to track your competitors?

68. Where would the Financial Projections typically be located in a business plan?

69. What strategy should a new company wanting to enter a market employ?

70. What is a characteristic of a market leader strategy?

71. Why are companies able to stay in business during turbulent financial market times?

72. What is meant by Relationship Marketing?

73. What is a competitive advantage?

74. How does a company assess the performance of its marketing efforts?

75. What has been the trend in marketing in the last few decades?

76. In which section of a business plan would you talk about the CEO?

77. What would sending coupons to prior customers directly be considered?

78. What are the minimum financial statements that should be included in a business plan?

79. Why is it important to know the entire potential market even if your company can only focus on a small segment?

80. What best describes a differentiation strategy?

81. Where might a potential competitor come from?

82. Which of the following would be a mistake in forecasting?

83. What is the purpose of a cash flow forecast?

84. Why is it important to talk about market timing?

85. How could a video rental outlet stand out above their competitors in a positive way?

86. What is meant by "top down" budgeting?

87. Which of the following would not typically be a section in a business plan?

88. Which of the following strategies has warehouse reseller Costco taken?

89. What is meant by Market Demographics?

90. What is the purpose of a what-if analysis?

91. What policy should be followed regarding employees and the company strategy?

92. What should be the minimum length of a business plan?

93. Why would a company's website be considered a part of its marketing effort?

94. What should a company do if they do not have a marketing plan?

95. What is one of the ways to track your competitors?

96. How is "distribution and delivery" defined?

97. What is Blockbuster Videos business model?

98. What is one of the criteria that a flower delivery company could distinguish itself by on the market?

99. Why is it important to have an executive summary?

100. Why is it important to talk about competition?

101. What marketing method is a gas station most likely to use?

102. Which of the following is one of the groups a business plan is meant to inform?

103. Why would a new company spend most of their budget on marketing?

104. Where would company valuation be discussed?

105. What section would SWOT analysis typically be in?

106. What should be considered while deciding a firm's strategy?

107. What is one of the reasons for the failure of companies?

108. Which of the items below is NOT a purpose of a business plan?

109. What is the DuPont formula?

110. What is one of the ways to establish who your competitors are?

111. What is meant by "market segments"?

112. Which of the following is a traditional method of marketing?

113. What is a business model?

114. What role does marketing play in a company's business life?

115. Which of the following could be a core competency of a company?

116. Which of the following terms best describes how a company can make itself stand out from the competitors?

117. What type of company would never need a business plan?

118. What is meant by vertical integration?

119. What would be the best methodology to follow while creating a forecast?

120. How far into the future should revenue be projected in a business plan?

121. Which of the following would you factor into long term liabilities?

122. What is an advantage of making a competitor analysis?

123. Why is it okay to let some competitors' moves go unanswered?

124. Why is it important to identify your market segments?

125. Why would a company with a very rigid business plan possibly face trouble?

126. What is meant by Mass Marketing?

127. Why should a business plan be revisited annually?

128. What is a value chain?

129. What is a way to segment the market?

130. Customer share is sometimes referred to as _____.

131. The way you want to spend your time, money, and resources in the future are your _____.

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Business planning

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

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

True - false questions

Indicate whether the following statements are true or false:

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

Multiple choice questions

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

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Building Your Business

What Is a Business Plan?

Business Plan Explained in Less Than 5 Minutes

Definition and Examples of a Business Plan

How a business plan works, types of business plans, business plan vs. business model.

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A business plan is a detailed written document that describes your business’s activities, goals, and strategy. A strong plan outlines everything from the products a company sells to the executive summary to the overall management. In essence, a business plan should guide a founder’s actions through each stage of growth

Think of your business plan as a road map. It documents the various stages of starting and running your business, including business activities and objectives. Business plans create the structure you need to make decisions by outlining the financial and operational goals you’re striving toward.

One of the most common reasons for crafting a business plan is to attract investors—and, in return, receive funding. As an early stage company, for example, you may leverage your business plan to convince investors or banks that your entity is credible and worthy of funding. The business plan should prove that their money will be returned .

A business plan can also be useful for when a well-developed company goes through a merger or acquisition . As outlined by the U.S. Small Business Administration (SBA), a merger creates a new entity via the combination of two businesses. An acquisition, on the other hand, is when a company is purchased and absorbed into an existing business. In either case, a business plan helps establish relationships between business entities, making a merger or acquisition more likely.

Alternate name : Strategic plan

A business plan is a formalized outline of the business operations, finances, and goals you aim to achieve to be a successful company. When designing a business plan, companies have leeway for how long, short, or detailed it can be. So long as it outlines the foundational aspects of the business, in most cases, it will be effective.

The most common type of business plan is a traditional business plan. This style tends to have the following common elements, generally in this order.

Executive summary : Tells your reader why your company will be successful. Includes the company’s mission statement , product information, and basics regarding the business structure.
Company description : Where you brag about your entity’s strengths. Answer the question, what problem is your team solving?
Market analysis : A deep dive into your industry and the competition. Consider why competitors are successful. How can your offering do it better? If applicable, how can you enhance the experience for the consumer?
Management plan : Outlines leadership structure of the company and may be best detailed as a chart. This way, readers can see exactly who is planning to run the company and how they will impact growth.
Marketing and sales plan : Details how you’ll attract consumers with your product or service, and how you will retain those customers. All strategies outlined in this section, such as the use of digital marketing , will be referenced in your financial plan.
Funding request : For those companies asking for funding, this is where you’ll detail the amount of funding you’ll need to achieve your goals. Clearly explain how much you need and what it will be used for.
Financial plan : Convinces the reader that your company is financially stable and can turn a profit . You will need to include a balance sheet , an income statement, and the cash flow statement (or cash flow projection, in the case of a new venture).
Appendix : Where any supporting documents, such as legal documents, licenses of employees, and pictures of the product will be included.

Your company’s business plan should fit your needs, which will often depend on what stage of growth you are in. If you are considering starting a new venture, for example, writing a detailed business plan can help prove if your concept is viable or not.

If your business is seeking financial capital, though, you will want your business plan to be investor-ready. This will require you to have a funding request section, which would be placed right above your financial plan.

You should avoid using lofty terms or technical jargon that those outside your team won’t understand. A business plan is meant to be shared with those inside and outside your organization. Simple and effective language is best.

Your business’s stage impacts the length and detail of a business plan. As discussed, a traditional plan follows a detailed structure, from the executive summary to the appendix. It is a lengthier document, often amounting to dozens of pages, and is often used when seeking funding to prove business viability. In most cases, crafting a traditional plan will take lots of due diligence work.

The other main type of business plan is a lean startup plan. A lean startup plan is much more high-level and shorter than the traditional version. Companies just starting development will often create a lean startup plan to help them navigate where they should start. These can be as short as one or two pages.

A lean plan will include the following elements.

Key partnerships : Notes other services or businesses you will work with, such as manufacturers and suppliers.
Key activities and resources : Outlines how your company will gain a competitive advantage and create value for your consumers. Resources you may leverage include capital, staff, or intellectual property.
Value proposition : Clearly defines the unique value your company offers.
Customer relationships : Details the customer experience from start to finish.
Channels : How will you stay connected with your customers? Detail those methods here.
Cost structure and revenue streams : Details the most significant costs you will face as well as how your business will actually make money.

Remember that business plans are meant to change as your company grows or pivots. You should actively review and edit your business plan to keep it up to date with business activities. For example, you may start with a lean plan and move to a traditional plan when you hit the fundraising stage.

A business plan may often be confused with a business model, and it is easy to understand why. Simply put, a business plan is the holistic overview of the business, while a business model is a skeleton for how money will be made.

Key Takeaways

A business plan is a comprehensive document that outlines a business’s operations, finances, and goals. It guides the business’s day-to-day decisions.
A business plan is necessary for your company’s success, as it creates a path to scalability.
There are two main types of business plans: a traditional business plan and a lean startup plan.
A traditional business plan will be essential when you begin to seek debt or equity capital for your company.

U.S. Small Business Administration. “ Merge and Acquire Businesses .” Accessed June 8, 2021.

U.S. Small Business Administration. " Write Your Business Plan ." Accessed June 8, 2021.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

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Marketing in Business: Strategies and Types Explained
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Business Development: Definition, Strategies, Steps & Skills
Business Plan: What It Is, What's Included, and How to Write One CURRENT ARTICLE
Small Business Development Center (SBDC): Meaning, Types, Impact
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Business Startup Costs: It’s in the Details
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Crowdfunding: What It Is, How It Works, and Popular Websites
Starting a Business with No Money: How to Begin
A Comprehensive Guide to Establishing Business Credit
Equity Financing: What It Is, How It Works, Pros and Cons
Best Startup Business Loans
Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
Partnership: Definition, How It Works, Taxation, and Types
What is an LLC? Limited Liability Company Structure and Benefits Defined
Corporation: What It Is and How to Form One
Starting a Small Business: Your Complete How-to Guide
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A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

A business plan is a document describing a company's business activities and how it plans to achieve its goals.
Startup companies use business plans to get off the ground and attract outside investors.
For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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What is a business plan? Definition, Purpose, and Types

In the world of business, a well-thought-out plan is often the key to success. This plan, known as a business plan, is a comprehensive document that outlines a company’s goals, strategies , and financial projections. Whether you’re starting a new business or looking to expand an existing one, a business plan is an essential tool.

As a business plan writer and consultant , I’ve crafted over 15,000 plans for a diverse range of businesses. In this article, I’ll be sharing my wealth of experience about what a business plan is, its purpose, and the step-by-step process of creating one. By the end, you’ll have a thorough understanding of how to develop a robust business plan that can drive your business to success.

What is a business plan?

Purposes of a business plan, what are the essential components of a business plan, executive summary, business description or overview, product and price, competitive analysis, target market, marketing plan, financial plan, funding requirements, types of business plan, lean startup business plans, traditional business plans, how often should a business plan be reviewed and revised, what are the key elements of a lean startup business plan.

What are some of the reasons why business plans don't succeed?

A business plan is a roadmap for your business. It outlines your goals, strategies, and how you plan to achieve them. It’s a living document that you can update as your business grows and changes.

Looking for someone to write a business plan?

Find professional business plan writers for your business success.

These are the following purpose of business plan:

Attract investors and lenders: If you’re seeking funding for your business , a business plan is a must-have. Investors and lenders want to see that you have a clear plan for how you’ll use their money to grow your business and generate revenue.
Get organized and stay on track: Writing a business plan forces you to think through all aspects of your business, from your target market to your marketing strategy. This can help you identify any potential challenges and opportunities early on, so you can develop a plan to address them.
Make better decisions: A business plan can help you make better decisions about your business by providing you with a framework to evaluate different options. For example, if you’re considering launching a new product, your business plan can help you assess the potential market demand, costs, and profitability.

The Essential Components of a Business Plan

The executive summary is the most important part of your business plan, even though it’s the last one you’ll write. It’s the first section that potential investors or lenders will read, and it may be the only one they read. The executive summary sets the stage for the rest of the document by introducing your company’s mission or vision statement, value proposition, and long-term goals.

The business description section of your business plan should introduce your business to the reader in a compelling and concise way. It should include your business name, years in operation, key offerings, positioning statement, and core values (if applicable). You may also want to include a short history of your company.

In this section, the company should describe its products or services , including pricing, product lifespan, and unique benefits to the consumer. Other relevant information could include production and manufacturing processes, patents, and proprietary technology.

Every industry has competitors, even if your business is the first of its kind or has the majority of the market share. In the competitive analysis section of your business plan, you’ll objectively assess the industry landscape to understand your business’s competitive position. A SWOT analysis is a structured way to organize this section.

Your target market section explains the core customers of your business and why they are your ideal customers. It should include demographic, psychographic, behavioral, and geographic information about your target market.

Marketing plan describes how the company will attract and retain customers, including any planned advertising and marketing campaigns . It also describes how the company will distribute its products or services to consumers.

After outlining your goals, validating your business opportunity, and assessing the industry landscape, the team section of your business plan identifies who will be responsible for achieving your goals. Even if you don’t have your full team in place yet, investors will be impressed by your clear understanding of the roles that need to be filled.

In the financial plan section,established businesses should provide financial statements , balance sheets , and other financial data. New businesses should provide financial targets and estimates for the first few years, and may also request funding.

Since one goal of a business plan is to secure funding from investors , you should include the amount of funding you need, why you need it, and how long you need it for.

Tip: Use bullet points and numbered lists to make your plan easy to read and scannable.

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Business plans can come in many different formats, but they are often divided into two main types: traditional and lean startup. The U.S. Small Business Administration (SBA) says that the traditional business plan is the more common of the two.

Lean startup business plans are short (as short as one page) and focus on the most important elements. They are easy to create, but companies may need to provide more information if requested by investors or lenders.

Traditional business plans are longer and more detailed than lean startup business plans, which makes them more time-consuming to create but more persuasive to potential investors. Lean startup business plans are shorter and less detailed, but companies should be prepared to provide more information if requested.

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A business plan should be reviewed and revised at least annually, or more often if the business is experiencing significant changes. This is because the business landscape is constantly changing, and your business plan needs to reflect those changes in order to remain relevant and effective.

Here are some specific situations in which you should review and revise your business plan:

You have launched a new product or service line.
You have entered a new market.
You have experienced significant changes in your customer base or competitive landscape.
You have made changes to your management team or organizational structure.
You have raised new funding.

A lean startup business plan is a short and simple way for a company to explain its business, especially if it is new and does not have a lot of information yet. It can include sections on the company’s value proposition, major activities and advantages, resources, partnerships, customer segments, and revenue sources.

What are some of the reasons why business plans don't succeed?

Unrealistic assumptions: Business plans are often based on assumptions about the market, the competition, and the company’s own capabilities. If these assumptions are unrealistic, the plan is doomed to fail.
Lack of focus: A good business plan should be focused on a specific goal and how the company will achieve it. If the plan is too broad or tries to do too much, it is unlikely to be successful.
Poor execution: Even the best business plan is useless if it is not executed properly. This means having the right team in place, the necessary resources, and the ability to adapt to changing circumstances.
Unforeseen challenges: Every business faces challenges that could not be predicted or planned for. These challenges can be anything from a natural disaster to a new competitor to a change in government regulations.

What are the benefits of having a business plan?

It helps you to clarify your business goals and strategies.
It can help you to attract investors and lenders.
It can serve as a roadmap for your business as it grows and changes.
It can help you to make better business decisions.

How to write a business plan?

There are many different ways to write a business plan, but most follow the same basic structure. Here is a step-by-step guide:

Executive summary.
Company description.
Management and organization description.
Financial projections.

How to write a business plan step by step?

Start with an executive summary, then describe your business, analyze the market, outline your products or services, detail your marketing and sales strategies, introduce your team, and provide financial projections.

Why do I need a business plan for my startup?

A business plan helps define your startup’s direction, attract investors, secure funding, and make informed decisions crucial for success.

What are the key components of a business plan?

Key components include an executive summary, business description, market analysis, products or services, marketing and sales strategy, management and team, financial projections, and funding requirements.

Can a business plan help secure funding for my business?

Yes, a well-crafted business plan demonstrates your business’s viability, the use of investment, and potential returns, making it a valuable tool for attracting investors and lenders.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance.

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner.

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed.

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis.

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful.

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

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For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen.

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used.

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see.

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business.

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it.

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business.

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think.

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate.

Here are the statements you should include in your financial plan:

Sales and revenue projections
Profit and loss statement
Cash flow statement
Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering.

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual.

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information.

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

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Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process.

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan.

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results.

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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

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Pdf Notes, Ebooks & MCQs

Business Planning and Project Management MCQ

Business plan mcqs with answers pdf. Business Planning and Project Management MCQ pdf. Project Management Multiple Choice Questions and Answers for MBA, BBA.

Are you a business professional looking for MCQs related to Business Planning and Project Management? Then you have come to the right place!

Here we will provide you with a range of questions and answers that can help you test your knowledge on these important topics. Whether you are preparing for an upcoming exam or brushing up on your skills, this article has something for everyone.

With our detailed analysis, examples and tips you can be sure to ace any test related to Business Planning and Project Management.

Business Planning and Project Management MCQ

What is Business Planning and Project Management

Business Planning and Project Management are two essential concepts that every business owner should understand. Business planning is the process of setting goals, formulating strategies, and creating a roadmap to achieve success.

It involves analyzing market trends, identifying potential risks, and developing contingency plans to mitigate them. By creating a comprehensive business plan, entrepreneurs can effectively communicate their vision to investors, stakeholders and employees.

Project management is the process of planning, organizing, leading and controlling resources (human or material) in order to achieve specific goals within a defined time frame.

It involves breaking down complex projects into manageable tasks, assigning responsibilities to team members and tracking progress along the way. Effective project management ensures that projects are completed on time and within budget while maximizing efficiency and quality.

Both business planning and project management are essential for achieving success in any business venture.

A Project Management Information System consists of the followings

A Project Management Information System (PMIS) is a system composed of the tools and techniques used to manage projects.

It consists of processes, methods, databases, software, and hardware that help project managers plan, execute, monitor and control the various aspects of their projects.

It also includes communication networks that provide access to necessary information for all stakeholders involved in the project.

By utilizing a PMIS, project managers can effectively track progress, identify risks and opportunities, streamline communications and ultimately optimize project performance.

Business Planning and Project Management MCQs

Q1. The project manager conducts the analysis of the problem & submits the report to the ___. a. Top Management b. Lower Management c. Middle Management d. All of the Above

Answer: (a)

Q2. The Staff performance has to be evaluated ___. a. Marketing phase b. Design Phase c. Testing Phase d. Post-completion analysis phase

Answer: (d)

Q3. The project management process is defined by the ___. It describes & organizes the work of the project. a. Customer b. Organization c. Project d. None of the above

Answer: (b)

Q4. A workable scheme is maintained to accomplish the business need in ___. a. Executive Process b. Controlling process c. Planning Process d. Initiative process

Answer: (c)

Q5. Controlling process controls ___. a. Time b. Cost c. Quality d. All of the Above

Q6. A team negotiates for ___ a. Scope cost & schedule objectives b. Changes to scope, cost, or schedule c. Contract terms & conditions, resources d. All of the Above

Q7. If you add staff, the schedule may shorten & costs will increase. a. True b. False

Q8. The ___ is a useful tool in project management to compare the relative flexibility of the parameters considered. a. Kiviat graph b. Pert Chart c. All of the above d. None of the above

Q9. The project will go through for preparation, which constitutes formulation & modeling, Planning, control, execution, monitoring, completion & review. a. Statement is correct b. Statement incorrect

Q10. In the ___ stage, the project manager along with the team members draft the outline of the project. a. Initial stage b. Final stage c. Preparation stage d. None of the above

Q11. We need to monitor each project as such and make a program to manage them as a group to take the ___ and be prepared to manage diversity is called ___ a. All are valid b. Disadvantages, P3M c. Advantages, P3M d. Advantages, P2M

Q12. Resource requirement increases at the rapid rate of becoming constant while the project is during its 80% to 95% progress stage ___. a. True b. False

Q13. The scope of Project planning includes the identification of key areas from the client through ___. a. Meetings b. Discussion c. Interviews d. All of the above

Q14. The review process is not training plan-oriented. a. True b. False

Q15. Prepare a checklist of items to be monitored & control during the course of execution of projects in ___. a. Identification process b. Review process c. Analysis Process d. None of the above

Q16. Five conditions imposed on every project are. a. Scope, Quantity, Time, Cost, Resources b. Quality, Scope, Time, Cost, Resources c. Quality, Scope, Time, Cost, Quantity d. None of the above

Q17. The Key Personnel for each area and list them in the person column of the project ___ a. Datalist b. Worksheet c. Project assignment worksheet d. Assignment

Q18. Individuals assigned to a key resource role may work towards gathering “Business key resources” & technical key resources they are projecting. a. Coordinators & team invitees b. Team leader c. Project manager d. All are correct

Q19. ___ is produced by identifying the key elements breaking each element down into component parts & continuing to break down until manageable. a. Responsibility chart b. Checklist c. WBS d. Team

Qs 20. WBS does not show dependencies. a. True b. False

Q21. ___ Involves the identification of the possible risks and assesses the consequences by means of a checklist of possible risks, surveys, meetings brainstorming, and reviews of plans, processes, and products. a. Risk Assessment b. Risk Control c. Risk Ranking d. Risk Mitigation

Q22. Reviews, Findings, and analysis of the project performance are done during a. Planning Processes b. Executing Processes c. Controlling Processes d. Closing Process

Q23. ___ Specify the objective, products, logistics, roles, responsibilities, and time frame. a. Review b. Quality c. Agenda for quality review d. Schedule quality review

Q24. To check the deviation from the baseline during the Re-Plan stage schedule ___ is used. a. Gantt Chart b. Cost workbook c. All of the above d. None of the above

Q25. To identify the Alternate solutions evaluate the change request with respect to the. a. Functional scope b. Schedule c. Effort and cost d. All of the above

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Paper 1 Section A Practice MCQs: 3.1 What is Business

Last updated 14 Oct 2019

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Here is an interactive resource which provides a series of exam-style multiple choice questions (MCQs) that cover topics in Unit 3.1 What is Business?

We are adding questions to the database of 3.1 topics. Each time you launch the resource, 10 questions will be drawn from topics in 3.1 (What is Business). How many can you get correct?

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Stock Plan Cash Holding Suits Tee Up Questions of Funds’ Purpose

By Jacklyn Wille

A handful of new lawsuits challenging employee stock ownership plans with significant cash holdings could force courts to grapple with the differences between traditional retirement plans and those aimed at giving workers an ownership stake in their companies.

In recent months, several employee-owned companies have been targeted in federal court lawsuits over how they invest the portion of their ESOP assets that isn’t held in company stock. These lawsuits say ESOPs sponsored by Aluminum Precision Products , Pride Mobility Products Corp. , Aerotech Inc. , and Wilson Electric Services Corp. kept millions of dollars in overly conservative investments like cash equivalents and ultra-short term bonds earning paltry returns ranging between 0.5% and 1.5%.

These low-yield investments—which accounted for between $4 million and $12 million of the relevant plans’ assets—are inappropriate for workers trying to save for retirement, according to the series of cases led by Minneapolis-based law firm Engstrom Lee LLC. These plans lost out on between $3.3 million and $6.9 million because of this investment strategy, the lawsuits say.

ESOPs give workers an avenue for becoming part owners of their companies by allowing them to hold employer stock in individual accounts. Proponents of ESOPs tout them as a way for workers to share in the rewards of their labor while improving employee motivation and retention and combating wealth inequality.

There are about 6,500 ESOPs covering more than 14 million participants as of 2024, according to data from the National Center for Employee Ownership.

Litigation involving ESOPs typically centers on whether workers were forced to overpay for their stake in the company.

The new cases represent a departure from that trend by criticizing plans that hold large amounts of cash-equivalent investments in addition to employer stock. The success of this legal push may turn on whether judges see ESOPs as retirement savings vehicles focused on maximizing returns or as distinct programs primarily concerned with pursuing different goals.

Legitimate Reasons

Attorneys identified several legitimate reasons for an ESOP to have substantial cash holdings.

An ESOP may hold cash to facilitate repurchases of shares held by employees exiting the plan, Lindsey H. Chopin , a principal at Jackson Lewis PC in New Orleans, said. The holdings could also act as a hedge against the rest of the plan, she said.

ESOPs are “innately risky” because of their concentration in a single-stock investment, Chopin said. Having a conservative hedge may be a reasonable strategy when looking at an overall portfolio, she said.

Carl Engstrom , who represents the plaintiffs in these cases, disputed the idea that such an investment strategy could be prudent over the past several years, while investors were navigating high levels of inflation.

“It’s hard to defend a strategy of holding a material amount of assets in cash during that period of time given the rates of return,” Engstrom said. “Losing your purchasing power consistently over time isn’t hedging—that’s actually just losing money.”

‘Very Different Animal’

The lawsuits may be built on a faulty premise, according to some attorneys interviewed by Bloomberg Law.

ESOPs are a “very different animal” than traditional retirement plans and the people running them don’t have the same duty to maximize returns, Rick Pearl , a partner with Faegre Drinker Biddle & Reath LLP in Chicago, said.

ESOPs are commonly misunderstood as retirement plans, Pearl said. While they can be used that way, Congress has been very clear that ESOPs aren’t principally understood as retirement plans, according to Pearl.

“Congress knew full well that an ESOP wasn’t diversified, that it can be very risky, and that there will be ebbs and flows in stock price over time,” Pearl said. “This wasn’t meant to replace 401(k)s or pension plans; this was meant as something totally different.”

ESOPs are unique and not solely intended to guarantee retirement benefits, and they impose greater risks on workers’ assets than a typical diversified retirement plan by their very nature, José M. Jara , counsel for Fox Rothschild LLP in Morristown, N.J., said.

But ESOP managers still have a responsibility to think about the best interests of their participants, Engstrom said.

“Folks running ESOPs need to embrace the same ideology of fiduciary plan management in terms of both prudence and loyalty and ultimately thinking single-mindedly about what is the best way to help employees reach their goals in managing these plans,” he said.

Context Key

One key factor in how the cases fare may be the type of effort spent informing judges about the differences between ESOPs and traditional 401(k) plans, which are frequently challenged in court for their investment decisions and fees.

Judges accustomed to seeing 401(k) litigation may need more information about how ESOPs are fundamentally different and not subject to the same fiduciary obligations, said Pearl, who typically represents benefit plan sponsors and isn’t involved in these cases.

“My sense is that judges may need extra statutory help in understanding how to apply ERISA to a particular plan or particular situation, and these cases are no different,” he said.

To contact the reporter on this story: Jacklyn Wille in Washington at [email protected]

To contact the editor responsible for this story: Carmen Castro-Pagán at [email protected]

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Business Plan MCQs (FREE Multiple Choice Questions)
These Business Plan MCQ questions answers are a fun way to test your knowledge. ... 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
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.
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.
Chapter 5 Flashcards
A business plan is a document that outlines _____. Multiple choice question. the organization's long-term goals and direction the need the firm will fill, the operations of the business, and its expected revenues and expenses a proposed firm's goals, strategy for achieving them, and standards for measuring success a firm's resources or capabilities along with their competitive strategic potential
Business plan quiz Flashcards
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Business Plan MCQ [Free PDF]
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:
Quiz & Worksheet
Quiz and worksheet questions have the following objectives: Identify the section written last. Know the typical timeframe business plans address. Identify a crucial mistake to avoid in preparing a ...
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Business Planning MCQ Questions Answers
This means: 34. A Business Plan should not include a section about regulatory issues since this is out of the business owners hands. True or False. 35. The main reason that business fail is due to not having enough? 36. The Purpose of the Company Description in the Business Plan is: 37.
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What Is a Business Plan?
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The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the ...
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Paper 1 Section A Practice MCQs: 3.1 What is Business
Here is an interactive resource which provides a series of exam-style multiple choice questions (MCQs) that cover topics in Unit 3.1 What is Business? We are adding questions to the database of 3.1 topics. Each time you launch the resource, 10 questions will be drawn from topics in 3.1 (What is Business). How many can you get correct?
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Stock Plan Cash Holding Suits Tee Up Questions of Funds' Purpose
Stock Plan Cash Holding Suits Tee Up Questions of Funds' Purpose. A handful of new lawsuits challenging employee stock ownership plans with significant cash holdings could force courts to grapple with the differences between traditional retirement plans and those aimed at giving workers an ownership stake in their companies.
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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 __________.

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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?

General Business Planning MCQs

Business planning

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Multiple choice questions

What Is a Business Plan?

Definition and Examples of a Business Plan

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