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49 Cards in this Set

  • Front
  • Back
Characteristics of an industry that make it difficult to start new ventures
Barriers to entry
A road map for starting and running a business; also used as a sales document to convince bankers, venture capitalists, family, friends, and even oneself to invest in the business.
Business Plan
An entrepreneur writes the executive summary to the business plan first.(T or F)
False
The business plan describes an investment opportunity.
(T or F)
True
Entrepreneurs should avoid discussing potential barriers for the new venture in their business plan. (T or F)
False
A target market is a group of other companies in the same industry. (T or F)
False
Examples of demographics are "growth" and "maturity."
(T or F)
False
Sociographics are the tendencies for people to identify with a particular cause or group (T or F)
True
Entering an emerging industry that does not have an established market typically requires less capital.
(T or F)
False
When entering a mature-phase industry, execution is more important than innovation.
(T or F)
True
The balance sheet shows the status of the business at a particular point in time.
(T or F)
True
Variable expenses such as cost of goods sold are listed on the balance sheet.
(T or F)
False
The basic outline for a business plan includes all of the following except
A personal credit check
The people most likely to become customers of a business are its
Target market
An emerging industry is often characterized by ________ growth
Fast
During which industry phase will the entrepreneur have the most trouble obtaining a significant market share?
Growth phase
In which of the following marketing strategies does a company build market share by moving from one niche to another?
Guerilla
Seven good reasons that entrepreneurs should write a business plan:
1)To sell oneself on the business
2)To obtain bank financing
3)To obtain investment funds
4)To arrange strategic alliances
5)To obtain large contracts
6)To attract key employees
7)To motivate and focus the management team.
A business plan should include the following...
- Executive summary
- Company information
- Product or service description
- Competitive analysis
- Market analysis
- Industry analysis
- Management team
- Marketing plan
- Financial projections
The _________ is probably the most important section of any business plan
Executive summary
Here are some tips for writing an effective executive summary:
1) Write everything else first
2) Write in plain language
3) Describe the business
4) Describe the market size
5) Identify the target market share
6) Identify competitive advantages
7) Describe the investment opportunity
The company's information section includes...
- Basic details about the company
- The company’s legal form and state or country in which the business is incorporated
- The ownership structure of a business
- The company’s mission statement
- A brief overview of the company’s operating history
A brief statement about how the venture was conceived can be useful
The product or service section describes the new venture's product or service in details...
- Sufficient to enable investors a working understanding of what the company sells
- May include photographs, schematic drawings, and descriptive scenarios about how the product or service is used by customers
- If patents, copyrights, or other forms of intellectual property protection have been put in place, this section highlights the status of those measures
- Entrepreneurs writing this section focus on the benefits of each feature of their product or service
Writing in the section of products and services focus on the benefits on each of their product or service.

Features refers to what the product is, and benefits refer to what the product...
Does
The new venture will likely encounter various...
as it attempts to distribute its products or services in markets already served by existing competitors
Barriers to entry
The competive analysis section examines...
- The markets that the competitors serve and the strategies they employ in those markets
- The various barriers to entry encountered as it attempts to distribute its products or services in markets.
- The expected response from competitors when the new venture enters the existing markets.
- Reasonable judgments that might occur and counterstrategies to combat them.
- A features and benefits matrix that highlights the new venture’s product or service
The market analysis section of the business plan is designed...
- To provide insights into the target market for the products or services offered by the venture
- There are several common ways for entrepreneurs to delineate the market for their new venture, including:
* Demographics
* Psychographics
* Geography
* Sociographics
There are several common ways for entrepreneurs to delineate the market for their new venture, including:
- Demographics
- Psychographics
- Geography
- Sociography
Demographics refers to readily identifiable characteristics of an individual or a group snf include...
- Age
- Income
- Sex
- Race
- Ethnic background
- Marital status
- Home ownership
- Educational background
_______ refers to group or individual characteristics that are less readily observable. These variables, with terms such as attitude, taste, or values, describe psychological states or tendencies associated with individuals or groups
Psychographics
Markets that are confined to a particular location can be described using terms from ________
Geography
_______ refers to the tendency for people to identify with a particular cause or social group
Sociographics
The industry analysis section of a business plan focuses on...
Identifying the current health, maturity, and future prospects of the industry
* Industry health: Whether the industry is marked by innovation, growth, and dynamism, or whether it is in decline.
* Maturity: A reflection of its health.

Growth stage: Achieved critical mass in terms of market size and now has enough active customers to sustain a growing number of competitors.
* The challenge is whether the company can scale itself quickly enough to capture a significant market position

Despite the growth in the industry, many new ventures fail during this phase of the industry life cycle.

Mature stage: Characterized by steady or slowly growing industry-wide revenues.
- A few well-established brands dominate the industry and control much of the market share.
- Despite the lack of growth, the mature stage can be attractive to a new venture due of the industry’s stability.
- Innovation is less important than outright execution.
- Customers have well-established buying patterns and preferences.

Decline stage: Characterized by falling industry-wide revenues, consolidation of competitors, and falling prices and profit margins.
- Tend to eliminate competitors who are least efficient in their delivery of products and services

Another industry variable that a business plan addresses is the future prospects of the industry.

There can be several ways of forecasting industry trends.
- Direct means: to plot industry size over the past five to ten years on a graph and then extrapolate the graph forward.
- To examine what industry analysts are saying about an industry’s growth potential is yet another way.
An ______ industry is often characterized by rapid growth and frequent and dramatic changes. An _____ industry often has a long period during which it struggles to establish itself in the minds of its primary customers.
Emerging
A _____ industry is one that has achieved critical mass in terms of market size and now has enough active customers to sustain a growing number of competitors

During the _______ stage, the challenge is whether the company can scale itself quickly enough to capture a significant market position.
Growth
The _______ stage of an industry is characterized by steady or slowly growing industry-wide revenues
Mature
An industry that is in _______ is characterized by falling industry-wide revenues, consolidation of competitors, and falling prices and profit margins.

_______ industries tend to eliminate competitors who are least efficient in their delivery of products and services.
Decline
The part of the business plan that discusses the __________ emphasizes the relevant expertise that each team member brings to the enterprise. The section should not include each person's résumé but, rather, a brief (one or two paragraphs) biographical description of each management team member's experience, education, and duties. It's important to highlight the strengths that each team member brings to the venture
Management Team
The marketing plan describes...
- How the new venture intends to enter its chosen markets
- How it intends to acquire customers
* Market entry strategy describes the approach the firm takes to introduce its products.
* Firms can use a wide range of market entry strategies, including the onslaught strategy, guerrilla marketing, and the feint strategy.
* Marketing techniques range from advertising to public relations and promotions.
- The marketing plan budget specifies the likely costs of the early-stage advertising and promotions campaigns.
________ describes the approach the firm takes to introduce its products. Firms can use a wide range of market entry strategies, including the onslaught strategy, guerrilla marketing, and the feint strategy
Market entry strategy
With the _______ the venture enters the market visibly and directly, attempting to compete head-to-head with the existing firms in the market. The ______ is risky, requiring that the venture specify in detail how it intends to deal with the potential backlash from the existing competitors.
Onslought strategy
________ is used when the venture wants to avoid competing head-to-head with the established firms in the market
Guerilla Marketing
The _____ strategy is also useful when a new venture is entering an industry with established and dominant competitors. This tactic calls for the venture to make a highly visible entry into a particular market niche. At the same time, the venture quietly enters another market niche that is the true target of its intentions.
The feint strategy
_______ in a business plan usually include a sales forecast, income statement (also known as a profit and loss statement), cash flow statement, and balance sheet
Financial Projections
The _______ is a straightforward document that lists the various products or services that the company intends to sell, the price they will sell at, and the number of units of each item that will be sold each month.
Sales forecast
The ____ records the venture's gross revenues per month and subtracts all monthly expenses, both variable and fixed
Income statement
The _______________ tracks the movement of cash into and out of the venture. This important statement helps the business owner track the venture's liquidity
Cash Flow statement
The balance sheet equation is:
Assets = Liablities+Owner's Equity
A snapshot of how the venture is using money it earns through operations
How money that has been invested or loaned

Enables a quick review of the company’s debt-to-equity position and other so-called key ratios
Balance Sheet