Chapter 6 Vocab

Question 1

A document that outlines the basic concept underlying a business and describes how

Answer 1

Business Plan

Question 2

An abbreviated business plan that presents only the most important issues and projections for the business

Answer 2

Short Plan

Question 3

A complete business plan that provides an in-depth analysis of the critical factors that will determine a firm’s success or failure, along with all the underlying assumptions

Answer 3

Comprehensive Plan

Question 4

A section of the business plan that conveys a clear and concise overall picture of the proposed venture and creates interest in the venture

Answer 4

Executive summary (Overview)

Question 5

A section of the business plan that describes the product and/or service to be provided and explains its merits

Answer 5

Product/Service Plan

Question 6

A section of the business plan that describes the user benefits of the product or service and the type of market that exists

Answer 6

Marketing Plan

Question 7

A section of the business plan that offers information on how a product will be produced or a service provided, including descriptions of the new firm’s facilities, labor, raw materials, and processing requirements

Answer 7

Operations and Development Plan

Question 8

A section of the business plan that describes a new firm’s organizational structure and the backgrounds of its key players

Answer 8

Management Team

Question 9

A section of the business plan that identifies the potential risks that may be encountered by an investor

Answer 9

Critical Risks

Question 10

A section of the business plan that indicates to an investor how much money is needed, and when and how the money will be used

Answer 10

Offering

Question 11

A section of the business plan that focuses on options for cashing out of the investment

Answer 11

Exit Strategy

Question 12

A section of the business plan that projects the company’s financial position based on well substantiated assumptions and explains how the figures have been determined

Answer 12

Financial Plan

Question 13

Projections of a company’s financial statements for up to five years, including balance sheets, income statements, and statements of cash flows, as well as cash budgets

Answer 13

Pro Forma Statments

Question 14

An analysis of how a firm plans to create profits and cash flows given its revenue sources, its cost structures, the required size of investment, and sources of risk

Answer 14

Business Model

Question 15

A component of the business model that identifies the different types of revenue streams a firm expects to receive

Answer 15

Revenue Model

Question 16

A component of the business model that provides a framework for estimating the nature and types of costs and expenses a firm may incur

Answer 16

Cost Structures

Question 17

A component of the business model that provides estimates of the types and amounts of investment required to achieve positive profits and cash flows

Answer 17

Maximum Investment

Question 18

A component of the business model that identifies risks in the model and how the model can adjust to them

Answer 18

Business Model Risk